Sunny revolution – will RES ignite Polish economy?

Piotr NOWATKOWSKI
International Department Supervisor at RSM Poland

I was inspired to write this post by an article published in one of the biggest Polish newspapers. It concerned the consequences of planned amendments to the Act on Renewable Energy Sources (henceforth: RES). To find out more about the changes you can consult our article. Amendments, crucial  from the perspective of energy trading, came into force on 1 May this year, while those relating to the mechanisms and instruments supporting generation of electricity from RES, biogas and heat won’t come into force earlier than on 1 January 2016.

Reforms scheduled for next year will introduce fixed rates for electricity sold back to the grid (i.e. feed-in tariffs). In the case of sources generating up to 3 kW the rate will be PLN 0,75 per 1 kWh, whereas installations generating between 3 and 10 kW, depending on the source, PLN 0,45 – 0,70. For solar energy the expected rate is PLN 0,65.

Market reaction to changes in the law

However, as it is often the case, the market reacts in advance to any planned legislative changes. Already in March, a few weeks after the Act had been introduced, there was some open talk about the real revolution to take place, that is the one on the Polish market of RES. Industry experts predicted an increase in the number of micro installations of up to 200,000 with the annual growth of about 50,000.  (in comparison, in 2014 there were only 535 new micro installations connected to the grid countrywide).

Predictions of experts seem to reflect reality. Companies installing solar panels can’t keep up with the orders. Even the leaders in energy business, mainly related so far to the production of energy from conventional sources, rush to include the designing and installing of solar panels in their range of services. It’s also because of the extraordinary heat wave in August, not observed in Poland for decades, followed by restrictions on the supply of energy which greatly upset the production schedules of largest plants. Rationing caused anxiety which never serves economy any good, and led to heated discussion on the importance of diversifying energy sources in a country where 90% of the energy comes from burning coal.

The sunny business

Where some see problems, others see real business opportunities. The planned introduction of fixed rates for the surplus of energy generated by micro installations caused quite a stir among the society drawn to the idea of installing solar panels. According to a TNS Poland survey conducted for RWE[1], 21% of Poles may become users of micro installations. Given that the cost of cheapest micro installations starts at several thousand PLN, the estimated value of the market is approximately PLN 3 - 4 billion. No wonder that even the biggest players, not yet widely recognized as related to RES, are willing to fight for their piece of the pie.

Does the installation of solar panels make any sense in Poland?

The problem which, according to many, is supposed to hinder the development of RES in Poland, with particular emphasis on solar energy, are climate conditions in our country. To cut a long story short – is there enough sunlight in Poland for the installation of solar panels to even make sense? Of course, in terms of sunlight we are far behind the countries of Southern Europe. However, the average insolation in Poland is about 1000 kW per square meter and does not differ in this respect from weather conditions in, e.g.,  Germany where, according to the German Fraunhofer Institute[2], only on 12 August electricity generated from sun energy was 20 GW.

In conclusion, in years to come, RES should constitute one of the fastest growing areas of economy in Poland which also results from the fact that this is still a fledgling market when compared to other EU countries. Opportunity for growth is, therefore, much greater here than on relatively saturated Western European markets.