Climate Policy Energy Environment 12 June, 2017 9:00 am   
COMMENTS: Bartłomiej Derski

Green Energy Production in Poland is Decreasing

“After a brief increase, green certificates which were supposed to support the production of clean electricity went down again. Their price dropped to the lowest level in their 12-year history. According to a report published by this situation will not change quickly, despite the fact that we are producing less and less electricity from renewable energy sources,” writes Bartłomiej Darski, editor of WysokieNapię 

The goal of green certificates was to make even the differences between high costs of construction and utilization of windmills or biomass power plants, and low electricity price on the market. This way, within a decade, the government encouraged investments in the sector worth dozens of billions of PLN.

However, the current certificate price does not cover the investor costs of credits and power plants maintenance. According to Agencja Rynku Energii (Energy Market Agency, ARE), the majority of wind turbines and half of water power plants generate losses. Whereas biomass plants have to limit production.

On the Tuesday session of the Polish Power Exchange (TGE), the green certificates were sold at PLN 24.52 per MWh. This is a few dozen Polish groszy less than the previous lowest price from last April. At the same time, bilateral transactions (which usually ensue from long-term contracts), were settled at over PLN 90 on average. Both prices are a far cry from the price maximum, which was PLN 285 six years ago.

The prices remain low because we produce more “green” electricity than the government expected. It is the government who decides about the demand for certificates by issuing regulations. estimated that in 2016 we produced 22 TWh of electricity, for which green certificates should be granted. However, the demand for the certificates was at a little over 17TWh.

According to analyses conducted by, this year will be the first in a decade when the production of electricity from renewable sources will drop to a little under 22 TWh. The green certificates will cover 20 TWh. However, this year’s demand will be under 19 TWh, so the over-supply will be sustained. Consequently, the surplus of certificates, which was at 25TWh in May, will increase. This simply means that today energy sellers could actually cover the entire 2018 with the overflow.

The surplus of certificates will start to drop only in 2018. This will be caused mostly by the decreasing production of energy from biomass and some kinds of biogas; as well as this year’s renewable energy sources auction, which will transfer the winners from the system of green certificates to a new model of support, which will be more stable. This will happen provided that the government will maintain the regulation that assumes a stable demand increase for certificates. However, even in the best case scenario, the surplus will disappear only after 2020.

This is important because in line with the government’s assumptions and EU obligations, by then the production of energy from renewables should increase to over 32 TWh. However, nothing indicates that the actual generation of “green” power in Poland will exceed 22 TWh before the end of the decade. Until a few years ago, the government assumed that in order to fulfill the 2020 EU obligations (15% of energy from renewables in electricity production, heat and transport), we will significantly increase cogeneration of biomass with coal at the end of the decade. The problem is that considering today’s prices of green certificates, this would mean burning money of state-owned energy companies. The patching of such a big hole would cost from PLN 1 to 2 billion, which the companies would not recover in any support system accepted by Brussels.