Poland’s Ministry of Climate and Environment has announced that the work of the team for setting the maximum price for electricity from offshore wind farms will be extended until June 14, 2024. The reason for this decision is the need for additional analysis of current electricity market conditions.

“Based on the order of the Minister of Climate and Environment of April 5, 2024, regarding the establishment of a team for setting the maximum price for electricity from offshore wind farms, the chairman of the team, in consultation with the minister, decided to extend the deadline for the work until June 14, 2024”, as stated in a release. The ministry noted that due to the specifics of the second phase of the support system and the international environment, it is necessary to conduct additional analyses of electricity market conditions in order to ensure a properly calculated maximum price, which will be the basis for the development of the offshore wind sector in Poland.

In early April, the Minister of Climate and Environment appointed a team to develop recommendations for the maximum price for energy generated by offshore wind farms to be auctioned by producers. The first of these auctions will be held in 2025, with subsequent auctions in 2027, 2029 and 2031. Under the first phase of offshore support, the so-called strike price in the differential contract was 319.6 PLN/MWh.

The team is tasked with developing recommendations on the maximum price for electricity generated in an offshore wind farm, expressed in zlotys per 1 MWh, that can be indicated in the bids submitted in the auction by producers. This price must take into account, among other things, operating and investment costs of the farms, as well as the economic conditions of their operation, while not unduly burdening end users.

Determining a sufficiently high amount of support is crucial to the viability of offshore projects. Too low of a price may result in some projects not being implemented. These problems are not exclusive to Poland – last month we reported on BalticWind.EU that Lithuania canceled its wind farm tender due to weak interest from developers. Lithuania’s National Energy Regulatory Council (VERT) prepared the tender, which was announced in January and closed on April 14. The tender required at least two bidders, but only the state-owned Ignitis Group, which plans to build a 700 MW wind farm, showed interest.

In response to this setback, Lithuania’s Ministry of Energy has announced plans to consult with industry stakeholders to explore the possibility of resuming the bidding process and setting a new start date.

Source: Climate Ministries & BalticWind.EU