The change is viewed positively by many investors, as prices for green certificates used in the current system have plunged this year, complicating financing. Project sponsors are increasingly comfortable with competitive auctions, already used for assigning green energy tariffs in various countries.
"It was a challenge to get wind farms operational under the old system, and the price for green certificates has been declining, so we generally welcomed the change," said Andreas Challot, Wpd's head of international project development.
"It seems the [new] structure is transparent and bankable." Challot expects Wpd could bring at least 60MW of wind projects to the first auction, depending on timing and other tender details.
But, by mid-November many of these details were still lacking. According to draft legislation, a fixed tariff — using the contract for difference mechanism — will be assigned in 2016 for renewable projects providing forecast power generation totalling 50TWh over 15 years.
About 23TWh of this, or 1.5TWh a year, will be assigned to projects with 1MW-plus capacity producing less than 4,000MWh/MW. This part of the auction process is expected to be dominated by onshore wind and to add up to a guaranteed tariff for around 600MW.This is in line with expected capacity growth in 2015, when cumulative capacity should hit about 4.5GW. Next year, close to nothing should be added as legislation does not assure incentives for projects commissioned after 31 December that have not won an auction.
Wojciech Sztuba, a partner at financial advisory firm TPA Horwath in Poznan, expects keen competition in the first auction and prices around PLN 300/MWh (€70/MWh), well below the PLN 385/MWh onshore wind cap in the draft legislation. There is no bidding floor. The Polish Wind Energy Association is worried investors could underbid and projects will not be built as a result.
The new conservative Polish government, which has made its pro-coal stance clear, adds a further uncertainty. "I wouldn't be so worried about the first auction," said Sztuba, noting the process is already advanced and the government faces other priorities. "It will be more a question of the second and third."
Italy's ERG Renew has 42MW of operational Polish wind farms and will bring another 40MW online by the end of the year. CEO Massimo Derchi says confidence in the robustness of the Polish market framework has declined over the past 12 months.
Whether the company continues to invest in Poland will depend on the success of auctions, measured by the continued addition of a significant amount of capacity each year and remuneration slightly above the levelised cost of energy. "That would convince strategic investors like us to be confident and keep on investing", he said.
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