Filip Sypko: Polish photovoltaics will not slow down
Filip Sypko: Head of Solar Business Development at Green Genius
How do you assess the current condition of the photovoltaic market in Poland compared to what was observed in the same period a year ago?
It can be said that currently there is a tremendous interest in all areas of the photovoltaic industry. While the micro-installation segment has been red-hot for a long time, interest in business photovoltaic installations has only increased significantly in the last year. This is undoubtedly due to the significant increase in wholesale energy prices and the introduction of the capacity fee at the beginning of the year. With such a heavy burden on electricity bills, to own or rent a photovoltaic installation is a very cost-effective solution. The third key segment is large-scale photovoltaic farms. The development of this market has so far been derived from the RES auctions organised by the Energy Regulatory Office and has not been as spectacular as in the case of domestic installations. However, with the gradual increase in volumes allocated to PV projects in the auction, their development has started to become more and more popular. There are currently projects in the pipeline by developers with a total capacity of at least several GW, and it is this area that will bring the most of the new capacity in the near future.
Has the pandemic affected the photovoltaic industry in Poland?
Both in the case of the Polish market and in the case of other European countries, it can be said that the pandemic has affected them only slightly. Of course, the supply chain for the basic components of photovoltaic installations has been disrupted, but this has not stopped investments, only slightly delayed them. The pandemic has instead had a significant impact on component prices. Over the past year, prices of almost all important raw materials in the global economy have risen, which has also translated into a reversal of the previously downward trend in module prices. In Poland, however, this increase occurred at the time of the aforementioned increase in energy prices, so it was not as severe.
There are changes coming. Both the system of subsidies and the way of accounting for energy generated by PV installations are to be transformed. How will this affect interest in this branch of RES?
There is no doubt that the prosumer market will undergo significant changes. The change proposed by the Ministry of Climate and Environment in June to the way energy surpluses in micro-installations are accounted for, which was to be based on the average quarterly price of energy from the wholesale market, has aroused a lot of emotion. Shortly afterwards, we heard about a new concept – a 1:1 discount, but calculated on the energy itself, without distribution charges. A few days ago, another concept emerged – net-billing, that is, accounting for surpluses based on the current market price. It therefore appears that the final shape of the changes is still unknown. However, it is likely that regardless of the new billing method chosen, these changes will somewhat reduce the attractiveness of this type of installation. However, I do not think that this will cause a sudden collapse of this segment, rather a moderate decline. Until the end of the year, it is expected that there will be huge interest in home installations, especially since the third edition of the “My electricity” subsidy programme has been launched.
Is there any hope for continued prosperity in terms of new PV installations? Perhaps this opportunity should be seen in the planned subsidies for energy storage?
Absolutely. Energy storage for PV installations, both domestic and large-scale, is undoubtedly the future. Firstly, the proper functioning of the current electricity grid, which is limited in its capacity to handle large numbers of small distributed energy sources, is becoming an increasing problem. Storage facilities are a partial answer to this problem – when there is too much energy in the system, it can be physically ‘stored’ and given back when there is a shortage on the grid. Secondly, the price of energy storage, as in the past for PV installations, is decreasing very rapidly all the time. At the moment, however, both prosumer and large-scale energy storage are not profitable enough to make such investments in large numbers without support. At this stage, such projects should be supported in order to open up the market and acquire know-how. As scale increases, profitability will increase. This is exactly the same path that every new technology goes through.
Is the planned slowdown of the photovoltaic industry in Poland only related to the poor state of the electricity grid?
Taking into account all segments of the PV market, I believe that we will not see a market slowdown in the next two years. Let us not forget that the largest increases in capacity in the near and medium term will come from large farms, most of which will participate in auctions. We already know that these few auction gigawatts will certainly be built, but they will only be physically built and visible in the national system in a year or two. Undoubtedly, however, connectivity to medium- and high-voltage grids is already a significant problem that will only increase. Grid operators will not be able to upgrade infrastructure in the short term to cope with demand from developers. Even small domestic installations are already a challenge for local grids today. Arguably, this will actually be a brake on the industry in the years to come. However, there is a range of solutions available that could partially solve this problem, such as the energy storage mentioned earlier. It would also be desirable for the industry to change the definition of installed capacity so that it is counted according to the power of the inverters (AC) of a given farm, rather than the power of the PV modules (DC) operating in it. Synergies between photovoltaic and wind farms should also be sought. It is very rare for these sources to operate at full power at the same time, and for the time being they are treated in a completely independent manner. Every few percent of capacity released in this way would, on a national scale, bring great opportunities for the development of further projects.
Energy groups collect a significant portion of their revenues through electricity transmission charges. The PV installations therefore deprive them of some of their potential profit. Will this serve as a marker for increasing electricity prices to offset losses? If so, will such actions not lead to social conflicts?
Yes, it is true. The development of dispersed energy is detrimental to a system that has functioned unchanged for a long time. However, there is no other way at present. Energy groups, which are and will continue to be the backbone of the electricity system, must adapt to the new conditions that result not only from the standards imposed by the European Union, but above all from the social and technological changes that we are all experiencing as European citizens. It seems that domestic corporations themselves are also recognising this need by investing in RES assets themselves. Looking more broadly at the situation of the Treasury’s energy companies, it is impossible not to mention the concept of creating the National Energy Security Agency (NABE), which would take over currently unprofitable coal assets and leave transmission and green generation assets to the energy companies. This idea raises many doubts and so far provides more questions than answers, but it will undoubtedly have a significant impact on the shape of the Polish energy market. The green transition raises doubts in parts of society, but I believe that in the long term, it will benefit us all.
There is still a niche in the photovoltaic market in Poland that nobody wants to fill. I mean recycling used PV modules. It would seem that there is potential here, but there is not much interest. Why is that so?
I think the main reason for this situation is the low demand for this type of service so far. Photovoltaics is still under development. The first larger PV installations started to be built in Poland only a few years ago. Assuming that the service life of the modules as promised by the manufacturers is 25-30 years, we can expect that the mass withdrawal of the panels will take place only after dozen or so years. I am sure that by then many companies will have been set up to do this, as well as the technology to very effectively reuse the materials from which the modules are built.