The European Commission approves the extension of the Polish renewable energy auction system for 2022–2027

On 30 November 2021 the European Commission approved the extension of the Polish support scheme for electricity production from renewable sources through auctions for 2022–2027 (case SA.64713). The decision opened the way to applying the provisions of the act of 17 September 2021, which made it possible to extend the auctions to the end of 2027. For owners of and investors in biogas plants this means the continuation of the basic support mechanism for installations above 1 MW.

How the support works

The aid takes the form of a variable premium paid on top of the market price. If the wholesale electricity price on the Polish Power Exchange (TGE) is lower than the bid price (indexed annually by the average inflation rate), the state pays the difference; if it is higher, the producer returns the surplus. Such a mechanism, known as a contract for difference, protects the investor against falling prices, and consumers and the budget against overpaying in periods of high prices.

The extension required a new notification, because the 2017 approval (SA.43697) originally covered auctions until 30 June 2021; the Commission subsequently approved an extension by six months, to the end of 2021.

Scale of the system

The first auctions in the new period could take place in 2022. The Commission did not give a capacity target or technological details in its announcement, and Polish sources did not indicate separate amounts for biogas.

Significance for biogas

Auctions remain the key instrument for agricultural biogas plants above 1 MW and for landfill gas and wastewater treatment plant biogas installations, which until now took part in separate baskets. In previous years some baskets were not resolved because of too few bids, so the practical significance of the system will be decided by the volumes set by a Council of Ministers regulation and by investor interest.

For smaller installations, up to 1 MW, the FIT/FIP tariffs and premiums matter; their extension to 30 June 2024 results from EU rules on block exemptions (GBER).

What next

The ministry was to prepare regulations setting out the volumes for the following years, and the Energy Regulatory Office (URE) – the auction schedules. For the biogas industry it was important that they include baskets enabling real participation by biogas plants, and that the tender rules take into account the specifics of installations operating in cogeneration.

A note on sources

The Commission's announcement does not give the budget of the extended system – the figure of PLN 43.85 billion comes from the Polish government's estimates. The figure of PLN 40 billion (about €9.4 billion) relates to the 2017 approval. It should be distinguished from the new limit, which results from national assumptions.