We know reference prices – RES auctions 2019

In our most recent article, we described how to prepare for the coming auctions and today the auctions are even closer. We already know reference prices for 2019. The Energy Minister, in its regulation of 15 May 2019 on reference prices of electricity from renewable energy sources in 2019 and periods applicable to producers who won auctions in 2019, set auction prices, among others, for wind turbines and solar systems.

Minister’s regulation and amended RES act

The Energy Minister’s regulation comes into force 14 days upon adoption, which means the new reference prices became effective on 13 June 2019. The maximum period during which RES systems will be supported to the extent specified in the regulation is 15 years. This is another step that is moving the RES industry closer to the moment when the President of the Energy Regulatory Office announces RES auctions.

Legislative works have also been initiated to amend the RES act. The Government Legislation Centre has recently published, on its website, a draft dated 4 July 2019, which is now being processed by the parliamentary Legal Committee. The draft of the amended act on renewable energy sources and selected other acts also provides for a maximum amount and value of electric power from renewable energy sources which may be sold through auctions in 2019, which is another essential component (in addition to the reference price regulation) for organising the auctions. Once the parliament adopts the amendment and it comes into force, the Energy Regulatory Office President will be able to announce the RES auctions still this year.

According to the justification of the draft of the amendment act, the government expects new power volumes to grow by a total of 3,414 MW from various types of RES, with onshore wind turbines and solar systems holding the major share. Given that and considering the reference price rates, the forthcoming RES auctions will be dominated by the systems using energy of the Sun.

Prices for wind turbines and solar systems

Regulation of 15 May 2019 specifies reference prices for installations existing today and those to be deployed after winning the RES auction. It also sets the maximum prices for upgraded systems. Undoubtedly, the wind power technology is the most popular one in Poland. Photovoltaic systems have recently been gaining a stronger and stronger position in Poland’s RES energy mix. This is one of the reasons why it is worth looking more closely at the prices of these technologies.

According to the regulation of 15 May 2019 the reference price for photovoltaic systems of over 1 MW will total 365 PLN/MWh, while for sources of up to 1 MW – 385 PLN/MWh. These are better (higher) prices than those presented in the draft of the reference prices regulation published in late 2018. Then, they totalled 350 PLN/MWh for systems of over 1 MW and 370 PLN/MWh for systems of up to 1 MW, respectively. Nevertheless, we are seeing much lower reference prices compared to past years, despite the increase of prices of electricity from conventional sources. The Energy Ministry concluded that if the prices of solar systems are dropping, the rates of reference prices should be reduced as well. For solar systems of over 1 MW, the reference price in 2018 was 400 PLN/MWh, in 2017 – 425 PLN/MWh, and in 2016 – 445 PLN/MWh, while for systems of up to 1 MW the reference price in 2018 totalled 420 PLN/MWh, in 2017 – 450 PLN/MWh, in 2016 – 465 PLN/MWh, respectively. In 2019 the maximum prices for wind turbines will total: 285 PLN/MWh for systems of over 1 MW and 320 PLN/MWh for systems of up to 1 MW. In past years, for wind turbines of over 1 MW the reference prices equalled in 2018 – 310 PLN/MWh, in 2017 – 320 PLN/MWh, in 2016 – 300 PLN/MWh, while for turbines of up to 1 MW they totalled in 2018 – 350 PLN/MWh, in 2017 – 350 PLN/MWh in 2016 – 385 PLN/MWh.

Participation in auctions

As the 2019 reference prices regulation has been issued and given the fact that legislative works on the draft of the RES act amendment are fairly advanced, one should expect that the RES auctions will be announced soon. To participate in the auction, one must first – in the case of projects planned for execution – complete the prequalification procedure before the Energy Regulatory Office President and obtain a statement of approval for auction participation. The prequalification procedure is initiated by the investor’s application. It is completed once the auction participation approval statement is issued. Such a statement is valid for 12 months upon issue, which means that the investor will be allowed to submit offers in the auctions during the statement’s validity period.

Experience shows that the auction participation approval statement is the easiest to obtain prior to the announcement of the auctions. One then does not need to undergo a prolonged statement issue procedure resulting from the overflow of applications submitted to the Energy Regulatory Office. What should be included in the application has already been presented on our blog in this article.

Author: Piotr Szwarc,Lawyer, renewable energy expert, CCLaw – Creative Consultants Law Firm