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Green certificates as an instrument to support renewable energy in Poland—strengths and weaknesses

Environmental Science and Pollution Research volume 27, pages 6577–6588 (2020)Cite this article

Abstract

The problem of air pollution not only in Poland but also around the world has become an important topic of political, economic, scientific, and legal discourse. Its position is the result of international obligations and Poland’s membership in the structures of the European Union. In Poland, air quality is very bad, which makes it one of the countries with the worst air quality indicators in the European Union. One of the methods to reduce this high level of air pollution is to intensify the development of renewable energy sources by introducing effective support mechanisms for investors of new user-friendly and environment-friendly energy. The aim of the article was to analyse the support system for the development of energy production from renewable sources using the so-called “green” certificates of origin mechanism, which in Poland already has a 14-year tradition. The article presents the model of the renewable energy production support system in force in Poland. It pointed to its strengths and weaknesses. The development trends of the RES support system were also presented.

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Notes

  1. PMOZE_A—property rights to certificates of origin for electricity produced in RES, the period of production specified in the certificate of origin began from March 1, 2009

  2. Prosumer—an end customer who purchases electricity on the basis of a comprehensive agreement and generates electricity exclusively from renewable energy sources in microinstallations in order to use it for own needs not related to the conducted business activity.

  3. The credible electricity reference price (Cre) is the basis for all kinds of analyses, for observing market trends, for forecasting predicted prices in the future as well as for settling contracts concluded between individual participants of the energy market. The sources of Cre creation in Poland are transparent markets, where there is a full market game of demand and supply. Currently, there are only two such markets on the Polish energy market: the Internet Platform for Electricity Turnover - POEE (currently operating under the Warsaw Stock Exchange) and Energy Commodity Exchange - TGE S.A. Reference prices are determined for a given calendar year by means of the Regulation of the Minister of Energy in accordance with the statutory delegation (Act of 7 June 2018 amending the act on renewable energy sources and certain other acts - Journal of Laws of 2018, item 1276) (Internet site of CIRE 2019d).

  4. Definitions of small installations and microinstallations can be found in art. 2 points (18) and (19) of the act of 20 February on renewable energy sources (i.e. Journal of Laws of 2018 item 2389). A small installation is a renewable energy installation with a total installed electric power of more than 50 kW and less than 500 kW, connected to a power grid with a rated voltage of less than 110 kV or with a heat output of more than 150 kW and not more than 900 kW, in which the total installed electric power is greater than 50 kW and less than 500 kW; microinstallation is a renewable energy installation with a total installed electric power of 50 kW or less, connected to a power grid with a rated voltage of less than 110 kV or with a heat output of 150 kW or more, in which the total installed electric capacity is not greater than 50 kW.

  5. An energy company engaged in an economic activity in the field of electricity generation or trade in this energy and selling this energy to end consumers who are not industrial customers.

  6. Final recipient other than the industrial recipient referred to in point 1, being a member of the stock exchange within the meaning of the act of October 26, 2000, on commodity exchanges (Journal of Laws of 2018, item 622, 685 and 771), or a member market organised by an entity conducting regulated market on the territory of the Republic of Poland, in respect of transactions concluded on its own behalf on a commodity exchange or on a market organised by that entity.

  7. An industrial customer who used up to 100 GWh of electricity in the calendar year preceding the implementation of the obligation and submitted a declaration referred to in art. 52 par. 3 of the act on renewable energy sources.

  8. A commodity brokerage house or a brokerage house within the meaning of the act on commodity exchanges, in relation to transactions concluded at the request of final recipients, other than industrial customers, commodity exchanges or on a market organised by an entity conducting regulated market on the territory of the Republic of Poland.

  9. 1 EURO ≈ 4.30 PLN

  10. Electricity consumption intensity ratio - the ratio of electricity costs consumed for own needs to the gross value added calculated as the arithmetic average of the last 3 years preceding the year of implementation of the obligation.

  11. According to Polskie Sieci Elektroenergetyczne (PSE), RES installations generated approximately 165,800 GWh of electricity in the years 2005–2017. Assuming that the average efficiency of Polish thermal power plants for hard coal is approx. 35%, and calorific value of 25 GJ tons, this resulted in real savings of about 65 million tons of coal, a significant part of which would have to be imported, and an emission of around 160 million tons of CO2 and hundreds of thousands of tons of gaseous and particulate pollutants from conventional energy was avoided (Objective and subjective reasons... 2018).

  12. The Act of 20 May 2016 on investments in wind farms (i.e., Journal of Laws 2019, item 654) introducing the obligation to maintain the distance of a wind turbine from buildings corresponding to ten times its value (the so-called 10-h rule) caused a clear suspension of investments on the Polish market wind. After the construction of wind farms with a total capacity of approx. 5.8 GW by mid-2016, investors have stopped constructing new windmills, which will affect Poland’s compliance with 15% of RES in the national energy mix in 2020 (renewable energy production should be in Poland, 24,000–25,000 GWh).

  13. Some municipalities in 2017 imposed a higher tax on wind farm owners—despite the interpretative ambiguities and despite the assurances of the formal authors of the act, who argued that the tax should not be increased. However, the opinion on the legitimacy of increasing taxation after the introduction of the act was expressed by the Ministry of Finance. This interpretation meant for owners of windmills who found themselves in a difficult financial situation as a result of a large drop in the price of green certificates, higher operating costs and greatly distracted investors’ confidence despite the actions undertaken by the Ministry of Energy aimed at restoring the legal status in this area from the changes made by the act about investments in wind farms. It is worth noting that on 22 October 2018, the Supreme Administrative Court with the verdict (reference number: Act II FSK 2983/17) was interrupted by the uncertainty in which local authorities and owners of wind farms have lived since 2016 and unambiguously confirmed that the provisions changed in 2017 oblige municipalities that charged a higher tax (according to various estimates, 466 million PLN in the country) to return it to wind farm owners. This applies to 897 municipalities in which at the end of 2016 there were wind farms or single turbines, in total 1193 facilities with a total capacity of 5.8 GW.

  14. Power installed in wind farms in 2015 was 4.58GW, and electricity production was 10,858 GWh, which means that more than 40% of energy generated from RES in 2015 was for wind farms.

  15. PMOZE_A—property rights to certificates of origin for electricity produced in RES, the period of production specified in the certificate of origin began from March 1, 2009.

  16. The new support instruments can be used by electric energy producers from RES who are also entrepreneurs, using only hydropower or biogas (including agricultural), which means that new support instruments are dedicated only to strictly defined renewable energy technologies, excluding wind or photovoltaic installations, analogously as in the auction system.

  17. The FIT (feed-in-tariff) mechanism is based on a long-term (15-year) guarantee of a fixed price for the production of electricity from RES, with the simultaneous introduction of a purchase obligation by the network operator.

  18. The FIP (feed-in-premium) mechanism is to equalise the sale price of energy on a competitive market to the level of the guaranteed tariff. The mechanism of coverage of the negative balance refers to the difference between the value of electricity sales (calculated as the product of the amount of electricity and the TGeBase index) and the fixed purchase price determined on the basis of art. 70e of the amended act on renewable energy sources of June 7, 2018.

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  1. Faculty of Economics and Management, University of Zielona Góra, Licealna, 965-417, Zielona Góra, Poland

    Janusz Adamczyk & Magdalena Graczyk

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  1. Janusz Adamczyk
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  2. Magdalena Graczyk
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Correspondence to Janusz Adamczyk.

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Adamczyk, J., Graczyk, M. Green certificates as an instrument to support renewable energy in Poland—strengths and weaknesses. Environ Sci Pollut Res 27, 6577–6588 (2020). https://doi.org/10.1007/s11356-019-07452-5

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Keywords

  • Green certificates
  • Property rights market
  • “Green” certificates of origin
  • Environmental economics