Reference prices in the 2022 RES auctions: PLN 785/MWh for small agricultural biogas plants

On 31 October 2022 the Minister of Climate and Environment issued a regulation setting reference prices of electricity from renewable energy sources and the periods applicable to generators who win auctions in 2022 (Journal of Laws (Dz.U.) 2022, item 2247, in force from 5 November 2022). Reference prices are the upper limit in the RES auctions; for agricultural biogas plants with a capacity below 500 kW they are PLN 785/MWh (PLN 920/MWh in high-efficiency cogeneration), and for the largest, above 1 MW, PLN 700/MWh. The support period is 15 years.

What is changing

RES auctions in Poland are run by the President of the Energy Regulatory Office (URE). The winning bid is the one with the lowest energy sale price not exceeding the reference price, and the producer obtains the right to coverage of the negative balance and an obligation to purchase the energy for a set period. The regulation sets reference prices for different technologies and installation sizes:

For comparison: onshore wind PLN 340/MWh (up to 1 MW) and PLN 295/MWh (above), photovoltaics PLN 375 and 355/MWh, and thermal waste conversion PLN 420/MWh.

Significance for the industry in Poland

Reference prices set the framework for the profitability of biogas projects. A small agricultural biogas plant that wins an auction can count on higher support than a large installation. Installations operating in high-efficiency cogeneration receive an additional bonus. At the same time, rising fuel, energy and service costs mean that many projects do not fit within the limits, which is why the industry is calling for the prices to be updated and for greater flexibility in the system.

In parallel, the Council of Ministers regulation of 27 September 2022 set the maximum quantities and values of energy that can be sold through auctions in the years 2022–2027, and the minister's regulation of 10 August 2022 set the basic auction parameters for the 2027 delivery year.

How an auction works in practice

The generator submits a bid with a price not exceeding the reference price and a volume of energy. Bids are ranked from the lowest price until the quantity or value earmarked for sale is exhausted. The winner obtains the right to coverage of the negative balance, i.e. the difference between the bid price and the market price, and the obligation of the obligated supplier to purchase the energy.

What next

In the coming years the reference prices will be updated, and the industry expects them to take into account the growth in investment and operating costs. In parallel, work is under way on the legal framework for biomethane; ultimately some agricultural projects may move from the cogeneration model to gas production.