This article was published in Gazeta Wyborcza
If you are not going to produce electricity for your own needs but rather want to make a profit from selling electricity, you can obtain stable and long-term support through the auction scheme which has been in place since 2016.
The principles of the auction scheme are set out in the Renewable Energy Sources Act (“RES Act”). In this scheme, the support depends on whether the producer wins an auction organized by the President of the Energy Regulatory Office (“ERO President”). In such an auction, the producer makes a bid which includes the amount of electricity it intends to produce in its installation over the period of time for which the auction is organized, and the price at which it wants to sell the electricity. The auctions are organized separately for different RES technologies and depending on capacity of the installation, as so-called auction baskets. For instance, PV installations with an installed capacity of no more than 1 MW and small wind power plants. On the other hand, PV installations with a larger capacity are placed in the auction basket together with wind power plants with a capacity of more than 1 MW. In an auction, the winning bids are those with the lowest prices, until the amount of electricity set out in the Regulation for a given basket has been exhausted. By winning the auction, the producer gains a maximum period of 15 years during which it can receive support. How the support will be used depends on capacity of the PV installation. Those with a lower capacity, up to 500 kW, sell electricity to the so-called obliged suppliers, i.e. electricity trading companies in a given area, at the price that a given producer offered in the auction. Installations with a capacity of more than 500 kW must find customers who will buy their electricity on the market and sell it at the price which the customer is willing to pay. If this price is lower than the price offered by that producer in an auction and, consequently, the producer’s revenue is lower than the revenue it would earn if it sold the electricity at the auction price, the producer is entitled to financial support. The amount of this support, however, is not a simple difference between those revenues, but it is calculated in such a way that it takes into account the difference between the revenue that the producer would earn by selling electricity at the auction price and the revenue calculated using the average market price announced by the Polish Power Exchange. This difference, called the “negative balance”, is paid by the company Zarządca Rozliczeń S.A., acting as the so-called renewable energy settlement operator, on a monthly basis, at the request of the producer.
The condition for admission to an auction is to pass the pre-qualification procedure and obtain a certificate of admission to an auction. This certificate is issued by the ERO President at the request of the producer. In the course of pre-qualification, the ERO President verifies the state of preparation of the project. For this purpose, the producer must present, among others, a final and binding building permit, grid connection conditions obtained from the local power system operator, and must submit a list of plots of land on which the PV installation will be located. After positive verification, the ERO President issues a certificate of admission to an auction, which is valid for 12 months. Yet another condition is to pay into the ERO President’s bank account a deposit of PLN 60 per kW of capacity of the planned PV installation or provide a bank guarantee for the same amount.
The auction scheme is not only about the right to receive support paid out of the funds obtained from the customers, but also about the producer’s obligation to start the production and sale of electricity within 24 months from the day of closing the auction session and its obligation to produce the amount of electricity which it has undertaken to produce in its bid submitted in the auction. Failure to meet the deadline results in a loss of the right to receive support. The performance of the latter obligation is assessed after three calendar years, which allows for mitigation of the effects of e.g. less sunny year. If during such a period the producer produces less than 85% of the amount of electricity it declared in the auction, the ERO President will impose a fine in the amount of the difference in the production volume multiplied by half of the price offered by that producer in the auction.
The next RES auctions for PV installations are scheduled for 26 November 2020 (PV installations with a capacity higher than 1 MW) and 3 December 2020 (PV installations with a capacity not higher than 1 MW). Detailed information about the auctions, conditions of participation in the auctions and auction rules for auctions to be organized in 2020 is available on the website of the Energy Regulatory Office (www.ure.gov.pl).