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Current national targets under Directive 2001/77/EC run until 2010, but
only cover electricity. New Directive are working their way through the
European Parliament to add heating and cooling and to increase the
electricity and biofuel targets for 2020. The full EU Renewable Energy
“Roadmap” document is available online.
To Poland, these changes will mean several things. The current Polish
Energy Law provides for renewable energy consistent with the EU’s
definition (geothermal, solar, biomass, biogas, wind and hydro) and has
set goals for each year out to 2010 at which point the goal is 7.5% of
electricity from renewable sources. Unfortunately, progress in meeting
the renewable electricity obligation (“RES-E” for renewable energy
sources-electricity) has been slow. In 2007, the goal is 5.1% and the
current estimate of actual use for the year is 3%. The Polish approach
has been to use quotas for electricity distributors, called a Renewable
Profolio System “RPS,” applying the national targets to each
distributor with over 100,000 customers. Poland’s Energy Law
technically covers heating plants with a renewable energy obligation as
well (unique in the EU), but the law provides that prices cannot be
more than 5% of the previous year’s price for traditional energy. These
policies will lkely be re-opened by the EU changes later this year.
Enforcement in Poland is done through the use of “green certificates”
approved for producers by the government that can be sold or traded. So
the producer can theoretically get his electricity price plus the value
of the certificate. This would amount to roughly three times the
straight electricity price (the price of the traditional electricity
plus two times that amount from the certificate value set by law).
However, the law is weakly enforced and Poland allows “substitution
fees” to be paid in lieu of using green energy. These amount to the
price of the certificate, but do not involve having the headaches of
trying to locate, hook-up and sustain the equivalent green energy
contribution. It appears that most electricity distributors are using
substitution fees or risking the penalties of 130% of the green
certificate price for noncompliance. Only Poland uses the “substitution
fees” in RPS: Sweden uses a similar system with 150% penalties and
additional CO2 taxes on traditional fuels. The effective economic
incentives for green energy in Poland appear to be only about half of
those in Sweden.
To meet renewable electricity targets for 2010 and beyond, Poland will
rely upon increased wind and biomass power under the government’s plan.
Wind energy will hopefully grow to provide 29% of RES-E and biomass
some 53% by 2010. While a new wind farm will come online this year,
developments in that sector seem to also lag behind the projected
targets. Biomass is also growing significantly, but not fast enough.
Most Polish biomass use is now largely for heating in smaller district
plants (which does not now come under Directive 2001/77/EC, but will be
covered by the new Directive in the works).
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The biomass that is used
for electricity is largely in industrial “captive” boilers that are not
part of the general distribution system. Only 20 out of 160 Polish
power plants over 50 MW were reported as using any biomass for
co-firing last year, according to the Baltic Renewable Energy Center in
Poznan. It appears very unlikely that many of these plants internally
reached the renewable percent target. Co-firing requires modifications
of the power plant, record-keeping, and other burdens which have made
it expensive to do in Poland, despite its relative cost-effectiveness
elsewhere.
Changing this picture to meet even more aggressive RES goals after 2010
will require changes in the Polish law and a more aggressive
enforcement posture. To energy consumers, prices are expected to rise
to accommodate the more expensive renewable energy sources. Experience
in Western Europe and the United States, where RPS obligations are in
place in a majority of the states, suggest that these price changes
will not be drastic, especially since they only affect the RES percent
of the electricity distributed.
To investors and others involved in project development, renewable
energy will remain one of the growth sectors of the Polish economy and
should increasing be attractive for investment and entrepreneurial
opportunities.
The author is is involved in project development for bioethanol, coal gasification, wind energy and biomass in Poland.
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