European Commission approves Polish offshore wind support scheme

By: Tom Russell

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20/05/2021 European Commission

The European Commission has approved, under EU State aid rules, a Polish scheme to support offshore wind technology.

Poland notified the Commission of its intention to introduce a new scheme to support offshore wind farms. Offshore wind technology is at an initial stage in Poland.

The aid will be granted in the form of a two-way contract-for-difference premium, during 25 years, but only up to 100,000 full load hours per MegaWatt of installed capacity. Under this model, this variable premium is calculated as the difference between the reference price and the market price for electricity. When the market price is below the reference price, beneficiaries will be entitled to receive payments equal to the difference between the two prices. However, when the market price is above the reference price, beneficiaries will have to pay the difference between the two prices to the State.

The scheme will roll out in two phases. During the first phase of the scheme, offshore projects will be granted aid using the exception to the auction requirement, due to the existence of a very limited number of projects. The reference price for projects in the first phase will be administratively fixed based on their costs, with a maximum set at 319,60 PLN/MWh (€71,82/MWh). After obtaining the environmental permit which will fix the final technical characteristics of the project, each project will submit an individual notification with a business plan to the Commission. Based on the respective business plan, the Commission will assess individually the specific level of operating aid.

Under the second phase of the scheme, aid will be granted through open and competitive auctions which will be organised as of 2025, and the reference price of projects will be fixed based on the respective bid. The scheme has a total maximum budget of €22.5 billion and will run until 2030.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This Polish scheme is a very good example of how competition policy can enable Member States to support green energy projects, such as offshore wind farms. It gives the incentive to companies to invest in such green projects where they would otherwise not have invested. We hope that we will see many such initiatives in the future, which contribute to the EU's Green Deal, without unduly distorting competition in the Single Market.”

Poland is progressing the development of offshore wind under the Offshore Act, which regulates the method of obtaining public support by investors interested in building offshore wind farms in the Polish exclusive economic zone of the Baltic Sea. The Act provides up to 5.9 GW allocated by CfD in 2021 and a 2.5 GW CfD auction in 2025 and 2027. Projects will have a 7-year award-to-generation deadline, meaning 10.9 GW generating power by 2034. The government plans to launch further support phases in 2025 and 2027, both 2.5 GW, leading to 11 GW by 2040.

Back in April, RWE secured a CfD for its 350 MW FEW Baltic II whilst Ørsted and PGE secured CfDs for the Baltica 3 and Baltica 2 offshore wind farms with a total capacity of up to 2.5 GW. This was followed by news last week, it was announced that Equinor and Polenergia’s Bałtyk II and Bałtyk III projects were awarded CfDs.

For more information on offshore wind farms worldwide, click here.

About the Author

4C Offshore | Tom Russell
Tom Russell

01502 307037 Tom.Russell@4coffshore.net
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