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DARK CLOUDS GATHER OVER POLAND’S BOOMING SOLAR SECTOR

Dec 22, 2021 | Business, Energy & Climate

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By Jakub Wiech

Photovoltaics in Poland has been a boom industry in recent years thanks to state
subsidies. A new law, however, will place major curbs on the development of the
sector by making solar installations less attractive to homeowners. Although
politicians assure that it will still make sense to invest in solar, the
industry is looking to the future with uncertainty.

EMPIRE OF THE SUN

In the last two years, the capacity of Polish solar power installations has
increased by a factor of 10. As recently as late 2019, photovoltaics (PV)
accounted for just 600 megawatts. By 15 November 2021, Polish electricity
transmission operator PSE estimated the figure at some 6,100 megawatts.

This dramatic increase in PV installations was possible thanks to an effective
support mechanism, the Mój Prad (My Electricity) programme, which offered
households a subsidy up to 5,000 zloty for purchasing a solar power
installation. This mechanism triggered leverage and persuaded hundreds of
thousands of Poles to spend money on the technology.

> Solar subsidies are driving Poland’s energy transformation – but need more
> funding



A powerful solar industry soon emerged: PV installation companies stormed the
stock market, their telemarketers called residents of towns and villages to
offer their services, and more and more roofs around the country were soon
covered with the distinctive panels.

But it is not only subsidies that have caused the boom in photovoltaics. An
increasing number of Poles have begun to appreciate the risks of increasing
electricity prices, with Poland’s coal-based, high-emitting energy industry no
longer coping with the burdens of the EU emissions trading system.

Increasing prices of CO2 emissions permits, which in 2021 approached the
astronomic level of €80 per tonne, have resulted in rising electricity bills for
individual consumers. Investment in home solar electricity installations offered
a certain solution to this problem, allowing investments to be covered within as
little as six years.

> Gas bills to rise 54% and electricity 24% in new year says, says Polish
> regulator



Yet the solar eruption will soon come to an end. All because of new regulations
that President Andrzej Duda signed into law on 15 December.

SUNSET BOULEVARD

The new law, contained in amended legislation on renewable energy sources,
changes the payment system that prosumers (individuals who both use and generate
electrical energy) have been benefiting from to date.

The previous model depended on so-called rebates, meaning cashless settlements
between the prosumer and the energy vendor, which assumed that the owner of the
PV installation could “claim back” 80% of the energy they put into the network
without incurring any payments.

In this arrangement, the electrical energy grid was treated as a virtual
warehouse in which PV owners “stored” their excess of energy generated in
summer, for example, before collecting it in less sunny periods. These
conditions were very favourable for prosumers, enabling them to reduce their
electricity bills significantly.

Now, though, this system is to change. It will be based on so-called
net-billing, in which prosumers will settle the bill for the energy they
generate based on a special model related to the price for a megawatt-hour set
on so-called day-ahead trading. All PV owners will have their own deposit
account in which the money they collect from giving their produced energy to the
grid will be recorded.

> Europe’s largest factory for energy storage systems to be built in Poland



When taking energy for themselves, meanwhile, they will have to pay the same
amount as other consumers. This change will hit the viability of home solar
power hard, making the period of return from PV investments much longer.

According to the new law, applicants requesting that their PV installation be
added to the network by 31 March will be able to make use of the current rebate
system for the next 15 years. But the question is: what next for Polish solar
energy?

TEARS OF THE SUN

The Polish government says the changes are essential to adapt to EU energy
market directives and to deal with the problem of overloading the electrical
energy network with increasing numbers of prosumers.

The recently replaced climate and environment minister, Michał Kurtyka, noted
that the changes in the law are meant to direct PV users towards
self-consumption. “Energy transfer is very costly, as much as production
itself,” he said. There are no concrete data on this problem, however.

The work on the changes took places amid chaos. The ministry had been pointing
out the need to reform the system for several months, but there were various
concepts for what this rearrangement should look like across the governing camp.

> Poland records highest ever solar energy production



One proposal – put forward by former development minister Jadwiga Emilewicz –
was withdrawn in late October after a tempestuous meeting of the energy, climate
and state assets committee, which added a string of amendments,

Less than a day later, another politician from the ruling camp, Marek Suski,
presented his own bill, which passed through the lower-house Sejm at express
pace. The upper-house Senate suggested alterations to these changes, submitting
its own proposals that would, for example, extend the transition period by
another two years (to 1 January 2024). But MPs rejected these proposals.

It was this muddled implementation of the changes as well as a lack of analyses
on their effects that were among the main arguments of critics of the new
regulations.

“What is alarming is the chaos and pace of the Sejm’s work on an amendment bill
submitted in the form of an MP’s legislative initiative, as well as the lack of
evaluation of the effects of the regulation, particularly the omission of a
costs and benefits analysis of the changes introduced,” Anna Frączyk, legal
adviser for ClientEarth, told Dziennik Gazeta Prawna.

“Omitting analysis and evaluation of the consequences of the regulation and
acceptance of short-term dates for its implementation means that we do not know
what effect this solution will have on the further development of distributed
generation in Poland,” Frączyk continued.

The changes have also been criticised by activists from Polish Smog Alert, who
in June wrote to Prime Minister Mateusz Morawiecki about the issue. Their letter
contained an appeal to maintain the rebate system owing to the beneficial effect
of photovoltaics on air quality.

> Polish city records worst air pollution in the world as winter smog descends



The activists noted that the restrictions placed on the development of solar
power, which benefits household energy bills, have a negative effect on interest
in heat pump technology, a common replacement for domestic coal-fired stoves
within the government’s Clean Air programme.

“Many Clean Air beneficiaries opt to exchange coal heating furnaces for this
very reason that it offers them an attractive payment system and access to cheap
electrical energy from their own photovoltaic installation,” said Andrzej Guła,
head of Polish Smog Alert.

In short, the hastily adopted changes place question marks not only over the
development of solar energy, but also over the general state of renewable and
low-emissions sources in Poland.

SETTING SUN

To understand the consequences of curbs on the development of photovoltaics in
Poland, it is worth describing the role solar power plays in the Polish
electrical energy system. It is above all a safeguard, protecting the system in
three ways.

Firstly, given Poland’s geographical location, the capacity factor (CF) in its
PV power installations is small – around 11%. This means that within a year, for
each megawatt of Polish capacity installed in PV, only 110 kilowatts will
operate fully.

> Priest installs giant solar panel cross on church in Poland



Yet even technologies with such a modest CF can help the electrical energy
system in certain specific situations. Such cases include the peak of summer
energy demand. This comes in a period in which repair shutdowns of large
conventional units are planned and periodic problems with cooling of certain
power plants occur. This culmination of factors means that during the summer
demand peak, the Polish system can easily have capacity shortages.

The risk grows from year to year, as the coal-fired power stations that Polish
electrical energy is based on are largely antiquated and therefore susceptible
to breaking down. Around 70 coal units in Poland have already exceeded their
planned working time, thereby putting them at risk of so-called unplanned
events, often resulting in a unit falling out of the system.

From this perspective, photovoltaics (which works at full steam in the summer
season) appears to be a useful safeguard that can supply crucial megawatts at
peak demand times to saturate the system with capacity.

Secondly, the Polish system is in dire need of renewables. Its current profile
is a coal monoculture: Poland has the highest share of coal in its energy mix in
the European Union, which results not only in the economy being burdened with
the need to purchase emissions permits, but also problems with achieving climate
goals.

> Former coal mine to become Poland’s biggest solar farm



Thirdly, PV is an effective instrument in reducing electricity bills, which will
grow in the coming years. Last week, Poland’s Energy Regulatory Office agreed to
tariffs increasing electricity prices for individual consumers in 2022 by around
24%.

The government plans to mitigate the situation with protective measures – but at
the same time it is abandoning a solution that can be called a quasi-market
mechanism, because Polish support for PV previously operated according to these
principles.

Dark clouds have gathered over solar panels in Poland. The changes signed into
law by the president are unlikely to cut out PV investments entirely. But they
could well put people off spending money on these solutions.

Translated by Ben Koschalka. Main image credit: Piotr Skornicki / Agencja Gazeta

Jakub Wiech is a lawyer and journalist. He is deputy editor-in-chief of
Energetyka24 news service, nominated for the Grand Press award in the social
journalism category. He is the author of the book Energiewende. Nowe niemieckie
imperium.
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PAULINA OLSZANKA

Solutions journalism project manager
 
 Paulina  is a journalist and writer with a background in anthropology, social
theory & political economy. She has worked for Fairfax Media, the Polish Press
Agency, the Guardian and De Volkskrant
 
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AGATA GOSTYŃSKA-JAKUBOWSKA

advisory board member

Senior Research Fellow at the Global Europe Centre, University of Kent.

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WERONIKA STRZYŻYŃSKA

contributing editorial assistant 

Weronika Strzyżyńska is currently studying journalism at Goldsmiths as a Scott
Trust Bursary recipient. She  has written on issues immigration and Brexit for
New Statesman and Prospect

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AGNIESZKA WĄDOŁOWSKA

managing editor

Agnieszka Wądołowska is managing editor of Notes from Poland. She has previously
worked for Gazeta.pl and Tokfm.pl and contributed to Gazeta Wyborcza, Wysokie
Obcasy, Duży Format, Midrasz and Kultura Liberalna”

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JULIETTE BRETAN

contributing writer

Juliette Bretan is a freelance journalist covering Polish and Eastern European
current affairs and culture. Her work has featured on the BBC World Service, and
in CityMetric, The Independent, Ozy, New Eastern Europe and Culture.pl.

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DANIEL TILLES

editor-in-chief

Daniel Tilles is editor-in-chief of Notes from Poland and assistant professor of
history at the Pedagogical University of Krakow. He has written on Polish
affairs for a wide range of publications, including Foreign Policy, POLITICO
Europe, The Independent and Dziennik Gazeta Prawna.

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STANLEY BILL

founder, editor-at-large

Stanley Bill is the founder and editor-at-large of Notes from Poland.
He is also Senior Lecturer in Polish Studies and Director of the Polish Studies
Programme at the University of Cambridge, where he works on Polish culture,
politics and history.

Stanley has spent more than ten years living in Poland, mostly based in Kraków
and Bielsko-Biała. He founded Notes from Poland in 2014 as a blog dedicated to
personal impressions, cultural analysis and political commentary. He is
committed to the promotion of deeper knowledge and understanding of Poland.

He is the Chair of the Board of the Notes from Poland Foundation.

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MARIA WILCZEK

deputy editor

Maria Wilczek is deputy editor of Notes from Poland. She also contributes
regularly to The Economist and Al Jazeera, and has also written for The
Times, Politico Europe, The Spectator and Gazeta Wyborcza. She was previously
Marjorie Deane fellow at The Economist in London (2018) and a business
consultant at the Boston Consulting Group in Warsaw. Maria is a graduate of the
University of Oxford and a student at the Polish School of Literary Reportage.
 
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BEN KOSCHALKA

assistant editor

Ben Koschalka is a translator and the assistant editor at Notes from Poland.
Originally from Britain, he has lived in Kraków since 2005.

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NORMAN DAVIES

advisory board member

UNESCO Professor at the Jagiellonian University and Professor Emeritus at
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Professor of European Studies at Oxford University

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Professor at the Institute of History of the Jagiellonian University

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