October 15, 2012

  New correction coefficients for PV

Please find here detailed information about the new correction coefficients for PV installations in an article recently published by the PV-Magazine.

  PV Workshop

On November 6, 2012 in Berlin DeBenedetti Majewski Szczesniak together with Solarpraxis organize a workshop devoted to PV investments in Poland. You can register for the workshop here. More than 70 attendees have already registered!

  How to define the 10 MW limit for solar farms?

According to the published draft of the RES Act, solar farms of more than 10 MW (peak) installed capacity will no longer receive green certificates, and therefore won’t pay off. But how to define such a limitation? This limitation may refer to an installation, to a company running the installation unit, or to a grid connection point. But even if it refers to a grid connection point, it may refer to an internal grid, which can be operated by the same SPV, or by a sister company, or it refers to an external grid operated by a distribution grid operator, or even by a third party as for example the railway grid operated by PKP Energetyka. The existing legal framework as well as the expected changes to the Energy law act and the introduction of the RES Act don’t really provide a clear answer in their current wording. It is rather doubtful whether the speeded up legislative process will provide a final answer to that question. Having considered all options it seems reasonable that the 10 MW limitation generally refers to a grid connection, but defining the type of the same is far more difficult. So investors should take care about obtaining the necessary investment security if they plan solar farm investments exceeding the 10 MW limitation. Nevertheless, it is remarkable that no limitations regarding certain investment areas as recently implemented by the German EEG are discussed.

  Bad news: PSE Operator doesn’t want to issue any further grid connection conditions?

These plans are subject to verification as PSE Operator will at least partly finance them with the use of EU subsidies, and the new law obliges PSE Operator to publish a grid extension plan until end of 2014. Mr. Majchrzak commented on the article published by Puls Biznesu saying that it is not the capacity of the grids in Poland that are and will be a problem in the future, but the capability of the balancing system. According to Mr. Majchrzak’s presentation at the conference, an amount of 19.2 GW RES grid connections have already been issued by transmission and distribution grid operators (7.9 GW by the TSO), and RES grid connection contracts are signed for 13 GW (4.5 by the TSO). But only an amount of 8.9 GW can be fed to the grid until 2020, although he is aware, that Distribution Grid Operators often signed grid connection contracts without a deadline for completion of the RES installations, and only to block potential grid connection capacities. On the other hand, he confirmed that onshore wind exceeds 70 percent of the installed capacity only for a maximum of 100 hours per year, so generally only 70 percent of the installed capacity should be taken for calculation of the stability of the balancing system. Energy storage can improve the situation with the balancing system, and e-mobility or pump storage water power plants can constitute important energy storage sources. He promised to propose a further amendment in the legislative process of the three-pack whereby RES installations which have an energy storage system should have priority when it comes to connection to the grid. The recent draft RES Act already allows to issue grid connection conditions exceeding actual grid connection capacities, if the difference is covered by an energy storage system. But how instable is the balancing system in reality? Poland’s electric energy production is still in 90 percent based on coal-firing power plants, which will be systematically replaced until 2020. PSE Operator has recently signed grid connection contracts for 13 GW conventional energy plants (11.2 GW coal or lignite fired units and 1.8 GW gas fired units) and issued another 3.6 GW of grid connection conditions for conventional energy plants (2.6 GW coal or lignite fired units and 1.0 GW gas fired units). Surprisingly, gas-fired power plants still don’t play a serious role in the investment strategy of the utilities, although they emit only half of CO2 per MWh compared to lignite power plants, and gas power plants are fast enough to adapt their capacity to compensate fluctuations of electric energy production caused by RES installations. As regards RES installations, PSE Operator signed grid connection contracts amounting to 5.0 GW and issued grid connection conditions amounting to 1.2 GW until March 2010 – according to the previous energy law not requiring advance payments at the moment of application - and most of these projects will never be implemented, as it takes years to secure the cable infrastructure and achieve the necessary permits for grid infrastructure, which in most cases exceeds the contractual time frame to connect to the transmission grid. Even the generally promising grid corridor law (PL: ustawa o korytarzach przesylowych), which may enter into force in 2014, will at the beginning rather hinder grid investments until the necessary municipal plans will be in place, which may take from one to two years. So these projects will have serious problems to be fully permitted and constructed within the timeline set forth in relevant grid connection contract, and consequently the project rights of many projects are right now for sale. After the change of law in 2010 grid connection contracts have been signed with RES installations only for an amount of 0.5 GW (including 0.2 for a biomass facility in Polaniec operated by GDF Suez, rather a stable source of renewable electric energy compared to wind and solar) and grid connection conditions have been issued for an amount of 0.7 GW for onshore wind and 1.2 GW for offshore wind, which presumably won’t be connected to the grid before 2020. Additionally, offshore wind is a far more stable source of electric energy production than onshore wind due to constant wind at the sea and will rather provide to more stability compared to onshore wind and PV installations. Mr. Majchrzak promised that another grid connection conditions for 1 GW will be issued within the next weeks, but seems to be reluctant to issue further grid connection conditions for offshore wind projects. Observing the figures, the situation is far less dramatic than the press article and partly Mr. Majchrzak’s explanations suggest. Another serious question is, why the Polish Energy sector still plans to replace old coal-fired and lignite-fired units by new units using the same energy source, although leading Polish energy experts as Mr. Pawel Smolen, new COO with PGE, already recommend to deal with coal as an energy reserve for Poland in a more strategic way and to replace coal-fired power plants by production units using other energy sources. The replacement of old coal and lignite fired units by new units using the same energy source is neither in the interest of Polish energy independence nor in the interest of a climate friendly energy mix.

  Is the 5Y-term for offshore wind correction coefficient really helpful?

The introductory law for the “three-pack” will generally provide correction for the first 5Y-term. Fair enough for investments which have a investment period of up to 5 years to connect to the grid. But is this true for offshore wind? Even the Polish legislator predicted that the permits to erect platforms, which have been issued thus far for 13 areas, are valid for six years to achieve a building permit, and can be prolonged for another two years. To have a project fully permitted and to construct an offshore wind farm and connect it to the transmission grid is a separate story, and the investment horizon is rather 8 to 10 years. So how an investor obtaining a permit to erect platforms is able to calculate his future revenues? He can’t. The evaluation of the impact of the RES Act has already predicted this, as there is no degression of the correction coefficient of 1.8 for offshore wind. But this is not enough. The correction coefficient for offshore wind should be known for 10 years. The legislator already considered an exemption from the 5Y-period for water power plants, so why not introduce another exemption for offshore wind, which provides for better grid stability than onshore wind and is therefore according to Mr. Majchrzak, CEO of PSE Operator, a preferred renewable energy source?

  Green certificate oversupply almost certain

The prices of green certificates on the Polish Power Exchange are still dropping. The stock exchange price of green certificates dropped to a level of approx. 230 PLN/MWh - compared to more than 286 PLN/MWh of compensation fee/opłata zastępcza in 2012 and to a level of 280 PLN/MWh in February this year. When it comes to green certificates, the overproduction of green energy – as forecast by certain analysts mainly due to co-firing – is supposed to be the case. Official data on the performance of obligations in the scope of production of energy from renewable energy sources last year has not yet been published, but according to the Energy Agency ARE the share of consumed green energy is claimed to have reached 10.76 percent, thus exceeding the obligatory level of 10.4 percent. Therefore, in 2012 connection of a greater number of new renewable sources – installed capacity (in addition to co-firing) increased from 3.08 GW to 3.8 GW during the last half a year - should trigger an even greater overproduction. This threat should, however, disappear next year. Starting from January 1, 2013, the threshold of mandatory share of green energy will increase from 10.4 percent to 12 percent and during the years to come it is going to increase by 1 percent annually. The regulation increasing the obligatory level of purchased green energy is to be issued within the next couple of weeks, as claimed by the Minister of Economy. In the second half of the next year at the latest, the stock exchange price of green certificates should stabilize according to Polish renewable energy think tank IEO.

  Law implementing the “three-pack” published
Year Onshore wind farms above 0.5 MW Biomass (CHP) 10 MW  to 50 MW/over 50 MW
2013 0.9 1.4/0.95
2014  0.9 1.4/0.95 
2015  0.88  1.37/0.93 
2016  0.86  1.34/0.91
2017 0.83 1.32/0.89

Year PV 0.1 MW to 1 MW (rooftop/other) PV 1 MW to 10 MW Agricultural biogas  above 1 MW
2013 2.85/2.75 2.45 1.4
2014  2.85/2.75 2.45 1.4
2015  2.70/2.6 2.32 1.37
2016  2.55/2.45 2.2 1.34
2017 2.40/2.32 2.07 1.32

The producer is entitled to a certificate of origin for 15 years from the date of launching a new installation. For the renewable energy production launched before the Act came into force, the 15-year period is counted from the moment of first production of electricity, for which the certificate of origin was granted. For co-firing only a 5-year period is granted. Co-firing installations launched in 2008 or 2009 will lose their right to receive green certificates in 2013/2014, thus avoiding further oversupply of green certificates. Nevertheless, green certificates, which have been issued before the new law will come into force, will stay valid.

Furthermore, no changes to the Excise Tax Law have been made, so renewable energy production is still exempted from the excise tax. As expected, the building law will be amended, so that PV installations with more than 40 kW will require a building permit for construction.


For more information please contact:



dr Christian Schnell
venture agreements
C. David DeBenedetti J.D.
project finance
Joanna Świostek
project development/planning
and building law/commercial

DeBenedetti Majewski Szcześniak has been chosen
by Corporate Intl Magazine 2012 as the:

“Renewable Energy Law, Firm of the Year in Poland”

“Project Finance Law, Firm of the Year in Poland”

“Investment Funds Law, Firm of the Year in Poland”




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