Renewables in Poland – hard to get consensus on way forward

Jan Cienski recently wrote a blog for the Financial Times about the difficulties in getting renewable energy policies firmly established within Poland.

Renewable energy in Poland: endlessly renewable squabble

Poland’s long-running reluctance to tackle a new law on renewable energy is starting to impose growing economic and political costs, as big energy companies freeze planned projects and smaller investors are driven to bankruptcy, all while ministries squabble over the future shape of the law.

A new renewable law was supposed to be in force by the beginning of this year but has been delayed by at least two years. Without a clear formulation of how to calculate payments and subsidies in areas like power cogeneration, wind and solar, many projects have been halted.

Fortum, a Finnish utility, has planned investments of 2.5bn zlotys ($806m) but says it is waiting to see the shape of the new law before moving forward.

“For investors, it is crucial to have clear and stable support mechanisms. The current situation with a lack of certainty over the principles under which the support mechanism will work means a high level of risk which does not support making investment decisions,” Piotr Gornik, production and distribution director for Fortnum’s Polish operations, told the Wirtualny Nowy Przemysl economic website.

The company had planned to build new generating capacity in its plants in southern and south-western Poland.

Other companies like France’s EDF have taken similar steps. EDF had planned to spend €1.8bn to build new generating capacity at its Rybnik plant in southern Poland but late last year announced a freeze. The worry is over the cost of CO2 emissions permits and lack of clarity over co-generation, when organic matter, or biomass, is burned with coal to generate power.

Polish state controlled utilities like PGE and Tauron have also complained about the long-delayed law.

Problems with the law are slowing other projects, such as building off-shore wind farms.

Adding to the controversy, existing biomass subsidies are encouraging power generators to burn wood, sometimes imported from outside Poland, along with coal, which may fit within the definition of biomass but violates the spirit of the law.

At a time when Poland is feeling the effects of slowing investments funded by EU structural funds, the pressure is growing on the government to act and get large investments rolling. However, disagreements among the economy, environment and treasury ministries are further slowing progress.

“A quick political resolution is needed to agree on the project and present it to parliament, but the government must take a unified position, just like parliament. Otherwise it will be a conflict not only between conventional and renewable energy, but also within renewables,” said Janusz Piechocinski, the economy minister, according to the PAP news agency.