Keep-on-Track! Project National Report: Poland

Transcription

1 Keep-on-Track! Project National Report: Poland Contract No: IEE/11/842 Authors: Anna Pobłocka, eclareon Michal Siembab, PIGEO (Polish Economic Chamber of Renewable Energy)

2 TABLE OF CONTENTS THE POLISH RES-E SECTOR... 4 SUPPORT SCHEME... 4 BARRIERS TO THE ELECTRICITY SECTOR... 4 THE POLISH RES-H&C SECTOR... 9 SUPPORT SCHEME... 9 BARRIERS TO THE HEATING AND COOLING SECTOR... 9 THE POLISH RES-T SECTOR SUPPORT SCHEME BARRIERS TO THE TRANSPORT SECTOR LITERATURE AND OTHER SOURCES Disclaimer: The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein. 2

3 Interviewed Experts We would like to thank all interviewed experts for their very valuable input and their support for this study. We highly appreciate their expert knowledge and their availability in the framework of the Keep on Track Project on behalf of the European Commission. For this country study, the following experts were interviewed in 2014: Grzegorz Szulc, Innowacyjne Techniki Energii Odnawialnej ITEO (Innovative Technologies for Renewable Energy) Michał Świątek, Wielkopolskie Centrum Ekspertyz Finansowych - STRATEGOR (Financial Expertise Centre of Wielkopolska) Adam Stępień, Krajowa Izba Biopaliw - KIB (The National Chamber of Biofuels) Stanisław Pietruszko, Polskie Towarzystwo Fotowoltaiki PV Polska (Polish PV Association) 3

4 The Polish RES-E Sector Support scheme In the Republic of Poland, electricity from renewable sources is currently promoted by green certificates. The rule governing the certificate receipt is identical to all RES technologies one certificate is obtained for 1 MWh of energy produced from a licensed/registered source and confirmed with the proper readings of the measuring devices. The upper limit of the certificate price is determined by the value of the unit substitute fee. Electricity producers may also sell their electricity on the market or offer it to an electricity supplier at last year's market price. Operators of micro-installations with a capacity up to 40 kw, who decide to sell their generated electricity to an electricity supplier, receive 80% of last year's market price. Furthermore, electricity from renewable sources is supported through tax relief (RES LEGAL Europe Database). Barriers to the electricity sector Political and economic framework Up to this day (end of January 2014) Poland did not transpose the Directive on renewable energy sources to the national law. In March 2013, the European Commission referred Poland to the European Court of Justice for this delay. Member States of the European Union were obliged to implement the RES-Directive 2009/28/EC into their national law no later than by the 5 th December Poland has not presented new consistent legal solutions that ensure a sustainable development of RES in Poland. The Commission proposes to impose a daily penalty payment of EUR 133, The amendments of the Energy Law from July 2013 that Poland introduced in order to avoid the penalty may not be sufficient to meet the EC criteria. Since over 2 years, the Polish government is working on the implementation of the new Law on renewable energy sources (RES-Law). The current draft law, which is the eight draft version, introduces a new support scheme for RES-E in a form of auction scheme. The existing quota scheme should continue and apply for already existing plants for 15 years after their commissioning. However, their operators can choose if they prefer to be supported through the auction scheme instead. In the auction system, there will be 2 tendering categories, depending on the plant capacity (40 kw - 1 MW and >1 MW). The winner of the tender will be the operator who is committed to deliver a certain amount of electricity for the lowest price, which will represent the guaranteed feedin tariff for 15 years. It is still not sure, how the tenders will be organised and if all RES-technologies will compete with each other or if there will be separate auctions for different technologies. Support for co-firing will be reduced by 50% and hydro-power plants with capacity above 1 MW will be excluded from both support schemes. The insecurity regarding new RES-Law the time of its implementation and its effect on different technologies prevent new investments. Without security regarding support of investments, banks do not grant investments loans. In these circumstances, with the typical project financing of 10-30% 4

5 of own contribution and the rest coming from the bank loan, no project can be implemented (Świątek, STRATEGOR). One of the most severe criticisms regarding the draft RES-Law is the paragraph 39, which restricts receiving support through auction or quota scheme in a case when the RES-investor received other public grant, e.g. a subsidy or loan from the National Fund of Environmental Protection and Water Management or EU Regional and Structural Funds. This regulation may cause that Poland will not be able to use funds dedicated from the European Union for development of renewable energy sources and low-emission economy for the time period of However, according to the interviewed stakeholders, since the Polish Ministry of Economy, responsible for designing the RES-Law, did not give any explanation for this rule, it is expected that this paragraph will be amended (Świątek, STRATEGOR). According to Mr Pietruszko from the Polish PV-Association, the draft law on renewable energy sources does not allow for the development of prosumer and distributed renewable energy generation. Auction mechanism will support the development of RES based solely on the cheapest technologies (Pietruszko, PV Polska). For over a year now there is oversupply of green certificates. In February, the stock exchange price of the certificate fell to a record low of PLN 100 per MWh (EUR 23.76), which was approximately one third of the substitute fee designed for this year. In the years before, the prices of green certificates normally remained around the cost of this fee. The main reason for this trend is including RESelectricity production in co-firing plants, using biomass together with fossil sources (coal and lignite) into the support scheme. This production amounts to the volume of about 50% of all electricity generated from renewable sources. In practice, this means that over 50% of the revenues from the sale of green certificates go to conventional energy sector. The price of green certificates fell also through the support of old and fully amortised hydro power plants and the possibility of paying the substitute fee instead of purchasing the certificates form producers of electricity from RES (Siembab, PIGEO). As mentioned before, the operators of RES-micro-installations receive a feed-in tariff, which however, amounts to only 80% of average selling price of electricity on the competitive market, which is not sufficient to constitute a real incentive. According to Mr Pietruszko, this regulation will be amended and a net-metering will be introduced for micro-installations (Pietruszko, PV Polska). Grid regulation & infrastructure Access to the grid for new plants, especially those using renewable energy sources is very limited. The most important barrier concerning grid issues is lack of free grid capacity. The poor infrastructure of transmission and distribution grid is not adjusted to distributed electricity generation as the one coming from the usage of renewable energy sources. This is due to the centralised electricity generation system prevailing in Poland. This situation is intensified through insufficient investments in network extension in the desired scale, technical restrictions introduced 5

6 by companies involved in electricity distribution and transmission for those who apply for grid connection permits and finally speculators who are closing access to network (Siembab, PIGEO). Apart from that there is no guarantee and no priority of grid connection for plants using renewable energy sources. The priority for renewable energy sources applies only for the transmission of the electricity but this can only be applied after connection (Siembab, PIGEO). The new draft RES-Law will introduce priority of grid connection for renewable energy sources, which will, however, still be restricted with regard to technical and economic feasibility of the grid connection. Another barrier is the advance payment. According to the Energy Law, a developer wishing to connect his plant to the grid needs to submit an application along with additional planning documents and an advance on the connection fee. The payment amounts to PLN 30 for each kilowatt of the connection capacity he applied for. The advance payment has to be paid on account of the grid operator. Advance payment is dedicated to the payment of the connection fee. The Energy Law states that the grid operator has to pay the advance payment back when the grid connection permit is refused due to no technical or economic conditions of the connection. The advance shall also be paid back if the connection simply does not occur, no matter on which grounds. Yet this is not regulated by the Energy Law. There is a risk that a developer may receive connection conditions, which make the investment unprofitable and do not allow for the further development of the project and the advance payment will not be paid back (Siembab, PIGEO). The connection fee claimed by the grid operator differs significantly for the same RES-E plant type and the same capacity. Based on data provided by the Transmission System Operator PSE, the difference may be as much as two orders of magnitude converted per one megawatt for the same RES source (e.g. wind energy generation). At one location, issued connection conditions require a connection fee of PLN 13,000 per MW ( 3,144 per MW), while at another location about PLN 4 million per MW ( 970,000 per MW) (Siembab, PIGEO). Another barrier regarding grid infrastructure, is the requirement for all plants with capacity above 2 MWel, which want to be connected to the electricity grid, to conduct a study on the impact of the connected generation facility on the electricity system. The study is conducted by the system operator and its results are inaccessible to the plant operator. Apart from that, some distribution and transmission companies include the cost of grid modernisation and expansion outside the connection point in the connection fee (Siembab, PIGEO). Administrative processes Another type of barriers are these connected to the administrative processes. The time required to develop fully permitted project (with construction permit) is at least 3 years. The most complicated issues are lack of spatial plans, lengthy procedures and lack of information on available grid capacities (Siembab, PIGEO). First barrier is the lack of local spatial development plans. Most investments in renewable energy sources may be located in an area on the basis of including generation facilities in the local spatial 6

7 development plan. This applies particularly to investments in wind farms. Currently, a majority of municipalities in Poland do not have a local spatial development plans and if they have, the plans seldom provide for location for the RES plants in the area. In this situation, the building permit is issued on the basis of a planning permission (rarely possible for wind farms) or a new local spatial development plan needs to be approved. The procedure of a new plan approval is costly and timeconsuming and extends the process of preparing the investment project by minimum one year. The procedure for obtaining the local development plan is in many cases connected with an assessment on the environmental impact (Siembab, PIGEO). Lengthy administrative procedures constitute another barrier. There are only few regulations on how long the administrative procedures may take, and, in cases when they are specified, the timeframe is considered as too long. Mr Szulc, an expert on biogas installations, stated that the administrative procedures in Poland takes approximately 1.5 year, whereas in the neighbouring country Germany the same procedure is finalised in 1 or 2 months (Szulc, ITEO). The proposed draft law on the protection of the landscape is criticised as hindering further development of wind power in Poland. The draft law will limit the opportunities for renewable energy in Poland by applying the rigors of location and establish further areas where wind investment will not be allowed to be realised. Moreover, the proposed regulations significantly reduce spatial planning power of municipalities and move the decision making to the provincial level (województwa) (Świątek, STRATEGOR). The availability of information on possible connection and vacant capacity is not sufficient. The Energy Law obliges the operators of grids with a voltage of more than 110 kv to publish the current connection capacity for a given connection point and the planned changes for the next five years. However, since most RES plants (around 90%) are connected to the grid with a voltage of less than 110 kv this obligation does not help further development of RES. Most grid companies do not comply with the provisions of the law to provide information. In some cases published data do not bring any information, which might be of interest for RES-E developers. Also most of the gird operators avoid giving notice on no available capacity for new connections (Siembab, PIGEO). Other One very severe barrier is the public perception of RES as an expensive energy source. Politicians, as for example the Polish Prime Minister, Donald Tusk, express the argument that energy generated from such sources is the most expensive one and contributes to growing energy prices for end users, deteriorates the landscape and adversely affects the functioning of the electricity system (Siembab, PIGEO). A good example for this negative perception is the draft of the building act, which proposes an introduction of 3 km distance from buildings and forests for wind energy plants. This restriction would in reality ban wind power plants in Poland. Moreover, the act would not only affect new installations, but also concern already existing plants, which would in effect have to be moved to other locations. It is very improbable that this regulation will be approved by the parliament. The 7

8 draft, however, shows the attitude of polish politicians towards wind energy and affects polish image within international RES investors (Siembab, PIGEO). 8

9 The Polish RES-H&C Sector Support scheme In Poland, heat generated from renewable energy sources is supported through two different subsidy schemes. One was launched by a state-owned bank, the other one by the National Fund for Environmental Protection and Water Management. The former supports refurbishment works which, among others, may include the installation of RES technologies for heat generation. The subsidy from the National Fund supports the purchase and installation of solar collectors (RES LEGAL Europe Database). Renewable energy sources in heating are only indirectly supported though a certificate system. Apart from the green certificates granted for electricity generation from renewable energy sources, there are also certificates for supporting co-generation: yellow certificates granted for CHP using agricultural biogas and CHP using other RES with capacity up to 1 MW el or purple certificates granted for CHP using gas derived from any biomass and red certificates granted for CHP using solid biomass or bioliquids with an installed capacity of at least 1 MW. Certificates are issued for electricity generated in high-performance cogeneration plant, but the amount of the certificates granted strongly depends on the amount of generated heat (Siembab, PIGEO). Barriers to the heating and cooling sector Political and economic framework The most severe barrier to development of renewable energy sources in the heating sector is the insufficient support system. In comparison with renewable energy sources in electricity sector, RES used for heating purposes are poorly supported. There is no quota system with certificates for generation of heating from RES, no guaranteed prices and no tax exceptions or reliefs (Siembab, PIGEO). The certificate system supporting co-generation terminated on 31 March This applies only to yellow and red certificates and not to the violet certificates, which operate until 31 March The termination of certificates scheme was one of the main causes of the crisis, which last year plunged among others biogas industry in Poland. Without a stable mechanism of support with certificates for co-generation no development in using heat from renewable sources can occur (Siembab, PIGEO). On 24 January 2014, the Parliament passed an amendment of the energy law, restoring the support system for high-efficiency cogeneration with includes yellow and red certificates and extends its operation until The support scheme is still not approved by the European Commission. This procedure might take few months. However, the parliament decided not to wait for the decision of the EC and introduce legislation allowing for the restoration of support for high-efficiency cogeneration. In case that the European Commission does not approve the scheme, the beneficiaries 9

10 of the scheme might even have to pay back the granted support. Under such circumstances, the Polish state will have to pay compensations to these beneficiaries (Gram w Zielone). There is no tax relief for the purchase of renewable energy equipment for heating purposes. This barrier affects primarily smaller units. The tax law does not include any suitable mechanism supporting installation of units generating heat using renewable energy sources, as for example heat pumps, solar collectors and biomass boilers in residential buildings (Siembab, PIGEO). Other Another barrier is the limited access to biomass for heating purposes. Introduction of green certificates to support producers of electricity from renewable energy sources has resulted in transfer of a significant part of biomass delivery from the heat production industry to the electricity sector. Consequently, there has been no significant increase in the share of primary energy in domestic biomass in recent years. Effectively, there are anomalies in the use of biomass for energy purposes. Energy companies, guided by a potential profit derived from green certificates, obtain biomass for blocks generating electricity. A major part of electricity generated in Poland is produced from biomass, particularly in installations for co-firing of biomass with coal and from large installations for biomass. Thus, availability of solid biomass for energy purposes at a reasonable price for the heating sector is very much limited (Siembab, PIGEO). 10

11 The Polish RES-T Sector Support scheme In Poland, renewable energy in transport is promoted through a biofuels quota obligation. The producers, importers and suppliers of fuels are obliged to meet an annual quota of biofuels in the total amount of liquid fuels produced/supplied/imported. The obligation levels - the National Indicative Target - are determined every three years for a period of 6 years by the Council of Ministers (RES LEGAL Europe Database). Barriers to the transport sector Political and economic framework Uncertainty on the European market, due to failure of the European Council to reach an agreement on biofuels regulations, constitutes a very severe barrier for the biofuels. A compromise proposal presented by the Lithuanian Presidency, introducing a cap of 7% on conventional biofuels has not been agreed on. On 11 September 2013 a narrow majority of Members of the European Parliament voted that "first generation" biofuels should not exceed 6% of the final energy consumption in transport by 2020, as opposed to the current 10% target in existing legislation, while advanced biofuels should represent at least 2.5% of energy consumption in transport by The Members of the European Parliament vote also endorsed double-counting of biofuels produced from UCO (Used Cooking Oil) or animal wastes and a minimum 7.5% limit of ethanol in gasoline. 1 The discussion is still not finalized, which strengthens the legislative uncertainty in the whole European Union (Stępień, KIB). In Poland, like in the majority of the European Union Members States, consumption of liquid fuels is dominated by diesel oil. The sales of diesel oil have been recently 3-times higher than of petrol. The major reasons for such development should be seen in a long-lasting preference for diesel oil through excise duty rates (that account for some 2/3 of the excise duty in case of petrol) and a dynamic technological progress in the automotive industry in building compression ignition engines that has brought about a wide-spread introduction of Common Rail fuel injection systems which as a result reduced significantly the consumption of diesel oil. Such disproportion directly translates into clear dominance of methyl esters in terms of volumes over bioethanol in the achievement of the National Index Targets. "Dieselisation" of transport also contributes to lack of interests among fuel businesses in introducing to the market liquid biofuels that are based on petrol (Siembab, PIGEO). Another barrier is the high costs of biofuel manufacturing caused by the price of agricultural raw materials. They account for some 2/3 of all costs related to biofuel manufacturing. Prices of agricultural raw materials are also subject to significant fluctuations (Siembab, PIGEO). 1 Source: European Biofuels Technology Platform ( 11

12 There are no mechanisms in Poland that promote and support initiatives that lead to development of transport operated by electricity generated from renewable sources (Siembab, PIGEO). Market structure The grey market, i.e. illegal trade in fuels does not only affect the producers of the fuels but also limits the use of bio-components. The fuels traded in this grey market are not blended with biocomponents. The problem has grown rapidly since the beginning of 2012, when the amount of excise duty tax has risen. The share of this grey market in the wholesome diesel market is estimated at about 8% in the first and second quarter of 2012 (Siembab, PIGEO). The targets of the quota obligation (as indicated by National Indicative Target) are mainly met by blending biocomponents into normative fuels, while the difference between the National Indicative Target and the share achieved by blending is covered through the sale of liquid biofuels. This is in Poland reduced to the trade of B100 (methyl esters forming self-contained fuel). Due to the high costs of B100 and the need of artificial lowering prices of this fuel to make it more attractive in comparison to the normative fuels a phenomenon of multiple trading of the same product commonly known as "carousel B100"came to life (Siembab, PIGEO). Grid regulation & infrastructure Technological progress that consists in using the Common Rail fuel injection system in compression ignition engines has simultaneously led to technological limitation in the possibilities of using methyl esters as a biocomponent in diesel oil. The percentage level of esters in diesel oil that is generally accepted by manufacturers of Common Rail vehicles does not exceed the volume of 7% (socalled B7). This is primarily related to specific physico-chemical properties of esters the excessive amount of which in diesel oil will significantly affect the life cycle of Common Rail systems. Mass scale use of such technology significantly affects the development of quality standards for fuels, and, consequently, the European and domestic policies that determine the legal framework for the required properties and qualities of fuels. Older technologies used in diesel engines did not have such limitations. What needs to be stressed is that Common Rail technologies used in agriculture equipment (tractors, combines) are adjusted to run on clean BIO100 biofuel (Siembab, PIGEO). The quantitative limit of maximum permitted content of biofuels is determined to a large extent through the technological development of the automotive industry, which by working closely with the refinery industry is not interested in the use of biofuels on a large scale (Stępień, KIB). In Poland, with the exception of biofuels BIO100, there is practically no supply market of biofuels, due to the lack of appropriate infrastructure (limited number of tanks at tank stations) and no consumers interest in purchasing them (caused by the age of the car fleet in Poland and prices of biofuels small price differences do not compensate for lower energy content of biofuels as compared to petroleum-derived fuels) (Stępień, KIB). 12

13 For over 2 years now the Ministry of Economy has been working on amending the Fuel Quality Monitoring and Control Act that consists in changing the definition of petrols that involves increase in the permitted maximum percentage of bioethanol from 5 to 10% (so-called E10). However, increase of the percentage of bioethanol in petrols is not a safe solution from the technical point of view for all vehicles in Poland that run on petrols, primarily because of the age of the car fleet in Poland. Almost each vehicle with a petrol engine manufactured after 2000 may safely use E10 fuel, however, according to the data from the Polish Central Statistical Office (GUS) the vehicle average age in Poland is 14 years (or actually 12 years), and in view of lack of accurate data introduction of E10 was abandoned when amending the said act in Currently, work is under way again on another amendment, however, it is based on the same estimates which has resulted in setting up a transition period having 2 types of petrols sold at the same time on the market, i.e. having 5% and 10% share of bioethanol by the end of 2016 (as provided for in the current draft of the act). This means marginalisation of market importance of E10, which will directly limit the increase of the use of bioethanol as a biocomponent of the standard fuel (Stępień, KIB). 13

14 Literature and other sources European Biofuels Technology Platform. Available at: (last visit on ). Gram w Zielone: Sejm przywrócił żółte certyfikaty. Biogazownie rolnicze znów będą rentowne. Available at: (last visit on ). Pietruszko, PV Polska: Stanisław Pietruszko, Polish PV Association (Polskie Towarzystwo Fotowoltaiki PV Polska). Interview on re-frame.eu Database: Online database on barriers to renewable energy and the corresponding policy recommendations. National profile for Poland. Available at: (last visit on ). RES LEGAL Europe Database: Website on Legal Sources on Renewable Energy. European Commission. Available at: (last visit on ). Siembab, PIGEO: Michał Siembab, Polish Economic Chamber of Renewable Energy (Polska Izba Gospodarcza Energii Odnawialnej PIGEO). Questionnaire provided as member of the Keep-on-Track consortium PIGEO on Stępień, KIB: Adam Stępień, Polish National Chamber of Biofuels (Krajowa Izba Biopaliw KIB). Interview on Szulc, ITEO: Grzegorz Szulc, Innovative Technologies for Renewable Energy (Innowacyjne Techniki Energii Odnawialnej ITEO). Interview on Świątek, STRATEGOR: Michał Świątek, STRATEGOR, Financial Expertise Centre of Wielkopolska (Wielkopolskie Centrum Ekspertyz Finansowych - STRATEGOR). Interview on