Energy Regulatory Office RES auctions 2021: President of the URE summarises the results of December auctions for sale of electricity from renewable energy sources - News -

Out of the five auctions held in December 2021, only three were conclusive.

In the second round of this year's auctions, slightly more than 18.5 TWh of electricity from renewable sources, for a total value of more than PLN 8.6 billion was offered for sale. The volume of electricity contracted as a result amounted to nearly 14 TWh (75%) with the value slightly exceeding PLN 3.2 billion (37.5%).

Fig. 1. The volume of electricity offered for sale and sold as a result of the three conclusive RES auctions conducted by President of the URE in December 2021.
 

Fig. 2. Value of electricity offered for sale and sold as a result of the three conclusive RES auctions conducted by President of the URE in December 2021.
 

Solar power producers accounted for more than 96 percent of the winning projects

“Of the 375 total winning bids, only 14 concerned installations other than PV. These 14 bids, i.e. less than 4 per cent, were made by wind farms and hydro power plants” said  Rafał Gawin, President of the Energy Regulatory Office summarising the results of the second round of this year's auctions. “The results of additional auctions confirm the expansion trend of photovoltaic projects in the auction system, which proves that the availability of wind projects on the Polish market remains to be limited due to unfavourable legal environment. This confirms the slowdown in the development of onshore wind projects, already noticeable in previous years.”

Fig. 3. Winning bids in December RES auctions by technology

Dynamic growth of small PV units

All auctions held in December were dedicated to new units. Traditionally, the auction for photovoltaic and wind power units with capacity up to 1 MW (designated as AZ/11/2021) attracted the most interest. In total, 182 generators joined the auction with 401 bids. All bids were made by entrepreneurs investing in PV units. Within this basket, the total electricity volume of 2.7 TWh was purchased for nearly PLN 2.5 billion. As a result of the auction, 99.9 per cent of the electricity volume was sold under 309 bids made by 141 generators, with a total value of merely PLN 677 million (which corresponds to 27 per cent of the value of energy offered for sale). This means that the price of electricity offered by generators in PV units is falling. The result of this auction enables the development of PV units with a total installed electrical capacity of around 300 MW.

Fig. 4. The value of electricity in the third December auction (AZ/11/2021)

Due to the very large number of bids, the auction winners – as in previous years – were selected not only on the basis of the electricity sale price offered, but also on the basis of the order in which the bids were submitted. Pursuant to the RES Act^[1], in the event that multiple participants to an auction offer the same lowest electricity sale price, it is the order of precedence that determines the winner.

The total electricity volume offered by generators (nearly 3.8 TWh) represented more than 138 percent of the amount in the auction notice. On the other hand, the total value of electricity offered by the generators (slightly over PLN 1 billion) accounted for only 40 percent of the value of electricity indicated in the notice.

The reference price in this basket was 340 PLN/MWh. The minimum price at which electricity was sold, however, was 219 PLN/MWh, whereas the maximum price was 278.9 PLN/MWh.

Fig. 5. The graph shows the development of prices per MWh in this basket.

In the auction for larger projects, similar capacity was contracted for wind and photovoltaic technologies

The auction dedicated to PV and wind units with a capacity greater than 1 MW (designated as AZ/12/2021) attracted 66 generators that placed 89 bids it total. Within this basket, the total electricity volume of 14.1 TWh was purchased for over PLN 5 billion. As a result of the auction, slightly more than 11 TWh of electricity was sold (which corresponds 78 per cent of the electricity offered for sale) under 62 bids submitted by 46 generators, for the total value of over PLN 2.5 billion (49 per cent of the value of electricity offered for sale).

Fig. 6. The graph shows the value of electricity offered for sale and sold in the basket for PV and wind units with capacity greater than 1 MW (expressed in PLN billion). Auction AZ/12/2021.

The outcome of this auction allows for the development of PV capacity of approx. 570 MW  and of approximately 460 MW of onshore wind farms. The similar level of installed capacity for the wind and photovoltaic technologies, which was contracted in this auction is primarily due to the small volume of electricity offered for sale, as well as the relatively short time (counting from the June round of auctions) available to generators to prepare the documentation necessary to enlist new projects in the system.

Competition means lower prices

The total amount of electricity offered by generators (13.9 TWh) corresponded to over 99 per cent of the amount of electricity indicated in the auction notice, while its total value (over PLN 3 billion) was equal to 66 per cent of the value specified in the notice. The above proportion, which was observed in the results of all the three December auctions, is characteristic of the auction system and reflects the impact of competition driving down the prices offered in the auctions. The stronger the competition, the lower the prices. The auction system – in line with the underlying assumptions – supports the competitiveness of entities entering the auctions, which translates to best possible electricity prices and, consequently, influences the costs of electricity offered to end customers.

The reference price in this basket was 320 PLN/MWh for solar power plants and 250 PLN/MWh for wind power plants. The minimum price at which energy was sold was 139.64 PLN/MWh for onshore wind farms and 207.85 PLN/MWh for photovoltaic power plants, respectively.

Fig.7.  Selling prices in the basket for photovoltaic and wind units larger than 1 MW and reference prices for individual technologies in electricity in the basket (AZ/12/2021).

The third basket included only hydroelectric power plants

Auction AZ/13/2021, dedicated to hydropower, biofuel and geothermal installations with an installed electrical capacity of up to 1 MW, traditionally attracted interest from hydropower generators only. Three generators took part placing five bids in total. The volume of electricity for that basket totalled 143 GWh of electric power worth PLN 70.2 million. As a result of the auction, 76.5 GWh of electricity was sold (53 per cent of the total volume offered for sale) under four bids submitted by three generators, for the total value of nearly PLN 49 million  (70 per cent of the value of electricity offered for sale).

No bids were placed in the auctions dedicated to hybrid installations (AZ/9/2021 and AZ/10/2021).

“The attempt to create new auction baskets for hybrid facilities, which the legislator envisaged in the regulation, proved to be clearly premature in light of the current legal regulations. The lack of interest of entrepreneurs in such projects indicates, in my opinion, the need to modify the regulations defining hybrid RES installations, and to clarify their role in the auction and power supply system” observed the Regulator.

***

• The results of all five auctions can be found in the Public Information Bulletin.
• All December auctions were intended for new units. For the first time ever, two of them were dedicated to hybrid renewable energy installations[2]. The remaining three were so-called top-up auctions, i.e. intended for technologies for which the auctions held in May and June this year had been conclusive, yet without contracting the entire volume and value of energy to be sold in 2021.[3]
• Among the auctions held in December, the basket for large[4] wind and PV units had the highest value (over PLN 5 billion) and at the same time the highest volume of electricity offered for sale.
• The auction parameters for 2021 are set out in Regulation of the Council of Ministers on the maximum volume and value of electricity from renewable energy sources that may be sold in auctions in 2021[5]
• The December auctions were conducted in accordance with the  Terms and Conditions of auctions for the sale of electricity generated in RES units established by the President of the URE and approved by the Minister of Climate.
• At the beginning of November, the URE published the new User Manual for the Online Auction Platform, which was adapted to the regulations introduced by the amendment to the RES Act[6]
• The first round of this year's auctions was conducted by the President of the URE in May and June. The volume of electricity from renewable sources offered for sale at that time was slightly more than 68 TWh with a total value of nearly PLN 24 billion. The volume of electricity contracted following to the auctions amounted to nearly 37 TWh (54%) and its total value slightly exceeded PLN 8.5 billion (36%).