The Government is counting on the most expensive RES technologies and is attempting to halt the sector’s development. If the Regulation concerning the next year’s auctions for renewable energy sources is published in the form presented for consultations, the cost of production of green energy in Poland will increase substantially, whereas the sector’s growth rate will fall.
In accordance with the recently published draft Regulation concerning the volume and value of RES auctions in 2017 Ministry of Energy is assuming support primarily for electricity production technologies using biogas and biomass. At the same time the Ministry seems to forget that these green energy technologies are very expensive. In accordance with the Government’s assumptions, the average cost of production of 1 MWh in these technologies ranges from 415 PLN/MWh (biomass) to 550 PLN/MWh (agricultural biogas). The total value of auctions for these technologies is PLN 17.6 billion. In accordance with the draft the next year’s auction is to result in the construction of 300 MW in small PV farms and only 150 MW in new wind farms, where the cost of electricity was assumed at the level of 400 PLN/MWh and 330 PLN/MWh accordingly. However, the value of auctions for these technologies is only PLN 4.2 billion. Hence, the Government is counting on more expensive technologies. The question is: do electricity consumers, which will have to pay for the more expensive technologies selected instead of the less expensive ones, think the same.
Additionally, it has to be noted that the government did not agree to the transition of a single wind farm operating under the green certificates scheme to the auction scheme. However, such a consent has been issued, for instance, to biomass and biogas installations, which resembles discrimination. This is even more important, as Ministry for Energy still does not take any measures that could stabilise the oversupply in the green certificates scheme, which may result in bankruptcy of many RES installations operating under that scheme.
The tiny volume of the proposed auctions is incomprehensible – approximately 680 MW is provided for new installations. To date the average yearly RES installed capacity growth in the period 2010-2015 amounted to approximately 883 MW/year. The reasons for bringing further wind power development in Poland to a halt are inexplicable, in particular given the fact that the design of the auction scheme does not guarantee that all installations that win the auction will be built. For example, in Italy the ratio is approximately 50%. Therefore, the proposal is even more controversial. The Government does not provide for the construction of a single new wind farm within the auction planned to be held in 2016. Ministry of Energy seems to completely ignore the fact that with such growth rates Poland cannot fulfil its EU commitments in the area of the share of energy from RES in domestic electricity consumption.
The announcement of the draft coincides with a communication concerning the delays in the implementation of yet another investment in the conventional energy sector – the Jaworzno Power Plant. Currently, other projects, such as Kozienice Power Plant, Stalowa Wola Power Plant and Włocławek Power Plant also suffer from delays reaching several months – and even years! The commissioning date of the Opole Power Plant is very uncertain. This means that new power plants will not supply electricity to the network in the amount and within the deadlines assumed by the Government and required by security of supply of electricity to consumers. The National Power System urgently needs additional generating capacity, which in the short term may be provided only by wind and PV. Polskie Sieci Elektroenergetyczne even announced that they would be happy to see an additional 2,000 MW of RES capacity by 2020.
It is appalling to compare the halt to the development of the RES sector, which could provide clean and inexpensive energy, for instance for electro-mobility or heating, with information concerning the dramatic air quality in the largest agglomerations in Poland, which, in accordance with the World Health Organisation estimates, causes more than 40,000 deaths per year.
Furthermore, it shall be noted that the statement of reasons to the draft Regulation concerning the next year’s auction is completely inconsistent. The Government suggests that among all renewable energy sources only wind power is unstable. This is false. Wind power is a stable source of energy, although it cannot be centrally controlled. This also pertains to any other renewable source. Other RES, including biomass and biogas, are equally uncontrollable for PSE. However, the Ministry is planning to develop them although they too do not ensure final consumers continuous access to electricity.
The adoption of the Regulation in its current design will bring irreversible results for the RES market in Poland. Even if the Government admits a substantial number of wind farms to the RES auction in 2018, most likely the awarded projects will not be built, for as a result of the adopted anti-wind regulations the investors will not succeed in acquiring the required operation permits before the deadline, laid down in the harmful legislation in 2019. No investor will acquire new permits enabling investment in more modern and efficient wind turbines in 2018-2020, for the anti-wind act blocked the development of all new projects.
This policy, adverse towards the RES industry and the wind energy sector in particular, deprives the Polish citizens of the benefits stemming from properly designed renewable technology mix despite having them to incur the costs of the support scheme. The draft Regulation once again – and broadly – opens the support scheme to subsidies for co-firing, which is a technology that brings no sustainable and systemic benefits and does not solve any issues. These issues include the increase in energy security, in particular in the context of the problems with investments in conventional sources. The technology mix proposed for the 2017 auctions will furthermore not allow Poland to achieve the health benefits stemming from the supply of a substantial volume of clean electricity to the system. On the other hand, the additional cost of statistical transfers, reaching several billion PLN, is inevitable, for such a configuration of auctions actually makes it impossible for Poland to achieve our EU targets for the production of RES electricity in 2020.
We hope that in the course of the public consultations (which are to last only until 28 November) the Government will review its approach to the development of a sustainable energy mix in the sector and consider all of the arguments provided above, balancing the auction scheme not using the installed capacity criterion for particular technologies, but using the criterion based on the achievement of the necessary targets and minimisation of cost of redevelopment of the entire energy sector. In PWEA opinion this requires the increase in the auction volume for new wind energy installations at least to the average annual capacity growth to date, i.e. approximately 680 MWh/year. The RES sector should be developed in a sustainable way, with particular regard to the least expensive and most mature technology – onshore wind. This is the only technology having enough potential to substantially contribute to the achievement of the RES targets set for Poland for the year 2020.