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Poland Renewables Bill to Forge New Solar Market as EU Cuts Back

Poland Renewables Bill to Forge New Solar Market as EU Cuts Back

Poland is set to approve renewable energy laws that may spur a 100-fold increase in solar power capacity next year, just as the rest of Europe scales back.

The country that has 3 megawatts of solar capacity may build as much as 400 megawatts next year if the renewables bill comes into effect on schedule in January, said Stanislaw Pietruszko, the head of Poland’s photovoltaic association. Neighboring Germany has 30,000 megawatts installed.

The east European nation is seeking to lure investors that have turned away from Germany, Italy and the U.K. after cash- strapped governments cut subsidies for clean-energy projects. Poland, which gets about 85 percent of its power from coal-fired plants, is poised to join Ukraine in offering some of Europe’s highest solar subsidies as its economy grows.

“The proposed rates are very good, higher than those in Germany,” Pietruszko, who is president of the Polish Society for Photovoltaics, said in an interview.

Prime Minister Donald Tusk’s government is seeking to double the share of energy provided by clean sources by 2020 and plans to triple support for large solar plants through a green- certificate program starting in January, the final draft of the bill shows. It will also introduce feed-in tariffs, or premium rates paid for renewable power, for small projects.

Government Plan

The government proposes paying tariffs of as much as 1.30 zloty (41 cents) for projects of less than 100 kilowatts until 2027. Larger plants will qualify for as many as 2.85 green certificates per megawatt-hour over 15 years. Each tradable certificate, which utilities are obliged to buy, averaged 248.6 zloty a megawatt-hour last month.

“If effective from January, the tariffs could lead to at least 300 to 400 megawatts in applications for plants that could be built by year-end,” Pietruszko said.

Poland, which has already developed a wind-power market with about 2,300 megawatts in capacity, has no utility-scale photovoltaic plants operating even though its solar radiation is similar to that in Germany, Europe’s largest solar market.

German developers such as Gehrlicher Solar AG and Conergy AG are preparing to tap the Polish market once the new rules come into effect. Chinese companies are also “on the starting blocks,” according to Pietruszko.

“The Polish market will definitely be very interesting once feed-in tariffs and green certificates are approved,” Antje Stephan, a spokeswoman for Hamburg-based Conergy, said by e-mail. “We’ve already started establishing our local network.”

Stable Economy

Poland is “interesting” given its proximity to Germany, its political and economic stability and high prices for electricity, said Stefanie Biala, Gehrlicher Solar’s director of project development.

Some investors aren’t waiting for the energy legislation to be approved. Unam, a Polish maker of metal tools, is about to start building a 70-megawatt solar park in Zlotow. It will begin preliminary work on the project next month for local developer Smart Eco-Wind, said Anna Jarka, a spokeswoman for Unam.

Poland’s Economy Ministry said it aims to approve the renewables bill along with two others for energy and gas by January. The draft has been sent to a government committee and needs to be approved by the whole Cabinet before being sent to the parliament, Iwona Dzygala, an Economy Ministry spokeswoman, said by phone. “Our priority is that draft comes into force next year,” she said.

Delay Possible

The bundling of three bills probably will lead to a delay that could push back the legislation until the middle of 2013, said Pietruszko.

Feed-in tariffs led to a boom in renewables projects in European countries such as Germany, the U.K., the Czech Republic and Spain. Poland is following the example of Britain, which introduced a dual system of green certificates and premium-rate tariffs. Romania is one of few European countries to use certificates only.

“Many expect a delay to the introduction of the law to as late as January 2014,” said Martin Simonek, an analyst at Bloomberg New Energy Finance in London. “However, the market is already buzzing with developers securing land and permits. So once it’s approved, if terms remain favorable, we’ll see a surge in installations.”

Some of the rules in the draft would establish a stable solar market, he said. These include a renewables surcharge akin to that in Germany, requiring consumers to cover the higher prices utilities need to pay for clean electricity, and fixed annual cuts for solar tariffs of 5.5 percent.

‘Catch Fire’

“The proposals will definitely ignite a new solar market, even if it may be slow to catch fire properly for large-scale projects due to slow permitting,” Simonek said. “The returns available and the proximity to experienced developers and contractors in Germany should allow for several hundred megawatts per year, at the very least.”

While the latest draft introduces a 10-megawatt limit on solar plants, there’s no cap on total installations. The Economy Ministry has forecast 50 megawatts of solar capacity in the first year and 600 megawatts by 2020, according to the photovoltaic association.

“The ministry expects 50 megawatts, but in my opinion it will be much, much more,” Pietruszko said. “This capacity will go immediately and I don’t know what the ministry will do if installed capacity exceeds 50 megawatts next year.”

The government and industry will have to work together to avoid a boom-and-bust scenario like those seen in the Czech Republic and Spain, he said. Costs and subsidy cuts in much of Europe will compound the effect of the financial crisis to reduce the pace of installations in most countries next year, according to New Energy Finance.

Copyright 2012 Bloomberg

Lead image: Poland stamp via Shutterstock


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