Will the new RES Act give momentum to the Polish renewable energy sector?

More information on this topic is presented in the PMR report:

Pursuant to the provisions of the new Renewable Energy Sources bill, co-financing for the operations of electricity generation companies in Poland will be provided via a two-path system: in accordance with the previous arrangements, which will gradually expire and in accordance with the new procedures, which will mandatorily apply to new capacity generation sources. Power generators operating within the framework of the current system of certificates will be able to choose between the old and new support systems.

According to our report entitled “Renewable energy construction in Poland 2014 – Development forecasts and planned investments“, the adopted measures are in the first place aimed at avoiding an oversupply of green certificates (which may have a negative impact on the market) and, thereby, preventing a substantial fall in the prices of these documents and, ultimately, reduction of the support for RES-electricity producers. This is what occurred in 2012. The massive increase in the volume of electricity generated from co-firing was the key driver here; therefore, reduced support for this type of systems was by no means surprising.
The absence of regulations governing the new support system and delays in the RES Act coming into force, combined with the reservations to the existing law, were the main barriers to the growth of the wind power sector last year. Complicated administrative procedures and the lack of transparency of local regulations combined with unfavourable tax regulations regarding real estate delay the implementation of projects, which also stands in the way of obtaining the funding and increases project risks. Other factors blocking the growth of wind farms include: difficulties in connecting to the grid, environmental requirements, public protests and difficult access to funding. Due to all these factors combined, both investors and the financing entities take a highly cautious stand regarding involvement in new wind farms.
Last year was very difficult for the biomass sector as well. The main reasons for this included: the absence of the applicable legal regulations in place, delayed legislative procedures and a collapse of the green certificates market. An oversupply of the certificates combined with the recent sharp decline in their prices resulted in a situation where selling the certificates no longer compensated the electricity producer for the acquisition cost of biomass being higher than that of coal. Eventually, numerous power plants terminated their agreements with biomass producers with a view to reducing its consumption. As a result, the biomass market took a tumble.
That the situation of producers of biomass for the power generation industry is difficult is confirmed by the recent developments in the market. Tauron Cieplo cancelled a tender for the construction of the biomass storage and feeding system for the BCF-100 boiler in Katowice, while Mostostal Warszawa’s delivery of a biomass-fired unit for Energa at the Elblag facility is over a year behind schedule. That the situation is challenging is confirmed by both electricity producers and biomass trading companies. The coming months and the fate of the new RES Act will be highly relevant to the biomass market.
Furthermore, the biogas market grows at a rate slower than its potential, too. The growth potential of biogas plants and agricultural micro-biogas plants operating in Poland ranges from 3,000 MW to up to 4,000 MW. The excellent resources base of Polish farms ensures continuous supplies and stable prices of the feedstock, which guarantees sustainable growth of this branch of the power sector. However, this opportunity is not fully exploited because the market does not create conditions conducive to the growth of biogas plants at this point of time. Obstacles to the market’s development primarily include organisational, economic and legal barriers and the shortage of financial support schemes dedicated to the development of agricultural biogas plants. Significant capital outlays which are required to implement biogas projects combined with a long period of return on investment and difficulties in obtaining co-funding result in a standstill in the market. In 2013, there were around 130 agricultural biogas plants at various stages of development. However, not all of the planned investment projects will eventually be completed, for various reasons, such as bankruptcies of some investors, refusal of the local communities to have the plants in their neighbourhood, difficulties securing the required financing, etc.
The introduction of new legal regulations would greatly foster the development of renewable energy sources in Poland, but in view of an uncertain and distant date of the entry into force of the new RES Act, the NFOSiGW works on a support system dedicated to micro installations. Under the scheme, referred to as “Prosumer”, households and associations of home owners that decide to install photovoltaic systems will be able to obtain support in the form of a loan or subsidy; the scheme’s budget will amount to PLN 600m in 2014-2018. However, the framework of the financing system has not been specified yet, and the implementation of the new scheme is also behind schedule. In addition to solar collectors, it will also apply to photovoltaic systems, small wind turbines, micro biogas plants and biomass incineration plants.

More information on this topic is presented in the PMR report:
Renewable energy construction in Poland 2014. Development forecasts and planned investments