Dynamic situation in the renewable energy market
The Russian aggression in Ukraine has rendered the current shape of the energy system in Europe obsolete. Energy prices in 2022 skyrocketed to levels that forced individual countries and the entire EU to intervene in order to stabilize the situation. Faced with new conditions, the need for finding a new, more resilient model, impervious to such threats, emerged. Consequently, another factor supporting the development of decentralized and independent from fossil fuel imports power sources appeared.
According to the latest PMR report titled “The RES farm market in Poland 2023. Market analysis and forecasts for the development of photovoltaics and wind farms for the years 2023-2028,” despite high expectations and investment opportunities in the renewable energy sector, its participants must face many barriers.
Advanced investment processes, but increasingly conservative investor approach
In 2023, the market entered with the burden of a price ceiling imposed on energy producers, above which they are obligated to transfer a refund to the Price Difference Payment Fund. Obviously, this disrupts market relations and impacts the revenue of energy producers, which, in turn, translates into limited investment budgets.
Unfortunately, this was not the only negative factor affecting the investment climate in the RES farm industry. On April 23rd and 30th, 2023, due to high solar radiation, historically the first restrictions on generation from photovoltaic sources, ordered by the Polish Power Grid Company, occurred. They were a result of surplus electricity production compared to demand, which was relatively low on those days (public holidays). Announced under the guise of a threat to electricity supply security, the scale of electricity oversupply from RES sources on those days exceeded 3 GW and 2.3 GW, respectively. Such actions caused nervousness among investors, especially since for a long time it was unclear whether any compensation would be granted in this regard. Only on May 19th, 2023, about a month after the first shut-off, was official information provided about a positive decision regarding financial compensation for incurred losses.
Find comprehensive information about the current state of the Polish renewable energy market in the PMR report:
The beginning of the year also brought disappointment to onshore wind farm energy producers. Although at the end of April 2023, the long-awaited amendment to the distance law easing the 10H rule came into force. Unfortunately for the wind industry, the previously established provisions reducing the minimum distance of turbines to 500 meters from residential buildings were changed at the last moment after additional consultations with the community of the municipality and after conducting a strategic environmental impact assessment, which is carried out as part of the local spatial development plan (MPZP). This boundary was ultimately shifted to 700 meters, which will cause numerous repercussions and effectively limit the development of new capacities compared to previous announcements.
Despite consistently positive long-term prospects for the renewable energy market, the past few months have brought a few significant changes that could not be received positively by market participants.
Fragmented photovoltaic farm market
In Poland, there are already several thousand photovoltaic installations with a capacity exceeding 50 kW. This results in a huge fragmentation of the market. Intensive development results in a large number of MW (including increasingly larger installations) being commissioned, the emergence of new players results in the acquisition of portfolios developed for years, and changes in market investors’ strategies also lead to numerous repositioning. Moreover, ownership changes occur very frequently and are extremely dynamic, making it not easy to capture the current state of affairs.
The analysis of operating photovoltaic farms conducted by PMR in terms of ownership enabled the creation of the current ranking of the top 25 investors. Among the market leaders are both companies with a relatively small network of installations and owners of single, but huge photovoltaic farms.
The map below confirms the diversity of the largest investors in the PV market.
Further development of the economic situation and the formation of energy price levels will influence the pace of development of the renewable energy market
Due to the high uncertainty of the market situation and the significant impact of volatile overall prices and energy prices, as well as the dynamic changes in macroeconomic indicators observed in recent months, we have prepared forecasts for the development of the photovoltaic and onshore wind farm markets in three scenarios. In addition to the base scenario, which presents, in our opinion, the most likely forecast for market development, we also present alternative scenarios (high and low energy prices) in the report.
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Senior Construction Market Analyst