Ministry of Climate and Environment submitted for public consultations the draft Regulation adjusting the quantitative share of the volume of electricity stemming from cancelled certificates of origin confirming the production of from renewable energy sources in 2023. Notwithstanding industry calls, the proposed quantitative share of the volume of electricity stemming from cancelled certificated of origin has been decreased from 18.5% in 2022 to 10% in the 2023 plan. This means a collapse of the green certificates market and the end of green transition in Poland — Polish Wind Energy Association alerts.
Ministry of Climate and Environment proposed a substantial decrease of the RES obligation in 2023 for green certificates — to 10% (from 18.5% in 2022). PWEA and other entities indicated the need for 16% to maintain the supply of and demand for green certificates at a stable level. MEC claims there is a clear need for a change of benchmark for the specification of the obligation in question by Minister for Climate and Environment. Until 2021 the key factor in that respect was the strive to eliminate oversupply of certificates of origin, observed in the recent years. However, the purpose of the Regulation in questions is to maintain a relevant level of revenue of RES producers participating in the scheme in question while limiting the burden for end customers, the Ministry’s document claims.
Today, the certificate of origin market is stable. Implementation of the proposed changes will result in a collapse of the market (by substantially limiting the demand with unchanged supply), what will cause problems for many producers of RES electricity (primarily from wind). Implementation of the proposed changes will result in skyrocketing oversupply of certificates that cannot be reduced before the end of the scheme without increasing the obligation again. Plainly speaking, such changes distort prices on the market and cause its unpredictability.
“In this scenario the oversupply in 2023 will increase twofold, and by 2024 — almost threefold, reaching more than 20 TWh (and almost 27 TWh during peak in 2026). This means that to balance the scheme in the long term we need to eliminate oversupply in the short term at the end of the scheme’s lifetime, what would entail substantial increase in costs for final customers. This is a sentence for the future of the RES industry, clearly demonstrating the unpredictability of investment regulations in Poland,” said Janusz Gajowiecki, President of the Polish Wind Energy Association.
Polish Wind Energy Association warned about excessive market intervention that may result in great imbalance, causing the market to collapse, just like we observed in 2015–2017. Recently, PWEA recommended to establish the obligation at the level of 16% for 2023, what would further decrease the existing oversupply while substantially limiting costs for final customers compared to the previous years. This is not the end of bad news — a proposal of amendments to the draft RES Act that additionally de-stabilises the green certificate market and increases oversupply in the future was recently published.
The statement of reasons to the proposed Regulation must be deemed incorrect — high market electricity prices will not compensate revenue lost due to the collapse of the green certificate market, for majority of investors have signed long-term PPAs with prices substantially different from current PolPX spot prices.
The government’s market intervention affecting operating installations will provide a negative message for investors intending to enter Poland as well as entities that already made their investment decisions. The proposed changes demonstrate that the Polish market is unstable and regulated in an unpredictable manner, and financial surplus used by investors to repay debt may collapse at any time.
“At a time when as a country we need the highest possible inflow of RES investments, in particular in wind energy, the government sends a message: We will not respect any market rules. Undermining the operation of more than 6 GW of wind capacity in Poland is completely incomprehensible, in particular given the threat to the country’s security. Currently, Poland faces the need to accelerate investments in renewable sources that guarantee energy security and independence from external fossil fuels. The proposed solutions breach the investors’ accrued rights and may further increase problems with acquisition of investment capital for such projects,” added Janusz Gajowiecki, President of the Polish Wind Energy Association.
Ensuring long-term stabilisation of the green certificate market by maintaining certificate of origin prices at an acceptable level while gradually limiting the oversupply is key. Such an approach will eventually allow for closing the green certificate support scheme without further complications and losses for operators of installations participating in the scheme, and will prevent excessive burden for final electricity customers.