Wind to disperse emissions and decrease electricity bills

by dbereza

Wind to disperse emissions and decrease electricity bills

by dbereza

by dbereza

Money for compensations to electricity bills need not be frittered away. They could be used to transform the system towards lower emissions. However, this requires the use of higher volumes of energy from renewable sources, including wind – the least expensive today.

The impact of the several thousand wind turbines with total installed capacity of approximately 5,8 MW present in Poland is already apparent. This is because wind, being a zero-variable cost source, for it does not incur the costs of, for instance, fuel, is used in the system first, before coal-fired or gas-fired plants, and before imported electricity.

The more wind energy, the lower the prices on the wholesale market

This directly translates into electricity rates for entrepreneurs, and subsequently into household tariffs.

“If the price of electricity contracted for 2019 at the beginning of December 2018 amounted to 277 PLN/MWh, with an additional 2 GW of wind capacity in the system (and other factors unchanged) the forecast wholesale price for 2019 would amount to 265 PLN/MWh, i.e. would be lower by 12 PLN/MWh. With 4.5 GW of wind capacity more the wholesale price would decrease by 27 PLN/MWh, to 250 PLN/MWh,” Janusz Kurzak from Enteneo calculates.

In accordance with estimates of the Polish Wind Energy Association, the total cost of electricity in the 2020-2040 period could be lower than in the EPP2040 scenario by PLN 25 billion and amount to PLN 1.44 billion. The amount saved is an equivalent of almost six months’ of electricity consumption in the entire Polish economy. In unit terms the savings amount to approximately 10 PLN/MWh over the entire period, and in the 2030s (when the draft EPP2040 provides for decommissioning of onshore wind farms and construction of a nuclear power plant) even as much as 30 PLN/MWh.

Wind energy may also be an effective tool to improve emission performance of the Polish economy

As demonstrated by estimates made for PWEA, atmospheric carbon dioxide emissions would decrease from the current 125 million tonnes per year to 94 million tonnes in 2030 and, in long-term perspective, to 91 million tonnes in 2040.

“Reduction by 30 million tonnes of CO2 emissions could be compared to one-year shutdown of the largest coal-fired power plant in Europe, i.e. Bełchatów Power Plant,” explains PWEA President, Janusz Gajowiecki.

Such an emission reduction would enable the achievement of the targets assumed in the so-called winter package, which will pave the way for the development of the energy sector in the next decade in the entire European Union. In the PWEA scenario the emissions will decrease from the current more than 800 kg CO2 per MWh of produced electricity net to 475 kg CO2 per MWh in 2040 and 380 kg CO2 per MWh in 2040. “Such emission levels are comparable to generated by gas-fired units,” Janusz Gajowiecki compares.

Implementation of the PWEA scenario will enable faster fulfilment of reduction commitments compared to the scenario laid down in the draft EPP2040. In the draft the emission still amounts to 640 kg CO2/MWh in 2030, and the total emission in the 2020-2040 period is higher by 16 percent, i.e. 336 million tonnes.

Assumptions to the PWEA scenario:

  1. Elimination of administrative obstacles to onshore wind development

Elimination of the minimum distance principle stemming from the Wind Energy Investments Act. The goal is to expand onshore wind farm capacity to 10.3 GW in 2024 and eventually to 12.3 GW in 2030.

  1. Offshore wind farm development

PWEA recommends to develop the potential of offshore wind farms in the Baltic Sea to 6 GW in 2030, 8 GW in 2040 and eventually as much as 12-14 GW.

Access to inexpensive and price-stable electricity is desired by all final customers. It is also one of the key factors considered by foreign investors interested in building their plants and data centres in Poland. They open the opportunity to improve the competitiveness of the economy and create innovative jobs.

The industry wants less expensive energy

Today, industry wants to build own, large-scale wind sources in the proximity of production plants and proposes to abandon the distance principle stemming from the Wind Energy Investments Act. Such sources would be the most effective in reducing CO2 emissions and would decrease system operation costs.

“Long-term power purchase agreements concluded directly with renewable source operators are already in common use in the USA.  In Europe the leader in signing such contracts is the British industry,” says Karol Lasocki, partner in K&L Gates Jamka law firm.

“Small and large industry needs stable and competitive energy prices on the European market, which can be provided by the least expensive today – in terms of production costs – onshore wind farms. Following the first corporate PPA signed in Poland between a wind farm and Mercedes-Benz Manufacturing Poland there have been many inquiries from similar electricity customers: from representatives of heavy industry to small and medium enterprises as well as local governments. In total the entities are interested in purchasing 3-4 TWh of green electricity per year, what corresponds to 5-7 percent of annual consumption in the entire industry in Poland,” says Hubert B. Kowalski, President of VSB Energie Odnawialne Polska sp. z o.o.

“This trend cannot be reversed. A new “megatrend” in the development of the least expensive RES has already begun – large-scale corporate PPAs. Therefore, the industry calls for including such PPAs in the Energy Policy of Poland until 2040. This will give industrial customers the freedom in selection of the power supply for their industrial plants and to opt for large-scale RES,” Huber Kowalski added.

“Wood and steel industry players with yearly consumption from 300 MWh to as much as 20 GWh are interested in the purchase of electricity directly from wind farms even in 15-year contracts. This would enable them to decrease electricity bills by 30 PLN/MWh, to 245-250 PLN/MWh, which is less than the current wholesale prices. Today, final customers pay approximately 370-380 PLN/MWh for electricity (tariff group B) or as much as 400 PLN/MWh (tariff group C),” explains Marek Przychodzień, President of EIDOS, representing a purchasing group of small and medium enterprises from Małopolska and Śląsk (with total consumption of 100 GWh/year).

The rapid increase of wholesale electricity prices for 2019 and bankruptcy of one of alternative vendors resulted in the need to seek a substitute offer. Eventually, a vendor offering rates 30 percent higher than this year was selected.

“The offer addressed to prosumers will not be a remedy to excessive bills of such enterprises, for their consumption is too high. On the other hand, such consumers are not rated energy-intensive, subject to tariff group B, hence are not the future beneficiaries of compensation programmes established by politicians,” Marek Przychodzień concludes.

Below you will find a gallery with a presentation delivered on a press conference organised by PWEA (click and go down the page to view)