Currently the following sources of financing for renewable energy projects are available:
The Stork Program – financing of distributed, renewable energy sources (RES):
Besides aid sources mentioned above, the investor may also apply for other incentives related to a broadly defined energy sector, in particular:
Incentives obtained by the investors in Poland are subject to Polish and EUstate aid rules which determine, among other things, the maximum level of support, beneficiaries and the detailed conditions of support.
Remuneration for renewable energy produced: the average market price of PLN163.58/MWh for the last year (2014) plus the market value of green certificate (certificate of origin) granted by the Energy Regulatory Office.
Rates (2015): 14 percent of all energy produced (floors relate to all types of renewable energy). The quota is increasing in stages and will reach 15 percent in 2016 to 20 percent in 2021.
The Act of Energy Law enacted on 10 April 1997 and the respectivedecrees from the Ministry of Economy, which will be subject to several amendments in 2016. Moreover it should be noted that beginning in 2016, the provisions of the new Renewable Energy Sources Act (RES Act) will enter into force.
The following is a summary of key changes:
Green certificates scheme: Current RES law is based on the support scheme in the form of green certificates and stays in force until the end of 2035 for all operating wind farms and projects completed before implementation of the new RES law.
Electricity producers may apply to the president of Energy Regulatory Office for green certificates (also known as certificates of origin), if they have produced renewable energy or if they are required to pay substitute fees calculated in line with the energy law. The green certificates are similar to securities; they are transferable and tradable on the regulated market (for example, the Polish Power Exchange) or within the over-the-counter market. Generally, if energy producers donot achieve the minimum level of share of renewable energy (for 2015 – 14 percent), they are obliged to purchase green certificates at the market (for redemption) or has to make a compensation payment. Currently the certificate’s substitution fee amounts to PLN300.03/MWh (approximately EUR70/MWh).
Sale: Electricity distributors have a legal obligation to acquire a certain amount of renewable energy generated in Poland. For the year of 2015, the above percentage limit of renewable energy will amount to 14 percent. Otherwise, the electricity distributor is obliged to buy the missing amount of renewable energy (by means of green certificates) on the market. The prices of renewable energy have been determined based on average prices of energy in the previous year. (The amount for 2014 was PLN163.58/MWh). The renewable electricity producers have priority over other producers with regards to the distribution of produced energy.
Administrative procedures: Business activity in the area of production of renewable energy is a licensed activity and requires a permit granted by the president of Energy Regulatory Office. Such a permit can be sought by an entity that meets requirements specified in the Energy Law, especially the ability to provide the financial, organizational and technical resources required to perform the licensed activity. As a rule, permission is given for the fixed term but not longer than 50 years.
Grid access: Priority access is granted over nonrenewable electricity producers. The costs of connecting to the electricity grid are determined by the actual costs incurred to construct the line. Those costs may be partially refunded to the investor, depending on the year and production capacity.
Overview of the implemented changes to the RES supporting mechanism (based on the RES Act enacted on 20 February 2015) – binding from 2016: New RES Act (which is the implementation of the provisions of Directive 2009/28/WE into thePolish law) is based on the reverse auction system, providing support in form of a feed-in tariff for the auction winner through 2035 (and 2040 for off-shore farms), mainly in force from 1 January 2016.
Key provisions for existing installations — modified green certificates system: The green certificates system shall be available for the installations in which the energy has been produced for the first time before 1 January 2016 and forinstallations which have been modernized after that date (under specific conditions described in the RES Act).
The green certificates shall be granted to the RES energy producers for15 consecutive years from the first production of the energy confirmed by the relevant green certificate, however, no longer than until 31 December 2035.
The certificate’s substitution fee will be frozen at the current (2014 – 2015) level, that is, PLN300.03/MWh (approximately EUR70/MWh) and will not be subject to indexation in the coming years.
Option to pay substitution fee will not be available in the event when green certificate prices fall below 75 percent of the substitution fee (PLN225/MWh or approximately EUR54/MWh).
Existing biomass co-firing installations will receive half of a certificate per each MWh produced (with an overall cap on production equal to the average amount from 2011 to 2013). By 31 December2020 the Ministry of Economy should announce a new ratio.
Hydro plants above 5 MW capacity will be excluded from the support system.All projects under the green certificates system will have an opportunity to move to the reverse auction system (within the proposed support period).
Key provisions for new installations — reverse auction system: The support system for RES installations producing the energy for the first time after 1 January 2016 shall be organized through a reverse auction system, giving fixed price for the energy (indexed by CPI on an annual basis) for 15 years until the end of 2035 (or the end of 2040 for offshore wind farms)
.Auctions will be arranged at least once a year, separately for small (installed power under 1 MW) and large (installed power over 1 MW) installations and also separately for the new (first production after winning an auction) and previous (participating previously in the green certificate system) installations. However biomass units of over 50 MW, large multi-fuel installations as wellas large hydro power plants will be excluded from auctions.
The pool of offers with the lowest prices that meet volume specification under the given auction shall qualify for the support. The annual cap for volumeand value subject to the tender(s) will be determined by the government through 31 October of the preceding year. The RES support shall depend on the installed power in the relevant RES installation. The RES operators of the installations with power lower than 500 kW will be obliged to sell energy in the declared amount at the tender price (regardless of current market conditions). The other RES operators(installed power of at least 500 kW) will be entitled to the difference between average market price and the price offered in the tender (in case the market price is lower than the price offered in the auction) payable by the Renewable Energy Settlements Operator, a State-owned company responsible for settlements of reverse auctions.
In regard to the new installations, the auction mechanism entails theintroduction of separate reference prices for each type of the renewable technology (the reference priceswill be set each year by the Minister of Economy, 60 days prior to the relevant auction). As for the previous installations, the reference price shallbe calculated as a sum of (i) the average market price of energy in the last quarter (published by the President of URE)and (ii) the average price of the green certificates for years 2011–2013 (i.e. PLN239.83). Tenders submitted during the auction in excess of the reference price will be automatically rejected.
The winning party of the auction will have to start production of electricity within approximately two months regarding the previous installations and within 48 months regarding the new installations (for solar energy within 24 months and offshore wind farms within 72 months) under penalty of losing the RES support for 3 years.
A portion of costs of the system will be charged to end customers, via a new RES fee added to distribution fees (approximately PLN2.51/MWh in the first year of the auction system).
The provisions of the new support system for RES introduce a limit to the state aid. The total value of support granted under these provisions taken together with any other state aid shall not exceed the difference between the value of the volume of electricity generated by the installation calculated by multiplying that volume by the reference price and the value of the same volume calculated by multiplying it by the average market price announced by the President of URE valid as of the day of the submitting of an offer in a tender.
The state aid includes: a) a difference between revenues earned from tenders and the equivalent of revenues calculated based on the average market price announced by the Presidentof URE, b) revenues earned from certificates of origin, c) tax reliefs, and d) other investment-related aid.