Winners and losers of the first RES auction for 2016.

On the last working day of last year, the first auction for the sale of electricity from renewable energy installations was carried out under the regimes of the Act on Renewable Energy Sources. The only possible date resulted from the late implementing regulations necessary for the President of the Energy Regulatory Office to conduct the auction within 30 days of its announcement. The auction was conducted and the results were announced despite the signals presented in online industry media about the technical problems of the operation of the Internet Auction Platform. There were selected or no winners among both entrepreneurs with RES installations already operating in the system of certificates of origin (mainly agricultural biogas plants with an installed capacity of up to 1 MW – basket 1 and above 1 MW – basket 2 and mainly small hydropower plants – basket 3), as well as entrepreneurs who will only realize their investments after securing the installation of a RES installation with financial aid (mainly solar installations, hydroelectric power plants and windmills with installed capacity up to 1 MW – basket 4). Not all competitors were successful and not only due to the insufficiently high energy volume available in baskets (baskets 3 and 4) in relation to the number of bids but also from the insufficient number of bids placed in a given basket to provide a quorum (basket 2).

The detailed results of the auction show that this system contains imperfections. One of them is that it was possible to submit the bid price at the auction even below the wholesale electricity price on the competitive market (in basket 3 an offer was made for 30 PLN / MWh). As a reminder, the offer price includes the wholesale market price of energy and unitary state aid in the form of an auction surcharge, which means that the sale offer (probably by mistake or as a result of IPA technical problems) forces the entrepreneur to sell below the market price on the competitive market.

We assess the prices of offers in auctions, especially in the group of new investments as low. They show that some entrepreneurs qualified for subsidies obtained investment aid for their installations and reduced the auction offer price in accordance with the regimes of the Act and Regulations. There is also a large part of new installations, which were prepared in one capital group, allowing for optimization of investment and operating costs and, as a consequence, reduction of the offer price in relation to the competitive market for individual investments.

The auctioning of existing agricultural biogas plants was of little interest. This may be due to several reasons:

  • Too low reference price in relation to the needs for the profitability of the undertaking,
  • Unclear methodology for calculating unit public aid;
  • Electricity support applies only to energy introduced into the network, and in the case of biogas plants, a large part of the energy generated is consumed for technological purposes;
  • Undecided in this industry, they hope to maintain a stable price for blue certificates in the longer term and extend the support for high-efficiency cogeneration.

The interest of existing biogas operators would probably be greater if the green certificates were not changed to blue by setting separate obligations in the last amendment of the RES Act with the supply for the purchase of property rights to new certificates. After all, we can repeat the scenario of the fall in the price of blue certificates, which we have been observing since 2012 on the green certificates market. A guarantee of the announcement of subsequent auctions for existing agricultural biogas plants does not exist. Using the experience of the first auctions, it is worth improving a few regulations, especially eliminating the abovementioned shortcomings, harmonizing the method of calculating the unitary state aid.