According to information contained in the latest Database of Photovoltaic Projects in Poland, more than 10 GW of PV projects are currently under development in the market. However, almost half of the projects have building permits - just under 5 GW in total. The database includes projects of various capacities - both those with a capacity of about 1 MW and larger farms. In the context of the upcoming RES auctions, which will take place in the first days of June, this information is important for all those interested in participating in this support system. For large projects (above 1 MW), a volume of 800 MW has been allocated in the RES 2021 auction and for small projects (below 1 MW) a volume of 1000 MW has been reserved.
The dynamics of the connection conditions issued has significantly accelerated in recent quarters. Throughout 2019, connection conditions were issued for projects with a total capacity of 1.7 GW and in 2020, almost 5 GW were already issued. However, in the first quarter of 2021 alone, the four largest distribution system operators issued connection conditions for 2.8 GW of projects - this is more than the total number of connection conditions issued over 10 years (between 2010 and 2019)!
Building permits are issued at a dynamic depending on the date of the RES auction. This is particularly the case for projects with a capacity of about 1 MW. For this type of projects, the highest number of building permits is issued a month or two before the auction. However, already now, one month before the planned RES auction, it can be concluded that the "small basket" will be filled and the competition will be high again. This is due to the fact that in the December 2020 auction the oversupply of projects was doubled and further new building permits have already been issued.
In the database Photovoltaic Projects in Poland, half of the projects are those with a capacity of about 1 MW. This is due to the fact that RES auctions developed mainly these small projects. Volumes for the "small basket" were significant and investors took up all available capacity. In contrast, the "large basket" was dominated by wind projects and photovoltaics could not compete with them. It was only in the December 2020 auction in the "large basket", intended for wind and PV projects above 1 MW, that PV managed to occupy about half of the allocated volume. Currently, both small and large farms are being developed in the market - in terms of capacity, large projects account for half of the market. Most large projects are developed as farms with a capacity of over 50 MW.
More detailed information on the photovoltaic project market in Poland in the latest IEO database:
- Monitoring of the implementation in Poland of the directives on renewable energy sources (RED II), EU regulations on the production of heat and electricity from RES and related directives (Electricity Market Directive, Energy Efficiency Directive).
- Monitoring the amendment to the Renewable Energy Sources Act
- legal updates, planned amendments and implementing regulations
- analyses, interpretations, expert opinions
- the impact of regulations on the profitability and formula of investment execution and the competitiveness of particular technologies
- specific arrangements for prosumers in the service and industrial sectors
- Legislative monitoring of the RES sector
- EU policy on the implementation of the EU climate and energy package, agreeing on and implementing the European Commission's "New European Green Deal", monitoring the implementation of the State's energy policy
- Monitoring of RES grant schemes for 2020-2021 from the point of view of the possibility to take advantage of competitions for RES investments, including ESCO schemes (self-producers and energy communities) and competitions for R&D projects
- Monitoring the development of investment projects and their implementation
- Current statistics on the development of the national RES market and monitoring of investment potential in wind and photovoltaic projects
- IEO's own analyses, forecasts and recommendations for the RES industry:
- RES auctions: including: list of companies that have won the auctions, selected auction projects,
- PPA - Corporate Power Purchase Agreement (contracts for direct sale of energy from RES installations),
- market for certificates of origin,
- electric energy prices,
- changes in the electricity and heat tariff system plus fixed and variable tariffs for companies (business perspective),
- electricity price forecasts,
- green investments in the heating market to adapt to EU directives, e.g. SDH - solar thermal systems for heating companies, gP2H - Green Power to Heat, which means unbalanced electricity from RES, in particular from wind power plants, whose generation profile is similar to that of heating,
- ready-made innovative RES solutions for implementation in energy systems.
- Current, independent political commentary
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Investors' interest in wind projects in Poland versus 10H Act
The latest IEO data indicate that the entry into force of the so-called 10h Act has essentially blocked the development of new wind energy projects in Poland. Since the Wind Power Investments Act, which requires the location of wind turbines at a distance of not less than 10 times their total height, went into effect in 2016 practically no completely new green field wind project has received a building permit. Projects only change their owner, sometimes insignificant changes are made to them, which only statistically confirm that the development activity is continued.
It can be noted that only those wind farm projects that obtained a building permit before the restrictive regulations came into force had a chance to be implemented (from the stage at which they had been in 2016). Only these investors have a chance to develop these projects using 15 years of support from winning RES auctions.
A common question asked by market participants is how many potential wind projects with a valid building permit can be submitted to this year's auction? Has the wind energy market been completely blocked?
Answers to these and other questions can be found in the latest August update of the Wind Projects in Poland database by the Institute of Renewable Energy (IEO).
According to the IEO, there are still 1.4 GW of wind projects on the Polish market with a valid building permit obtained before the entry into force of the 10H Act. This year's auctions are the last call for these projects to obtain financial support and to complete the investment process within the auctions. A large auction for wind and photovoltaic projects above 1 MW is planned for this year, in which 1.5 GW of wind and photovoltaic farm projects will get a chance to receive government support. So far, in two RES auctions (in 2018 and 2019) for large farms, wind projects with a total capacity of about 3365 MW have won, of which over 2 GW of projects are under construction.
The situation is slightly better when it comes to the successful application for connection conditions. In the Wind Projects in Poland database, wind projects with a total capacity of 7.68 GW have connection conditions issued.
Despite the stagnation in applying for new building permits, the projects are at various stages of progress. Some have already participated in auctions in 2018 and 2019, and those with "old" building permits are likely to participate in this year's auction. However, this is not the case for projects whose owners did not manage to obtain a building permit before 2016. On the Polish market, such projects, which have only grid connection conditions issued, are almost 3.2 GW. In the last three years, developers have been active in obtaining connection conditions. New connection conditions received both - projects with old building permits, as well as new projects. In 2020, 23 projects with a total capacity of 261 MW received connection conditions.
The largest capacity of wind projects is still present in the Pomorskie, Zachodniopomorskie and Wielkopolskie Voivodeships. In these voivodeships there are 57% of wind projects, while in eastern Poland the development activity has practically ceased.
A waste of the industry's potential and capital committed is the lack of developers' efforts to obtain a building permit for some projects with already issued grid connection conditions despite the 10h Act. In this group of projects with the capacity (according to the IEO database) of 1.8 GW you can certainly find those that will meet the 10H rule using the latest technologies. Smaller projects (several MW) consisting of new, efficient turbines, economically still win with photovoltaic projects in auctions. They can be implemented in the PPA formula, or in a self-producer's business model, where they could work better than photovoltaics. The under-use of this potential and the capital already committed is difficult to understand from an economic point of view, even if the industry is waiting for the 10H rule to be unblocked. The most regrettable thing is the time that is escaping, which is objectively the best for developed wind energy technology. - Grzegorz Wiśniewski, CEO of Institute for Renewable Energy.
We invite you to learn more about the IEO database "Wind projects and RES auction winners Database - August 2020".
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Based on the database of photovoltaic and wind companies "RES Auctions Winners 2016-2020"
In Poland the market of solar farms up to 1 MW is developing rapidly thanks to the polish auction system. Not surprisingly, competition in the "small basket" for wind and photovoltaic projects up to 1 MW was fierce. According to the announcement of Energy Regulatory Office, 590 producers joined the auction with a total of 1618 bids, and all the bids submitted were from photovoltaic only. The auction was resolved in favor of 235 producers, which submitted a total of 747 bids with the lowest price. The minimum energy price was 222.87 PLN/MWh - for comparison, in 2019 the minimum price was 269 PLN/MWh. On the other hand, the maximum price at which energy was auctioned in 2020 was 268.88 PLN/MWh - in 2019 it was 327 PLN/MWh. This shows that the high competition and the decrease in the prices of photovoltaic modules significantly affect the decrease in the auction prices.
Renewable energy auctions are the last call for wind farm projects blocked by polish “10H Act”. So far, the wind energy-dominated "large basket" (for projects above 1 MW) auction in 2020 succumbed to cheap photovoltaic technology. The 2019 auction, in which 3 PV farm projects won in this basket, was only the beginning of the PV "revolution" in this basket. In the 2020 auction, PV projects equalled the number of bids and capacity of wind power plants. In order to win the auction, PV investors went well below the reference price - the reference price for PV was 340 PLN/MWh, while the maximum price at which energy was sold in this auction was almost 100 PLN/MWh lower (249.90 PLN/MWh). The distribution of auction prices for the large basket of winning projects according to Energy Regulatory Office data (prepared by IEO) statistically confirms the thesis that wind and solar projects markets are similar - figure below.
Special purpose companies (SPC) held by holding companies as Windbud, Windpower Poland, Polenergia, QAIR Polska or OX2 won in the auction with wind farm projects, whereas SPC held by Green Genius, Columbus Energy or R.Power won with photovoltaic projects.
Among holding companies with the highest number of winners there are also EDP Renewables Polska and V-Ridium (formerly Geo Renewables), which are operating on both markets and have submitted both wind and photovoltaic projects to the auction.
If you are interested in purchasing the database of the winners of previous auctions for photovoltaic and wind energy, we invite you to visit our store:
Institute for Renewable Energy (IEO) was established in 2001. It’s an independent research group, and the first private research institute in Poland with a deep knowledge of the renewable energy issues: wind energy, solar energy, biogas, biomass, energy planning, ranging from politics energy and law, economic and financial analysis, and ending with the technical issues and design.
IEO also has an extensive experience in participating as an advisor (due-diligence, assumptions and concepts of technical solutions, functionality and utility programs, feasibility studies, business plans, terms of reference for a tender, supervision and construction monitoring) in the investment processes in the area of renewable energy implemented by the company and local governments. IEO actively participates and analysis the results of two first renewable energy auctions in Poland in 2016 and 2017.
IEO since 2009, conducts postgraduate studies "Investments in renewable energy sources", trainings and conferences in the field of technology, market economics and the law of renewable energy sources for national energy companies (eg. PGE, PKP Power Engineering), municipalities, financial companies (Alior Bank BGZ, ZBP) and foreign institutions (chambers of commerce in Germany and France, energy companies).
In addition, as part of its work, the IEO completed a number of expert opinions commissioned by the Ministry of Economy, Ministry of Environment, Ministry of Regional Development and other governmental and commercial projects for business customers.