Auctions for renewable energy installations stabilised by energy storage already in 2021

The Prime Minister signed a regulation on the maximum amount and value of electricity from renewable energy sources that can be sold by auction in 2021. The regulation contains volumes for hybrid installations. These will be the first auctions for this type of renewable energy installations.

According to the regulation, in 2021, 394,200 MWh of energy generated in hybrid installations with an output nominal power of not more than 1 MW and a value of PLN 242,433,000.00 may be sold by auction. The maximum amount of energy that can be sold by energy producer who have generated electricity in hybrid installations with an output nominal power of more than 1 MW has been set at 1,182,600 MWh and its value at PLN 703,647,000.00.

At the same time, the definition of a hybrid renewable energy source installation is being changed. It is to be obligatorily equipped with an energy storage facility, and its output nominal power utilisation factor is to be at least 60%, i.e. 5256 hours. This is a significant change compared to the definition currently in force, according to which the output nominal power utilisation factor is no less than 40 percent, which corresponds to 3504 MWh/MW/year. Currently, a hybrid installation can be supported by an energy storage, but this is not a necessary condition. The new definition of hybrid installation is to come into force before the announcement of RES auction in 2021.

The lack of incentives to build RES generation sources stabilised by energy storage facilities results in investors not opting for such solutions. However, our power system needs this type of controlled RES sources. They allow for a step increase in the effectiveness of the utilisation of the current DSO network structure. They increase the possibility of connecting renewable sources without the need to expand or modernise the network infrastructure. Installations equipped with energy storage mitigate the problem of network balancing and disturbances generated by RES and increase the regulatory capacity of the power system,” comments Barbara Adamska, President of the Polish Energy Storage Association.

The change of the definition of a hybrid renewable energy installation resulted in a revision of the assumptions for reference prices for this type of installation for 2021. It is assumed that these prices will increase. For this reason, the energy values given in the regulation for the baskets of this technology are higher than the reference prices set in the regulation for individual renewable energy installations for 2020. In 2021, a price of 615 PLN/MWh (415 PLN/MWh in 2020) has been assumed for a hybrid plant with a power of not more than 1 MW, whereas for the installations with the power of more than 1 MW the price is 595 PLN/MWh (increase from 415 PLN/MWh in 2020).

As a result of conducting the auction in accordance with the volumes specified in the Regulation, 5 MW may be generated in hybrid renewable energy installations with an output nominal power of not more than 1 MW and 15 MW in installations with a power higher than 1 MW.

Hybrid installations were excluded from the auction system notification made for the remaining auction baskets. However, since the proposed amount of support for these installations will not exceed the limit set in the block exemption, assuming that the other conditions for the application of the exemption will also be met, it will be possible to hold an auction for hybrid installations prepared in this way without a separate notification. Moreover, the government is preparing a re-notification of the auction system, announcing its extension to 2026. We expect that the support program for hybrid installations will be covered by this notification. As a result, it will also be possible to grant support for hybrid installations in subsequent auctions even after the expiry of the block exemption (which end in 2023), according to the real needs of the energy system and the scale of transformation towards a low-carbon economy,” commented Dr. Michał Bernat and Michał Motylewski from Dentons, a law firm cooperating with the Association.

The power of hybrid installations, which can be built as a result of conducting an auction according to the parameters indicated in the regulation, is not large. Nevertheless, it is an important signal for the market, as for the first time renewable energy installations stabilised by an energy storage will be included in the auction system, ” adds Barbara Adamska, President of PSME.

The regulation is necessary for the Energy Regulatory Office to conduct auctions for energy generated in renewable energy installations in 2021.