RES auction for existing biogas and biomass installations ends without a result

Auction AZ/1/2019 for existing installations using non-agricultural biogas and biomass with a capacity above 1 MW, held on 25 November 2019, was not resolved. As announced at the beginning of December, too few bids were submitted — the rules required at least three. For the biogas industry this is a signal that the auction system works best where there are many participants, and that narrow baskets can easily end in failure.

What happened

The two auctions held at the end of November 2019 concerned installations that were already operating and, after the green certificate system expired, were looking for stable support.

In the first auction, up to 34 TWh of electricity was offered for sale, and the maximum value of support reached PLN 20.74 billion — the largest auction budget of that year.

The auction for agricultural biogas plants

In auction AZ/2/2019 the pool was 3.433 TWh with a value of PLN 2.197 billion. Exactly three bids were submitted — as many as needed for the auction to take place. Two companies won: Bioelektrownia Buczek and Polskie Biogazownie "Energy-Żórawina". Settlement prices ranged from PLN 617.5 to 633.9/MWh. Only 219.83 GWh of energy worth PLN 137.95 million was sold, with an obligation to sell until 2029, so the vast majority of the budget remained unused.

Significance for biogas plants in Poland

• The support price. A level of over PLN 600/MWh shows that agricultural biogas plants need support clearly higher than wind or photovoltaics, which achieved much lower rates in auctions.
• The design of the baskets. The minimum-of-three-bids rule means that the outcome depends not only on the profitability of projects but also on the number of entities in a given basket. For landfill gas and sewage treatment plant biogas there are few such entities.
• An alternative route. Installations of up to 1 MW could use separate auctions and the feed-in tariff (FIT) and feed-in premium (FIP) systems, discussed in later entries.

How the auction system works

RES auctions in Poland are organised by the President of the Energy Regulatory Office (URE) on the basis of the Act on Renewable Energy Sources (ustawa o OZE). A generator submits a bid with its energy sale price, and the cheapest bids win until the volume or value pool is exhausted. The winner receives the right to have the negative balance covered between the bid price and the market price of energy. Installations that had been operating for years and had previously benefited from certificates of origin thus received a new, predictable basis for their revenues.

What next

According to the schedule, further auctions for existing installations (including small agricultural biogas plants and other installations of up to 1 MW) were to take place in December 2019, and auctions for new investments on 5–13 December.