Course of the first two auction rounds for renewables in Poland

The first auction round for renewable energy in Poland was held in late December 2016. In the energy mix in which intermittent energy sources of up to 1 MWp competed with each other (especially: photovoltaics, wind power, some hydro power plants), the auction did not go as smoothly as expected. Due to significant difficulties accessing the internet auction platform, many of the bidders admitted to the auction were not able to submit their bids. The problems accessing the auction were particularly reflected in the number of winning bids selected in the December 2016 and June 2017 rounds. The number of winning bids was four times higher than that concerning the auction held six months ago. The following tables include information on the two auctions.

When comparing the two auctions, one can see that the minimum

and maximum prices achieved in the two rounds were lower. The decrease in the prices in each further auction goes in line with the trend in Europe. The achieved prices trended mainly between PLN 300–350 per MWh, i.e. about 7.1 cent/kWh and 8.3 cent/kWh. By comparison, the average price for photovoltaics in the first auctions held in Germany under EEG 2017 was 6.58 cent/kWh. The lowest successful bid was 6.0

cent/kWh; the highest was 6.75 cent/kWh. When comparing the Polish auctions to those in Germany, what astonishes is the more than twofold difference between the lowest and the highest bid in Poland. Thus, this begs the question of whether the bidders who achieved 46 cent/kWh during the auction will eventually decide to construct the power plants.

The last auction was overall successful. Due to lower purchase prices and lease costs for land where power plants are to be mounted, and due to generally lower other operating expenses relating to the operation of photovoltaics power plants in Poland, investment in photovoltaics in Poland can be a successful business.

A totally different situation is in the wind energy market. The Polish energy regulator does not organise any auctions for power plants of over 1 MW producing electricity from intermittent energy sources. This thus blocks the opportunity for developing larger-scale and more profitable wind farms in Poland. In addition, the restrictive planning legislation and the introduction of the 10H rule nationwide effectively limits the number of accessible sites for the construction of wind

turbines in Poland.

 

Also the existing wind turbines are in an unenviable situation – extremely low prices for green certificates have led to a situation

where many turbines are not profitable. In addition, a new law on wind power investments was enacted in Poland in July 2016 based on which the tax base changed effective 1 January 2017. The Ministry of Finance and some administrative courts hold that because the whole wind turbine is now classed as a construction, all components of the wind turbine should be taken into account when calculating the tax base for property tax. The expansion of the tax base is catastrophic for taxpayers. In the light of the current interpretation of the provisions, the property tax to be paid by taxpayers might increase even five times. Before the enactment of the above-mentioned law, the property tax was charged only on the tower and the foundations of the wind turbine. The Ministry of Energy has recognised this acute problem – which was of course not particularly hard to do. A bill was presented to the Parliament which includes a requirement to reinstate the previous principles where tax is charged on wind blades. If the proposed bill is approved, the old rules will prevail. Notably, this favourable reinstatement should take effect already on 1 September 2017.

The on-going measures by the Ministry of Energy should be assessed

as very positive. There is hope that the bill including the proposed reinstatement of the previous wind turbine taxation rules will be adopted. But problems could arise when trying to answer the question of whether the 2017 property tax should be paid based on the currently applicable or the new provisions planned to take effect on 1 September. As of now, decisions of the voivodship administrative courts (Polish abbreviation: WSA) are not favourable for taxpayers – they tend to take the approach where the entire wind turbine is counted in the property tax base (WSA Łódź I SA/Łd 1/17; WSA Bydgoszcz I SA/Bd 866/16

und WSA Gorzów Wielkopolski I SA/Go 56/17). In the upcoming

months, this question is due to be decided by the Supreme

Administrative Court.