Polish wind on high alert as killer cuts loom


March 11, 2016

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The Polish Wind Energy Association held its annual conference in Warsaw this week, and the mood could hardly be more tense. The future of the wind industry in Poland is under threat.

It has all been going so well. In 2015, wind farms totalling just less than 1.3GW were built in Poland, which made it the second most active wind development market in Europe after Germany. This pushed the nation up to seventh in the list of Europe’s largest wind markets by installed capacity, ahead of more established rivals such as Denmark and Portugal.

But the rot set in with the election of October of the rightwing Law & Justice Party, which is led by former prime minister Jaroslaw Kaczynski. He selected party officials Andrzej Duda to run as president and Beata Szydlo as prime minister — and dictates policy to them now they are in power. It is not just the Putin-like structure that is alarming. It is the policies.

Poland relies on coal for 90% of electricity production, and the Law & Justice Party wants to prioritise growth in coal at the expense of other sources such as wind. The result is we have seen a series of policies in the last three months that are damaging for wind.

In January, the government pushed back by six months the introduction of a new tendering system for wind, which was included in the Renewable Energy Sources Act introduced by the previous government. This new system is set to allow developers to compete for 15-year fixed-price tariffs under a ‘contracts for difference’ mechanism. It is now due to come into force on 1 July, with a first auction scheduled to happen in the autumn.

You could argue that we should welcome the fact that Kaczynski’s government is sticking with the new system. We will if we actually see the auctions we have been promised. It is a huge ‘if’.

And until then, we will remain sceptical. Introducing a new system like this gives a wind-hating government the perfect opportunity to slow down the construction of wind farms in the next two years, because it adds confusion to the system for investors and developers; and the reverse auctions means those companies
would get subsidies lower than before. It is not that ‘contracts for difference’ are bad, but that the system can be manipulated for ill.

And last week we saw an even more openly hostile set of policies, as it was revealed that the government submitted draft legislation in late February to increase the distance that wind farms can be built from homes, schools and nature reserves to around 1.5km. This would rule out huge swathes of the country as potential sites.

It also proposes that wind farm owners should be forced to renew their permits every two years, which will increase the administrative costs of projects and hit margins; and it says that wind farm owners would be hit with fines or prison for building in the wrong places.

This has been weighing heavily on the minds of those in Poland this week. The PWEA has called the mood in the industry “tense”, while the European Commission’s Marie Donnelly took the chance to warn that retrospective changes would put off investors, just as we have seen happen in markets such as Spain. The European Wind Energy Association warned the laws would kill the industry.

The PWEA has said it is lobbying hard against the planned rules. Good luck with that. We see no reason why this government would care if it is sowing disquiet among wind companies, driving away wind investors, or in danger of killing the wind industry overnight.

In fact, we believe that was Kaczynski’s intention all along.

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