OVERVIEW - Poland’s 180-degree turnaround to green energy bears first fruits

The right-wing Polish government seems to be making a 180-degree turnaround on sustainable energy in the country and investors look eagerly forward to new renewable energy auctions later this year. Meanwhile, the winners of the 2017 renewable capacity sell-off are set to erect the first photovoltaic (PV) plants under the scheme as early as this summer.

"Now it is a very good time to invest in solar power in Poland. We held auctions for distribution of renewable energy capacities last year and the first bidders are the biggest takers," Paweł Czaus, Vice-Chairman of the Board of the Polish Association of Solar Energy (Polskie Stowarzyszenie Energetyki Słonecznej) told Renewables Now.

According to him, the country plans to add to the grid about 200 MW-250 MW from new PV plants this and next year. The current capacity is around 30 MW-40 MW, according to Czaus, but the expansion will be exponential.

It is expected that, by mid-2019, the cumulative solar capacity in Poland will be around 700 MW and soar to 1 GW by 2020.

"The task is feasible as the clean energy market is very robust in Poland now," Czaus emphasised.

Some 2,730 MW of additional renewable capacity could be auctioned in 2018, including 150 MW hydro, 1,120 MW wind, 700 MW biomass and biogas, and 750 MW solar PV, according to a summary by industry researcher ICIS. The government is planning policy changes that would allow wind projects over 1 MW, including offshore wind, to bid in RES auctions this year.

Asked whether Poland is finally embracing green energy sources, Vija Pakalkaitė, a EU Power & Carbon Markets Analyst at ICIS, told Renewables Now that the Polish government‘s proposals to amend the 2015 RES Act "represents a significant change" in renewable policy from the approach taken by the PiS government in previous years.

"The changes are likely driven by a realisation that the country remains behind on its binding 15% renewables target for 2020," she accentuated.

At the end of 2016, Poland had reached an 11.3% renewables share in gross final energy consumption, according to Eurostat.

"The draft proposes to replace the current set of seven 'technology baskets' within which auctions may be organised with a new set of five 'technology baskets'. This would force solar PV projects to compete in technology-neutral auctions with onshore wind," Pakalkaitė noted.

The Polish government late last year cancelled energy auctions it had planned to hold until the end of 2017, including an auction for PV and wind power projects exceeding 1 MW. It said that the decision was due to some changes relating to EU state aid rules that must be done to the country’s Renewable Energy Act.

SOLAR WINS

Of the 400 MW of solar power awarded in tender last year, 56 MW went to Modus Energy, the clean energy arm of Lithuania’s auto business, real estate and energy group Modus Group.

"Poland is attractive for our expansion due to the size of the market, the state's focus on the renewable energy sector development and a favourable business environment…For long, Poland was dependent on coal, however, in recent years, we see ongoing active positive discussions on renewables‘ development. And furthermore, the country has passed legislation that fosters renewables through the state system of sustainable energy auctions. Besides, the Government is further searching for means to promote the expansion of renewable energy in the country and attract more investments in the sector," Ruslan Sklepovic, Chairman of the Board of Modus Group, told Renewables Now.

Under his guidance, Modus Energy is set to invest roughly EUR 50 million in erecting 50 new solar power plants all over Poland. The first 12 PV plants will go online before the end of June and 30 more before the end of the year.

"To date, we are one of the largest solar developers in Poland," the Modus executive noted.

"Indeed, they are," Czaus, of the Polish Association of Solar Energy, confirmed.

According to the Modus Chairman, return on investment in Poland is "guaranteed" as the state itself purchases the renewable power through a flexible and investor-friendly FiT system valid for 15 years.

"We plan that our solar projects will buy off in over 10 years. If we happen to find more investment projects with a similar return in the neighbouring market, we will consider pursuing other investments of the kind," Sklepovic said.

"In implementing other projects, we expect to attract external investors as well," he added.

Modus Energy also has clean energy projects in Lithuania, Latvia, Belarus and Spain, where it has set up subsidiaries and has installed a dozen solar power plants with a total capacity of over 20 MW.

Modus Group has recently signed an agreement with the European Bank for Reconstruction and Development (EBRD) on the financing of the construction of biogass-powered power plants in Belarus. The bank has earmarked over EUR 12 million for the purpose.

Speaking to Renewables Now, Vitas Maciulis, president of Lithuania’s Solar Energy Association, underscored that Poland now is "reaping" what it has "sown" a few years ago.

"Three years ago, the Poles had a breakthrough in the field of clean energy, especially in solar. This is a merit of the current Polish government that has taken serious steps in giving a boost to the development of sustainable energy. The pretty stagnant Lithuanian solar sector of around 30 MW currently envies the Poles," he said.

At the end of 2017, the European Commission (EC) okayed under EU State aid rules Poland’s renewable energy support scheme and a reduced levy to finance the scheme for energy-intensive users. The EC wants to see Poland cut its significant dependence on coal and turn to sustainable energy sources and investors like Modus are already contributing tangibly to the transition.

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