A System Reinvented

This year’s auctions, scheduled between December 9 and 17, will include two main categories: technologies with installed capacities up to 1 MW and those over 1 MW. These categories, primarily focused on photovoltaic and onshore wind, will have a combined budget of PLN 10.04 billion. Most of the resources (21.7 TWh) will be allocated to the large-scale segment, underscoring the Polish government’s intention to promote large-scale projects.

The resurgence of interest in this system contrasts with the trend observed since 2021, when rising energy prices led developers to seek alternatives outside of auctions, such as long-term power purchase agreements (PPA). However, the drop in prices since 2023 has once again highlighted auctions as a tool for ensuring stable revenues and reducing risks in renewable energy projects.

A source close to Energía Estratégica España comments that, in the context of the auctions in Poland, some investors still view them as an attractive option for securing investment financing. However, in 2023, interest decreased because the prices offered in the auctions were lower compared to those obtained in the market through PPAs. Despite this, there is currently renewed investor interest in this support mechanism.

Advantages and Challenges of the Auction Model

For some investors, auctions remain an attractive option to secure project financing. According to a sector representative, “participating in an auction offers a guarantee of stability, making it easier to obtain loans on favorable terms.” Furthermore, the expected awarding prices between PLN 300 and 350/MWh appear competitive compared to current market prices on the POLPX exchange, which are around PLN 400/MWh.

However, there are also drawbacks. The current settlement rules, which require the return of revenues in the case of positive balances, have led some auction winners to abandon the system due to the extended investment return periods. Additionally, negative prices during periods of high photovoltaic generation and uncertainty about future component costs, such as Chinese solar modules, add complexity to the equation.

Sector Outlook

Companies like Orlen, Tauron, and Enea have expressed interest in the auctions, although they highlight the need to adjust parameters like reference prices to better reflect current market conditions. For Enea, auctions are “necessary for entities seeking flexibility in financing RES projects,” but they note that the PPA model remains a competitive alternative.

Grzegorz Wiśniewski, president of the Renewable Energy Institute, warns that traditional business models, based on annual average prices, need to adapt to the new market reality. According to him, “the profitability of photovoltaic generation is decreasing, especially during generation peaks, when prices can even turn negative.”

Renewable energy auctions in Poland are regaining relevance in an environment where financial stability and risk reduction are key for investors. Although the model faces challenges inherent to a constantly changing market, it remains a vital tool for fostering renewable energy growth and achieving the country’s ambitious energy transition goals.

This December will mark a turning point for the sector, which seeks to balance innovation, profitability, and sustainability amid a dynamic energy landscape.