Cross-border RES auctions to start in Poland

by Piotr Mrowiec

8 November 2016

On 1 July 2016, the amendment to the Renewable Energy Act (hereafter: RES Act) came into force. One of the novelties is that now entities that produce renewable energy in renewable energy installations located outside Poland and outside an exclusive economic zone may take part in auctions.

The auction system consists in the government ordering a certain amount of renewable energy and then the producerstaking part in the auction. Those who offer the bestterms and conditions win the auction. The main advantageof this solution is the possibility to negotiate that the electricity will be bought for a period of up to 15 years.

The amended RES Act allows entities that produce renewable energy in renewable energy installations located outside Poland and outside an exclusive economic zone(which lies outside the territorial sea but adjoins it) to takepart in the auction. The amount and the value of electricity to be sold in a given year is set by the minister in chargeof the energy sector, however, the electricity volume cannot exceed 5% of the total electricity sold in auctions in the previous year. According to the first draft regulation, the amount of electricity that can be sold in a cross-border auction in 2017 amounts to 365,257 MWh and its value totals PLN 152,532,449.00. This amount was determined on the basis of the unit price of electricity from RES, that is, PLN 360.00/MWh, taking into account the annual indexation. The regulation enters into force on 30/11/2016. Furthermore, according to the RES Act if an entity is interested in taking part in the auction the following terms and conditions must be met:

• there must be an international agreement between Poland and the country in which the installation is to be located, which guarantees the mutual use of the aid for producing electricity from RES;
• it must be physically possible to feed the electricity from the country in which the installation is located into the distribution network in Poland.

The new regulation also stipulates additional terms and conditions the fulfilment of which will allow entities to declare their intention to take part in the auction. These include: compliance of the produced electricity with certain EU regulations, verifiable confirmation that the energy is produced by an authorised entity, due accounting for state aid if it is granted, as well as compliance with certain formal requirements.

Germany seems to be a potential candidate to conclude an international agreement on cross-border RES auctions due to its stable and well-developed energy market. Such projects have already been planned there with Denmark as regards photovoltaic farms. Therefore, it is possible that Germany will also become a RES auctions partner forPoland, all the more that it wants to collaborate with other European countries.