New solar subsidies in Poland delayed

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New solar subsidies in Poland delayed

The reworking of subsidies for renewable energy in Poland, through the adoption of a new renewable energy resources act, is only making slow progress.

Poland holds much promise as a photovoltaic market, however legislation is moving slowly through the country's executive and legislature. Flickr/soylentgreen23

With Poland one of the Eastern European markets tipped to be a growth area for solar, the progress of renewable energy legislation is slow but there are some reasons for optimism.

A draft for a renewable energy act voted on in cabinet could be presented to parliament at the end of March, which would mean the legislation taking effect in early 2014.

A new regulation for subsidies for renewable energies in Poland was supposed to take effect as of January 1, 2013 but it has been obvious since autumn that the deadline would be missed. Discussion is ongoing about a reorganization of subsidies – in particular with regard to large installations to be subsidized with a modified certificate system, explained attorney Dr. Christian Schnell, partner in the law office DMS DeBenedetti Majewski Szczesniak, in Warsaw.

Many experts believe the law could eventually boost the development of photovoltaic technology in Poland. The proposed draft is currently in the standing committee of the council of ministers. Deputy ministers are discussing it before the Ministry of Economic Affairs prepares a final draft for cabinet. "According to the Ministry of Economic Affairs this approved draft will be adopted by cabinet by the end of March," said Schnell.

When the cabinet has finished deliberating, the draft must be considered by parliament. Schnell does not expect the new law to take effect before January 1, 2014 due to the notification process. Due to government aid legislation, the Polish government wants to have the European Union notified of the new law at the same time – a procedure which will presumably take six to eight months, explained the attorney.

The planned regulations, some details of which have been released, promise attractive framework conditions for photovoltaic technology for small systems, with less than 100 kW of output, which will be subsidized through FITs.

There is discussion about whether a certain share of private consumption of solar electricity should be stipulated for small photovoltaic installations, says Schnell. In addition, FITs could be reduced not only on an annual basis, but also in connection with certain steps involving the construction of additional installations. Thus, for example, there are plans to lower the FITs to 90% in the event of installation of 500 MW and with 600 MW added, feed-in tariffs could be reduced to 50%.

The impact of subsidies from the EU budget for small renewable energy installations must also be taken into consideration. According to Schnell, €2.3 billion has been planned into the budget – yet to be adopted – for 2014-2020 for investments in renewable energy installations. This amount is mainly to be used for the development of small plants.

Yet the situation becomes more complicated when it comes to subsidies for Polish systems of more than 100 kW.

An improved certificate system is supposed to make the construction of photovoltaic and wind-powered installations much more attractive so the Polish government aims to introduce a technology-dependent correction factor. For photovoltaic technology, it is supposed to be up to 2.85 in the first two years after taking effect. Up to now there has been a certificate for a renewable energy installation per kilowatt-hour, regardless of the technology employed. "At the moment the correction factors are not the subject of discussion, which is very positive," added Schnell.

The situation with regard to green electricity certificates is critical. Since Poland subsidizes 'co-firing' of biomass with green electricity certificates – and presumably will not abandon this practice before 2017 – there is an oversupply, explained the attorney.

The oversupply has seen the value of green energy certificates fall with the price currently around 70% of the compensation fee, below the 75-80% 'headroom' deemed necessary to keep the price attractive to renewable energy installation operators. The Polish Ministry of Economic Affairs has an obligation to increase quotas if the headroom is undershot in the draft of the renewable energy resources act.

Solutions to the oversupply of certificates are being discussed, says Schnell. On the one hand, the prescribed share of renewable energies, i.e. the quota that applies up to 2020, will be moderately increased. Biomass will be certified, Schnell goes on to say, to keep the uncontrolled import of biomass from outside the European Union – up to four million tons this year – within a justifiable and sustainable framework. Finally, the national environmental fund will buy up the current oversupply of certificates, essentially caused by the national energy industry over the past two years.

The final shape of the Polish bill will be determined by how the various solutions to the oversupply of green energy certificates are arranged and things should become clearer by the end of March.

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