Poland Seeks 40% Cut in Renewable Energy Costs by 2014

November 8, 2013 by  
Filed under Green Energy News

Poland aims to cut the cost of
renewable energy suppliers 40 percent by 2014 by auctioning
fixed-price contracts for generators and by cutting subsidies,
the nation’s deputy economy minister said.

Jerzy Pietrewicz told lawmakers that the government plans
to issue its final draft of legislation on renewables by the
middle of this month and that the rules may enter into force at
the start of next year. The energy regulator will organize
auctions to buy electricity from new installations for 15 years
and also reduce the number of green certificates granted.

Poland, which produces almost 90 percent of its electricity
from coal, had been working on new renewable energy regulations
since 2011. It’s seeking to balance a European Union demand that
it clean up fossil fuel emissions with Prime Minister Donald
Tusk’s ambition to limit consumer power bills.

“Auctions are a more efficient system that allows us to
choose the projects with lowest production prices from competing
ones,” Pietrewicz said at the Senate’s joint Public Finance and
Economy committee in Warsaw today. “Additionally, investors
will get predictability for their projects for a long period as
they will be settling a price level they offer.”

EU requirements call for Poland to expand the amount of
energy it gets from cleaner sources to 20 percent in 2020 from
11.5 percent in 2012. The government is also attempting to cut
support for renewable power generators, which guarantees above-market prices for power from clean sources. The tariffs cost
consumers about 4 billion zloty a year ($1.3 billion), according
to estimates from the Economy Ministry.

Technology Neutral

Poland won’t have any preferences for different renewable
energy technologies, Pietrewicz said. The Economy Ministry wants
to auction contracts to buy energy from installations with
capacities not larger than 50 megawatts.

The government also wants to exclude hydroelectric power
plants
exceeding 1 megawatt of capacity from the new system.

The rules would cut in half the subsidies for biomass co-firing, the major source of renewable energy now in Poland.

“Sudden, uncontrolled development of such technology
caused oversupply of green certificates and led to the collapse
of their market price in recent years, when the economy slowed
down,” Pietrewicz said.

The price of certificates granted for using clean
technologies has dropped 65 percent since the start of 2012 to
100.48 zloty a megawatt-hour, reaching a record-low on Feb. 14
this year, according to data compiled by Bloomberg. They
rebounded to 199.92 zloty a megawatt-hour as of today.

The new rules will apply to new installations only. The
deputy economy minister said support for existing facilities
will be kept unchanged. The government plans to run
“dedicated” energy auctions for “stable sources of power,”
to avoid possible wind and solar energy shortages due to weather
conditions.

Poland estimates that keeping the existing support system
will boost the cost of renewables by 123 percent to 8.9 billion
zloty ($3.4 billion) in 2020, according to a presentation
published on the Economy Ministry’s website.

To contact the reporter on this story:
Konrad Krasuski in Warsaw at
kkrasuski@bloomberg.net

To contact the editor responsible for this story:
David McQuaid at
dmcquaid1@bloomberg.net

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