Development of photovoltaic industry in Poland

by Piotr Mrowiec

10 May 2021

According to the data from Agencja Rynku Energii S.A., an energy market agency, the total capacity of PV power plants in Poland reached almost 4 GW at the end of December 2020. With that number Poland advanced to the 4th place among countries with the highest increase in photovoltaics (PV) capacity – right after Germany, the Netherlands, and Spain. In 2020 alone the capacity of the national PV system increased by almost 2.7 GW.

Phenomenon of “household installations”

The development of photovoltaic industry in Poland in 2020 and in the preceding years was driven by two support schemes dedicated to RES installations. One of them was for microinstallations with capacity of up to 50 kWp. The other one offered guaranteed tariffs for installations of up to 500 kWp and contracts for larger installations.

The support scheme for small installations contributed to interest in investing in PV panels, especially by owners of detached houses. This uncomplicated system is behind almost 80% of the new power capacity in Poland. It creates an opportunity to virtually store energy in the network – the producer can “deposit” the generated energy surplus and claim it back within 12 months, after a 20% or 30% deduction (the deducted amount depends on the installation size).

Bearing in mind that simple scheme, the ease of connecting “household installations” to the grid, the option to combine this support scheme with national and EU grants, as well as the increase in electricity prices with concurrent drop in installation prices, it can be safely expected that the development of microgeneration will continue to be a major factor behind the development of solar energy in Poland in the years to come.

Large installation sector

Despite the above, it is the segment of large installations which is key for investors. Most owners of large-scale stand-alone photovoltaic projects under development took part in energy auctions in 2020.

Auctions for installations of up to 1 MW, in which photovoltaic and wind farms could compete, were attended only by the former ones. Competition in the auction was even higher than in the preceding years. On the one hand, this resulted in more than half of the bids having been rejected; on the other hand, auction prices dropped considerably. According to the data published by the Energy Regulatory Office, the minimum price offered in 2020 in the winning auction bids was 222.87 PLN/MWh, and the maximum price was 268.88 PLN/MWh.

In the context of the drop of the strike prices offered by bidders in energy auctions organised in 2016–2020, particularly noteworthy is an opposite trend in prices of ready-to-build projects acquired on the market which won support under the action system. Here the average prices of 1 mWp installation projects are increasing. The prices of the winning projects varied between 70 and 90 thousand euro in 2016 and 2017. In 2018 it was already 110 to 140 thousand euro per project. The prices for projects from 2019 and 2020 auctions, in turn, hover around 160 thousand euro.

The situation looks different for auctions for installations with the capacity of over 1 mWp. In these auctions, the prices increased in each of the three sessions held between 2018 and 2020. As there was no price pressure for wind projects, the maximum auction price achieved in last year's (2020) auction for large wind and PV installations was higher than that achieved in the 2019 auction.

Development of Polish photovoltaic industry in 2021

The auction support and a system of discounts for microinstallations have been and will remain significant drivers of the development of the photovoltaic industry in 2021. When it comes to auctions, a further decline in auction prices of installations with a capacity of up to 1 MWp can be expected. However, the drop should not be so sharp as between 2020 and 2019.

It seems that it will be difficult to maintain the upward trend in the auction prices for large PV installations and wind farms with a capacity higher than 1 MWp. An increasing number of auction bidders may trigger pressure on the offered auction prices and cause their decrease compared to 2020.

However, looking at the low auction prices and the high prices of electricity in Poland, it may be concluded that PV project development undertakings are on the rise; this even applies to large-scale projects planned to be developed outside of any support system. A similar situation is on the German market, where such projects are developed successfully and the sun exposure level is virtually the same as in Poland.

It is also worth mentioning a problem faced by (not only) Polish PV project developers, namely the available connection power. In 2020 developers received refusals for connecting the designed installations to the grid several times more often than in the previous years. However, a new trend has emerged here. Some developers of large-scale PV projects include also the construction of energy storage facilities in their applications for an environmental permit and later on for a zoning decision. Furthermore, they indicate in lease contracts an option of building a power storage facility next to a PV farm.

As you can see, photovoltaics is the fastest growing of all RES sectors in Poland. And according to all forecasts, Poland is going to keep that pace of development and its strong position in the EU.

This article is based on the article "Polish PV in 2021" published at: https://www.pv-magazine.com/.