Energy Environment 31 July, 2017 9:00 am   
Editorial staff

Rączka: Changes in the Renewables act are not sufficient. Auctions are an opportunity (interview) is talking to Jan Rączka, PhD, senior advisor at Regulatory Assistance Project, on the amendments to the Act on renewables. According to the expert, auctions, a tool at the disposal of the Polish government, offer the opportunity to develop wind energy. What do you think about the draft of the so-called extensive amendment to the Act on renewables that the Ministry of Energy is working on? 

Dr Jan Rączka, senior advisor w Regulatory Assistance Project: I believe this project corrects the unfortunate decision made last year. It will not cause huge changes on the market, except for explaining an issue which previously caused controversy and exposed the business to losses.

What are the changes about?

It is difficult to talk about details, but the act reflects a certain kind of environmental policy, which has been visible since the start of this government’s term, i.e. support for those elements of the renewables sector which are manageable. The idea itself is good, but the chances to implement it are low because it is difficult to create a significant potential for installations on biomass, biogas or small hydro plants. The potential may turn out to be too small to offer a suitable volume of energy and fulfill the 2020 threshold.

Is it possible that the amendment to the Act on renewables will support the wind sector?

When it comes to the wind energy sector, this is a correction of errors made in 2015. It will not contribute to the construction of even one new wind turbine at all, but it introduces order into tax settlements for the existing wind farms. This is good, but it does not facilitate development.

What regulations should be introduced to make the development of wind farms in Poland more dynamic?

The acts don’t need to be changed because the government has a powerful tool in the form of auctions. 15-year contracts are a very impactful tool. If the government was interested in developing renewables, it could contract significant volumes of wind and photovoltaic energy, which should be used. The development of the photovoltaic sector creates huge opportunities, as it could take the burden off the energy system on hot days. Thus, not much needs to be done – it is enough to make appropriate decisions and be consistent. There are also other doable things that would bring about a lot of benefits,.I would personally recommend to use the net metering mechanism for micro-installations in the entire economy, not only in households. If this is available to small- and medium-enterprises, then it would be possible to very quickly use the market to unlock a potential, which is located close to the consumer – a factory, or a place that uses energy and thus takes the burden off the grid, increases security and efficiency. To sum up, my proposition is to use net metering for installations of up to 50 KW, whoever their user is.

How should we understand the so-called small amendment to the Renewables act, which pertains to the alternative fee. Its critics claim it destroys the green certificate system…

This amendment has three major consequences. First, it causes a sudden loss of profit based on the alternative fee for large operators of renewable energy sources. This means some of them will go bust. Secondly, the energy trading companies which signed contracts with renewable energy suppliers will no longer be responsible for the alternative fee and the obligations will be carried by the State Treasury. Third, this is yet another proof that the regulatory system is unstable. This means a certain prerogative has been taken away from the Energy Regulatory Office. Its decisions will be replaced by a different mechanism, which will have business consequences. This is a bad tactic – regulatory instability and changing regulations are lowering the chance that we will attract serious capital that will invest in our energy sector.

The alternative fee will be lowered, which means it will be slightly higher than the market price of green certificates. In result, businessmen will prefer to pay the alternative fee…

It’s true. Generally speaking, to elegantly overcome this impasse it would be best to open a big basket for installations, which were launched on the basis of green certificates and today could use the 15-year contracts awarded during auctions. The current situation is that various types of businesses, including Polish banks like BOŚ, invested large amounts to finance those installations and now they are at risk. Therefore, the conclusion is that all bills have to be paid and in the end someone will have to foot them and usually it is the taxpayer. This chaos is damaging our country’s reputation, which is still underappreciated by the government as a factor that determines decisions made by potential investors. To them this means increased risk against which protection is impossible. Meanwhile we really need investments in the energy sector and frequent and chaotic changes deter businessmen.

Inverview by Bartłomiej Sawicki