Poland's wind lobby, TGE power exchange plan PPA tools to drive growth

Warsaw — The Polish Power Exchange (TGE) and Polish Wind Energy Association (PSEW) are cooperating to create exchange instruments to support the development of a corporate PPA (cPPA) market for renewable energy, one of the experts working on the concept, Grzegorz Skarczynski, said Jan. 27.

Under the agreement, a working group will create a concept by the end of June, TGE and PSEW said in a statement earlier on Jan 25. Skarczynski said the instruments would be introduced on TGE over a two-or-three year period to create market price signals for cPPAs based on the experience of the Spanish and Norwegian markets.

The first publicly announced cPPA for onshore wind in Poland was concluded in 2018. Two more and one for solar were agreed in 2019 and four were agreed last year.

Seven cPPAs for a total of 198.2 MW of solar and onshore wind capacity have been publicly announced in Poland, volumes that are 20-times lower than in Spain, according to Re-Source Poland Hub.

"In January, at least three tenders were opened by multinational companies that are sourcing green energy, which proves there is demand," Skarczynski, a ReSource Poland Hub expert working on the project, told S&P Global Platts in an interview.

Skarczynski said he did not expect rapid cPPA growth because the RES auctioning support system provides much higher offtake ratings for developers than cPPAs.

In auctions to support renewable energy projects last November, the minimum average price was Zloty 190/MWh ($50.62/MWh) and the maximum price was Zloty 249.90/MWh ($66.58/MWh).

In comparison, the average spot price on TGE in November was Zloty 251.66/MWh and the average CAL-21 contract price was Zloty 222.46/MWh.

Another limitation on demand for onshore wind cPPAs is the 10-H distance regulation that bans the construction new projects within 1.5-2 km of residential and protected areas, whereas new solar projects are more expensive and offtakers are mainly driven by price, Skarczynski said.

Last year, the development ministry said the 10-H regulation would be modified this year to allow new projects to be built, but there has subsequently been a change of minister.

"Honestly, I am pessimistic about the timing but not about the ultimate solution," Skarczynski said.

"Wind is so cost effective that there has to be a de-freezing for new wind projects," he added.

Skarczynski said the first step in the concept would be to create price indices that would later be transferred to an index.

The second step would be a one-year profile product for solar and onshore wind, and ultimately a baseload product.

Currently, TGE only offers forward contracts up to three years.

"We see that there is some interest from investors and developers who can offer a fixed price for longer than three-year terms," he added.

In terms of onshore wind, Skarczynski said the instruments would perhaps be best addressed to existing projects that are reaching the end of their 15-year support cycle from green certificates, a subsidy system that is gradually being phased out and replaced by the auctioning system.