Poland: New support scheme for cogeneration

01.09.2017

The Ministry of Energy introduced guidelines for a new support mechanism for cogeneration (technological process of simultaneous generation of electricity and useful heat in CHP plants). All existent cogeneration installations will be allowed to benefit from the support system, based on a premium paid extra in the electricity price. For new units, an auction mechanism will be introduced. A “feed-in-premium” (FiP) mechanism will be provided for those installations with total installed capacity lower than 1MW.

According to the Ministry this solution will more accurately address the needs of existent installations, which require appropriate support in order to keep the generation of electricity on its current level. This is contrary to the proposed auction model for new installations.

The amount of premium directed towards existent installations of high-efficient cogeneration would be annually set by the Minister of Energy. It would be based on actual market data. Such a mechanism would ensure accurate adaptation of the amount of premium to changing business conditions.

The support for the new installations will be based on an “pay as bid” auction system, where the premium is the object in auction. Each of the investors is to present one offer - the winning offer would be those with the lowest prices offered. The system is supposed to promote solely the most effective technologies and locations, simultaneously minimalizing expenses of the system’s functioning.

15 years is the period for which the support will be granted. In the opinion of the Ministry of Energy this is optimal and sufficient from the investors’ standpoint. The proposed mechanism will guarantee that the winning investors will have a constant stream of income established as a premium to the electricity price.

The auction will be preceded by a pre-qualification process that is supposed to ensure an appropriate verification and evaluation of the investment plan, taking into consideration the readiness and completion capability of the investment. Projects of new cogeneration units will be verified on a continuous basis. It will ensure admission of only those projects, that will have technical capability of production of electricity from high-efficient cogeneration.

The support scheme will consider monitoring the investment process after winning an auction in such way, so as to constantly be in the possession of information regarding possible threats to investment being not accomplished. Monitoring is promoted in order to minimize the possibility of non-completion. It will ensure control of investment undertakings on a regular basis.

A separate subsidising instrument based on the FiP mechanism will be designed for installations with total installed capacity lower than 1MV. The mentioned system will have one fixed premium for all installations, with the quantity of power, kind of fuel and work features being of no importance.

The new support scheme will be in force until 2018.