1 GW of PV in Poland - this is just the beginning
In Poland we have just reached 1 GW of capacity in photovoltaic installations. Their growth rate has accelerated in the last several months. With the increasing economic attractiveness of photovoltaics, we are no longer wondering whether this development will be continued, but what are its limits. One thing is certain - we will wait much shorter for the next gigawatt and there will be at least a few drivers of this growth.
Last year, the total installed photovoltaic (PV) capacity in the world reached 486 GW compared to only 23.5 GW in 2009. This more than 20 times increase in less than a decade was possible thanks to investments in China, Japan, USA and Germany. In 2018 29 countries had at least 1 GW of photovoltaic capacity 1. Poland has just joined this group, although not so long ago it was not so obvious. A few years ago, it was believed that this technology was rather a long way off. The National Renewable Energy Action Plan, adopted in 2009, assumed only 3 MW in 2020. This level has already been exceeded more than 300 times.
Why are we developing photovoltaics?
PV is zero emission source, but it can also stabilize the operation of the power system, especially when reducing the peak demand. The national system needs at least 3-4 GW of photovoltaic installations 2. The development of dispersed solar energy also offloads the transmission grids.
Dynamic development of photovoltaics is possible due to constantly decreasing technology costs. Between 2010 and 2018, the weighted average cost of electricity production from PV in the world dropped by 77% to USD 85 per MWh (340 PLN per MWh). Many projects, especially in geographically attractive locations, offer PV even at the level of 20-30 USD/MWh (80-120 PLN/MWh) 3. Therefore, photovoltaics is the most popular source of new generation capacities in the power sector in the world. According to estimates by the International Energy Agency 4, this year's capacity increase may amount to as much as 115 GW.
What drives the development of PV in Poland?
The development of photovoltaics so far has been based on microinstallations, which we are more and more willing to install on the roofs of our houses and installations up to 1 MW, which received a guarantee of support in last year's auctions. Additional engines of growth will be available in the near future, and the further development of solar energy in Poland will be influenced mostly by:
- RES auctions - planned for December this year, the auctions may contribute to the construction of additional 750 MW of smaller photovoltaic installations, i.e. less than 1 MW. However, the development of large-scale photovoltaic farms may be a new phenomenon. Courageous plans of a growing group of investors, including state utilities, allow us to assume that photovoltaics may be able to effectively compete with wind energy in auctions for projects above 1 MW. In such a case, the average cost of electricity would have to be lower than 285 PLN/MWh.
- Corporate PPAs (Power Purchase Agreements) - long-term contracts for the direct purchase of electricity from RES are becoming more and more popular in the private sector. This is not only the activity of such corporations as Google, Ikea or Amazon. The International Renewable Energy Agency (IRENA) estimates that at the beginning of 2018, commercial long-term agreements were applied in 75 countries, and as many as 465 TWh were contracted in them - almost as much as the annual electricity consumption in France 5. This model is also becoming increasingly popular in Poland. The first such agreement was signed last year between Mercedes-Benz and VBS, and now it is offered by more and more companies, including Innogy and Enefit. With the 10H rule still in force, which blocks the development of onshore wind energy, the photovoltaic sector is a good alternative for consumers willing to buy green energy directly from its producers. It is the PPA that is supposed to support one of the largest photovoltaic investments so far - a 600 MW farm, which is to be built in Wielkopolska.
- Micro-installations - interest in self-production of electricity will continue to grow, and the support offered by the government's "Mój prąd" or "Czyste powietrze" programmes will only intensify it. The economics of microinstallations is also enhanced by rising electricity prices and the popularity of increasingly cheaper energy storage systems 6. Already in Germany, every second home photovoltaic system is installed in combination with a storage facility. This makes it possible to increase the level of autoconsumption of the produced energy - from today's 20-35% to 60-90% 7.
- New business models - the widespread use of micro installations will influence the development of new entities and business models that will enable the exploitation of the huge potential of the prosumer energy sector. An example is the possibility of direct electricity trading (peer-to-peer) - a model that operates on the basis of such platforms as Uber or Airbnb and is already present in the United Kingdom or the Netherlands.
Additionally, the generation in micro-sources can be controlled in a coordinated way by the so-called concentrators. The virtual power plant created in this way will be able to provide a number of system services generating an additional revenue stream. For example, in 2018, Sonnen, a company operating on the German market, was accepted by the TenneT system operator to provide frequency regulation services.
What is the role of photovoltaics?
Despite the dynamic development, photovoltaics in Poland is only a small part of the energy mix. However, this will change, as indicated by the draft of Poland's Energy Policy until 2040, which assumes 10.2 GW of PV power plants in 2030. Looking at current trends, this number is underestimated. If only PV avoids the fate of onshore wind energy, the development of which has been drastically slowed down a few years ago, annual capacity increases will exceed 1 GW. Therefore, it is necessary to work on preparing our system for better integration and increased use of PV. This requires the reform of the energy market. The development of renewable energy sources is obviously not about the race for gigawatts. It is about reducing CO2 emissions and increasing security of supply.
Author: Marcin Ścigan
Date of publication: 11 October 2019
- IRENA (2019), Renewable Energy Statistics 2019, The International Renewable Energy Agency, Abu Dhabi.
- J. Maćkowiak-Pandera, How do we cope with summer peaks? Forum Energii, 2018.
- IRENA (2019), Renewable Power Generation Costs in 2018, International Renewable Energy Agency, Abu Dhabi.
- IRENA (2018), Corporate Sourcing of Renewables: Market and Industry Trends - REmade Index 2018. International Renewable Energy Agency, Abu Dhabi.
- According to BloombergNEF, only between mid-2018 and March this year, the cost of electricity from lithium-ion batteries decreased by 35%, to the level of 187 USD/MWh
- SolarPower Europe (2019), Global Market Outlook 2019 - 2023.
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