Page 18 - Buy Russia - bne IntelliNews monthly magazine April 2017

18 I Companies & Markets bne April 2017
its development through the feed-in-tariff system, and now the rest of the world can benefit from cheaper solar power."
In 2016, Portugal managed to derive 100% of its electricity from renewable sources during four days in May. Denmark surpassed the 100% mark in 2015. Regionally integrated power grids and markets like the Nordic one are providing solutions to long-standing problems with solar and wind pow- er, such as storage and the gradual transmission of electricity generated on peak days to end-consumers when they need it.
But east of Berlin, things are less rosy. A combination of entrenched industrial practices, powerful hydrocarbon lobbies, a lack of political interest in renewables, changing
and confusing legislation, little public engagement in power generation and lower purchasing power than in the West mean that the EU's newest members may not benefit from a large- scale pickup in solar and wind power just yet.
Pressure from Brussels to increase bloc-wide renewable energy generation to 20% of total generation by 2020 has been dealt with creatively, for example by categorising co-fired coal and biomass as renewable energy in Poland and Slovakia, and counting pre-existing installations (primarily hydropower plants) towards national renewable energy targets.
Poland sets the bar low
Germany's eastern neighbour is perhaps the most tragic case of lagging behind in renewable energy generation. Home to Europe's second largest coal industry after Germany's, Poland has set an unambitious target for itself for 2020 – to meet 15% of its total ener- gy consumption from renewable sources. And, judging by recent developments, it may miss the target, Izabela Zygmunt, a Polish campaigner at CEE Bankwatch, explains in an interview with bne IntelliNews. "If we meet it, we will barely meet it," she adds.
The main culprit is coal, which accounts for almost 85% of the electricity generated in Poland at almost 50 coal-fired thermal power plants. "The coal sector has a powerful lobby, which is very well organised and has influence on any government that is in power," Zygmunt explains. Unsurprisingly, coal will continue to be at the heart of Poland's energy strategy looking ahead.
As if taking on the powerful coal industry wasn’t hard enough, renewable energy companies have had to grapple with ever more stringent legislation and a dysfunctional green certifi- cate scheme, which has recently been replaced by renewable energy auctions.
Like elsewhere in CEE, wind energy got a bad name in Poland when some of the first wind parks were built close to resi- dential areas, which prompted complaints about the noise from the turbines. In response, the Polish parliament passed prohibitive legislation banning the construction of wind farms within two kilometres of residential areas or forests. The result, Zygmunt says, is that there are now very few areas in Poland where wind farms can be built onshore, and planned projects are being cancelled.
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Residential photovoltaic (PV) rooftop panels have also suf- fered a setback from legislative changes, after which only wealthy homeowners that are concerned about the environ- ment will install rooftop PV panels, Zygmunt says, a combina- tion that is not all that common in Poland.
Overall, the future of solar and wind energy in Poland does not look particularly bright.
Chaos and confusion in Romania
The second largest EU member country in CEE, Romania is, on paper, a frontrunner in promoting renewable energy sources (RES) in the region. In 2015, the country exceeded its 24% RES target for 2020 by 0.8 percentage points. But a closer look at recent develop- ments indicates that things are about to take a turn for the worse.
The country was an early adopter of the green certificate scheme also used by Poland. The system was so generous, Alexandru Mustata from CEE Bankwatch Romania explains, that producers could afford to feed electricity into the grid for free just to collect the green certificates. The result was an unprecedented boom in the construction of solar parks and wind farms in 2010-2013. Among them is Europe's largest onshore wind farm at Fantanele-Cogealac with a capacity of 600 MW, built by Czech electric utility CEZ Group.
But like any bubble, the green certificate bubble was bound to burst, and burst it has. Nor do the frequent changes to the green certificate system – there have been up to 10 to date, Mustata estimates – help producers. "There is such a chaos now, that even producers don't know the rules [for granting green certificates] anymore.”
Roman Gazdik, spokesperson for CEZ Group, confirms this in an email to bne IntelliNews. "We are receiving all the green certificates that we were promised, but the ability to trade them has been postponed. Also, starting in 2021, we will only receive one green certificate per MWh.”
Mustata expects that Romania will increase its 2030 renew- able energy target only if the EU offers a good bargaining chip in exchange, such as the ability to extend the lifetime of the nuclear power plant at Cernavoda, which produces 20% of the country's electricity. However, solar and wind could still find room in the market, as many of the coal-fired thermal power plants are ageing and will likely be shuttered or replaced with more efficient units.
Un-FiT for renewables
Unlike Romania and Poland, but like Germany, the Czech Repub- lic chose a feed-in-tariff (FiT) system to support producers of renewable energy after passing its renewable energy act in 2005. But, unlike Germany, producers are paid by the government, and not by end-consumers, for the electricity they feed into the grid.
The FiTs were so generous in their early days, that they prompted an inflow of investment in solar parks and wind farms, which resulted in Prague being faced with a €1.2bn