The draft amendment to the Renewable Energy Sources Act gives only apparent hopes for the improvement of the situation of the wind industry in Poland. Notwithstanding the planned 2.5 thousand MW to be contracted, the actual capacity increase following this year’s auction may be zero.

At the same time, the situation of installations already in operation will deteriorate substantially, pushing those that trusted the government on the brink of profitability.

“Wind energy installations contracted under this year’s auction will never be built. Banks will not decide to finance projects where building permits (valid only until May 2021) will expire during implementation thereof,” claims Janusz Gajowiecki, President of the Polish Wind Energy Association (PWEA).

Therefore, despite certain positive conclusions stemming from the amendment to the RES Act (including the intention to hold a large auction for new wind capacity and extension of interconnection agreements to January 2020), PWEA thinks it is impossible to revive the industry and fill the investment gap.

During the recently commenced public consultations PWEA will recommend extending the interconnection agreements (expiring in May 2019) by at least a year and extending the building permits to 2023.

PWEA recognises the consolidation of the guarantees of origin scheme by enabling the sale thereof outside of Poland. However, it also sees the need for adjustments to regulations pertaining to existing installations. The provisions proposed within the amendment to the RES Act being consulted once again strike the wind energy industry, reversing the positive effects of previous amendments, including pertaining to the real property tax.

This will be the result of the introduction of a scheme artificially lowering the price of green certificates by adjusting the so-called substitution fee, which affects proprietary interest prices.

Adoption of the proposed solutions will result in total revenues from the sale of electricity and green certificates not exceeding 312 PLN/MWh, which is just above the level observed during the slump witnessed in the second half of 2017 and at the beginning of 2018. The investors’ business plans for most wind farms assumed revenues at the level of 400-450 PLN/MWh.

“Wind farms operating in the green certificates scheme will once again face the spectre of bankruptcy. Approximately 70 percent of existing installations may have to endure the loss of profitability,” PWEA President estimates.

As demonstrated by the Energy Market Agency data, the market faced such a share of unprofitable wind farms following the introduction of regulations discriminating the wind energy industry, i.e. the Wind Energy Investments Act applicable to the real property tax in May 2016 and the amendment to the RES Act in July 2017, adjusting the substitution fee – the so-called “Lex Energa”.

“Notwithstanding the initial hopes for a new opening for the wind energy industry, we consider the draft as a destabilisation of the industry. Such a radical change to the law will once again result in a number of claims filed by investors that committed their funds on the basis of confidence in the Polish government. Furthermore, it will undermine the newly emerging confidence of financial institutions and foreign entities intending to enter into offshore wind farm projects in the Baltic Sea. This will not only result in forfeiting the opportunity to fulfill international RES commitments, but also to transform the electricity production infrastructure on the basis of inexpensive and clean electricity, following the global megatrends,” Gajowiecki concluded.