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Energy Environment 20 July, 2017 9:00 am   
Editorial staff

Wójcik: changes in the green certificates system

“The goal of the amendment is to solve the issue of market oversupply of green certificates. The project proposes to withdraw the existing, fixed alternative fee which is 300.03 PLN per MWh,” writes Teresa Wójcik, editor at BiznesAlert.pl

Yesterday the Sejm’s Commission for Energy and State Treasury held the first reading of the act on amending the act on renewable energy sources. The project was proposed by MPs from the ruling Law and Justice party, which shortens the legislative path and will make it possible to introduce the necessary changes a lot quicker. The Commission’s majority rejected the motions by the opposition MPs to postpone the amendment to conduct further consultations with interested parties. After a debate, the Commission did not introduce any amendments and motioned for adopting the act. The second reading, this time during a plenary session will take place on Wednesday, 19 July.

The amendment is a response to an urgent demand to solve the issue of market oversupply of green certificates. The updated act proposes to withdraw the existing, alternative fee, which is 300.03 PLN per MWh. The price will be related to the market price of green certificates (wind power plants) and blue certificates (biogas). The proposed fee is at 125% of the last year’s average price of the certificates.

It turned out that in practice the green certificates did not work as an instrument in the support scheme for medium enterprises that invested in renewable energy sources. Auctions did not help much because they guarantee the purchase from a very small group of small producers of renewable energy. The result couldn’t be any different – currently that sector produces 1500 MW according to the Energy Regulatory Office. Experts are assessing that this is a significant overproduction. Today the market price of green certificates is PLN 27 per MWh. Considering the oversupply, their price dropped by 90% within a few years.

In view of the above, the goal of the amendment is to relate the one-time alternative fee (art 56 of the act) with market prices of economic rights that stem from origin certificates. The change of the one-time alternative fee will make the green certificate market more flexible and in the long-term it will achieve an important goal – lower the certificate oversupply on the market. The essence of the change is the over-estimation of long-term loan contracts for green certificates signed by entities producing electricity from renewable energy sources with subsidiaries of large energy companies.

In a support system based on certificates the green energy producers, apart from being able to sell energy, also receive a certificate for every MWh, which is an economic right and can be sold – either on the Polish Power Exchange (TGE), or in an individual OTC transaction. The price of the certificate constitutes support for the producer. The system has an important rule, which says that companies, which sell energy to end users have to have a number of certificates suitable to the scale of the sale. This means they have to either buy the certificates or pay the alternative fee.