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The auction system is a new incentive system for renewable energy in Poland. Under this system, the state procures a certain amount of electricity generated from renewable energy sources. In order to purchase it, it organises an auction in which renewable power producers take part. The deadlines and dates of the planned auctions are published on the homepage of the Polish Energy Regulatory Office (https://www.ure.gov.pl/).
The auction procedure and principles have been laid down in the Renewable Energy Law (General Part) and in the Rules on Auctions for the Sale of Electricity Produced in Renewable Power Plants (Auction Rules). An enterprise looking to generate renewable energy and, simultaneously, to receive incentives as part of the auction system must take appropriate steps before, during and after the auction.
At least 30 days before the auction, an announcement is published in the public information bulletin of the Polish Energy Regulatory Office (ERO), which includes the auction date, type and parameters. In order to be admitted to the auction, power producers must fulfil all parameter-related requirements specified in the public announcement.
Then, the power producer must register on the online auction platform (Polish abbrev. IPA) and activate his account there. It is a dedicated platform operated by ERO for holding auctions. You can register by filling out a registration form. If you grant a power of attorney, you must additionally pay a stamp duty into the bank account of the authorities with jurisdiction over the place where the ERO is established (currently the Warsaw City Council, Ochota District). Importantly, the bid for the sale of a certain amount of energy produced in a renewable power plant cannot be signed by an attorney or a commercial attorney (prokurent). The bid must be signed by the person authorised to represent the electricity producing company in accordance with the statutory rules of representation. The ERO has announced that during the 30 December 2016 auction as many as 15 bids were submitted against the rules of representation and therefore were disqualified. Therefore, we remind all potential auction participants about this formal requirement.
Next, the producer must submit an electronically signed application for a certificate of admission to the auction or a declaration of participation in the auction. Furthermore, he must establish a security in the form of a security deposit or a bank guarantee. The conditions for the security deposit and the bank guarantee have been set in the auction rules.
Once the producer meets all the requirements set in the auction rules, including fulfilling the auction parameters, having a valid certificate or an approved declaration, and having his security positively verified, he may participate in the auction.
According to the auction rules, an auction session must last at least eight hours. The session start and end date cannot be on a public holiday in the meaning of the Polish Public Holidays Act. Therefore, an auction may end on a Saturday (as it is not a statutory public holiday). Producers may submit their bids via the OAP only. §12(7) of the auction rules says that a producer may submit only one bid per one concrete renewable power plant. During the session, producers may modify or withdraw their bids up to one hour before the end of the auction session. If a producer withdraws his bid for a certain power plant within the permissible time, he can submit a new bid for the same power plant.
Once the auction is closed, bids cannot be supplemented or refined. A bid is considered submitted if it meets the requirements set in the Auction Rules, i.e. it has the required elements, the declaration, and valid signatures. If you withdraw and re-submit or modify a bid, only the most recent one will be considered. Producers must place at least three non-rejected bids for an auction to be declared as valid. If there are fewer bids, the auction is not valid. If a bid's asking price increased by one-off state aid exceeds the reference price (as regards ordinary auctions) or the maximum price (as regards supplementary auctions), the bid is rejected. Once the auction session closes, the ERO President immediately informs the public about the conducted auction on his website.
If the auction is successful (i.e. it was valid and ended in selecting a winner), the ERO President additionally announces, among others, the winning bidders.
However, winning the auction is only the beginning. The producer who won the auction must think of the further steps. Pursuant to Article 72 of the Polish Renewable Energy Sources Act (RES Act-PL), the winner must fulfil certain post-auction obligations. These are published in the information letter of the president of the ERO.
The day preceding the last day of 2016 was the date of the first auction round for renewable energies. Sadly, not everything went smoothly. Already from 10 a.m., the IPA was inaccessible, probably because of web traffic overload. The disappointed bidders demanded that the auction be repeated. Despite major problems due to which many bidders could not submit their bids, the ERO announced in its information letter of 3 January 2017 that the auction was valid and named the winner. Nevertheless, the ERO admitted its fault for the problems and announced that it would organise an additional auction in 2017.
As already mentioned, two auctions are planned to be held in 2017. An additional auction is to be held to console those bidders who were not able to participate in the first auction. The question is whether only bidders who were registered for the first auction (and who did not manage to submit a valid bid) or all those interested will be able to participate in this auction.
The government is also preparing for the regular auction to be held in 2017. To that end, the Minister of Energy issued on 16 March 2017 the regulation on the 2017 reference price for electricity from renewable energy sources and on time frames applicable to producers who win the auctions in 2017. The regulation stipulates the maximum PLN price per 1 MWh at which producers of electricity generated from renewable energy sources may sell it in 2017 at auction (the so-called reference price).
In comparison to the 2016 reference price, the following applies: The reference price for 9 of the 21 types of renewable power plants remained at the same level as in 2016, while for 8 the reference price was increased and for 4 it was lowered.
For instance, the reference price was decreased for power plants producing electricity with the help of solar power (PV systems). For power plants with a total installed capacity of up to 1 MW the current reference price is 450 PLN/MW (10.67 cents/1 kWh) in comparison to 465 PLN/MW (11.03 cents/ 1 kWh) in 2016. For PV systems with a total installed capacity of over 1 MW the reference price is 425 PLN/MW (10.08 cents/1 kWh) in comparison to 445 PLN/MW (10.56 cents/ 1 kWh) in 2016. The reference price for power plants with a total installed capacity of over 1 MW which produce electricity from onshore wind energy was lowered from 385 PLN/MW (9.13 cents/1 kWh) in 2016 to 350 PLN/MW (8.3 cents /1 kWh). Interestingly, the reference price for onshore wind power plants with a total capacity of up to 1 MW was increased from 300 PLN/MW (7.18 cents/1 kWh) to 320 PLN/MW (7.59 cents/1 kWh), i.e. by 20 PLN/MW. The greatest increase in the reference price from 305 PLN/MW (7.24 cents/1 kWh) in 2016 to 405 PLN/MW (9.6 cents/ 1 kWh) concerns power plants which produce electricity only from landfill gas.
Importantly, exceeding the reference price stated in the auction bid means that the bid will be rejected.
Until 3 April 2017 neither the Ministry of Energy nor the ERO President had announced when the additional auction would take place. Moreover, no reasons for the problems during the auction on 30 December 2016 were given.
Also, no concrete date for the ”main auction” has been announced (as of 6 April 2017). However, the auction is expected to take place at the end of 2017. On 3 April 2017, two regulations of the Council of Ministers were published in the Polish Journal of Laws. The first of them refers to chronology of the planned auctions on the sale of electricity produced from renewable resources in 2017 (Polish Journal of Laws of 2017, item 713). The second regulation stipulates the maximum amount and value of electricity from renewable energy sources which may be sold at auction in 2017 (Journal of Laws of 2017, item 712). The following table shows the maximum amount of electricity from renewable energy sources which may be sold by producers at auction in 2017. Only those amounts were stated for which the regulation stipulates a value of over 0.
Figure 1 (Click to enlarge)
Piotr Mrowiec, LL.M.
Associate Partner
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