Wind Energy in Polish Power System

AKADEMIA GÓRNICZO-HUTNICZAim. Stanisława Staszica w Krakowie

WYDZIAŁ PALIW I ENERGII

Praca dyplomowa

Imię i nazwisko Artur Wyrwa

Kierunek studiów TECHNOLOGIA CHEMICZNATemat pracy dyplomowej:Wind Energy in the Polish Power System

Ocena:

Opiekun pracy

prof. dr hab. inż. Adam Guła

Kraków, rok 2001/2002

6

AKADEMIA GÓRNICZO - HUTNICZAim. Stanisława Staszica w KrakowieWYDZIAŁ PALIW I ENERGIIKierunek studiów: TECHNOLOGIA CHEMICZNA

TEMATYKA PRACY I PRAKTYKI DYPLOMOWEJdla studenta V roku studiów dziennych

Specjalność: Paliwa i EnergiaKierunek Dyplomowania: Gospodarka Paliwami i Energią

Artur Wyrwa

TEMAT PRACY DYPLOMOWEJ: Wind Energy in the Polish Power System

Opiekun pracy: prof. dr hab. inż. Adam Guła

Recenzent pracy: dr inż. Mariusz Filipowicz

Miejsce praktykidyplomowej:

Centrum Badawcze ABB - Kraków

PROGRAM PRACY I PRAKTYKI DYPLOMOWEJ1. Zapoznanie się z literaturą dotyczącą energetyki wiatrowej.2. Udział w II konferencji ”Rozwój Energetyki Wiatrowej w Polsce - Konieczność

czy Idealizm”.3. Zapoznanie się z materiałami wewnętrznymi Centrum Badawczego ABB w

Krakowie.4. Zapoznanie się ze standardami światowymi w projektowaniu farm wiatrowych w

Mannheim/Niemcy, ABB New Ventures oraz analiza możliwości uczestnictwaABB w rozwoju energetyki wiatrowej w Polsce.

5. Perspektywy rozwoju energetyki wiatrowej w Polsce.

[email protected] (Looking for a job)Brody 13a34-130 Kalwaria ZebrzydowskaMałopolskaPOLAND

mailto:[email protected]

7

AcknowledgementsI would like to express my gratitude to professor Adam Gula for his advise and

support.I also thank Mr. Piotr Ciechanowski and Dr Volker Biewendt, both from ABB, for

fruitful conversations.

8

CONTENTS

FOREWORD..................................................................................................................10

1. INTRODUCTION........................................................................................................11

2. WIND RESOURCES ..................................................................................................15

2.1. WIND ENERGY AS A COMPONENT OF SUSTAINABLE ENERGY DEVELOPMENT ..............152.2. HARNESSING WIND ENERGY....................................................................................162.3. WORLD USE OF WIND ENERGY................................................................................172.4. THE POWER OF WIND .............................................................................................192.5. WIND RESOURCES EVALUATION ..............................................................................22

3. POLISH WIND CONDITIONS. ...................................................................................24

4. POLISH POWER MARKET .......................................................................................27

4.1. POLISH POWER SYSTEM .........................................................................................274.2. MARKET DESCRIPTION-GENERAL REMARKS.............................................................274.3. MARKET PARTICIPANTS ..........................................................................................29

4.3.1. Regulation of the electric energy market ........................................................294.3.2. Generation......................................................................................................304.3.3. Transmission ..................................................................................................334.3.4. Distribution .....................................................................................................35

5. WIND ENERGY IN THE POLISH POWER SYSTEM ................................................37

5.1. MARKET ASPECTS ..................................................................................................375.2.TECHNICAL ASPECT.................................................................................................37

5.2.1. Grid constrains ...............................................................................................375.2.2. Power quality constrains.................................................................................38

5.3. FORMAL PROCEDURES OF ESTABLISHING A WIND FARM .............................................39

6. LEGISLATION ...........................................................................................................42

6.1. INTERNATIONAL FRAMEWORK ..................................................................................426.2. POLISH LEGAL FRAMEWORK ...................................................................................43

6.2.1. Development Strategy of Renewable Energy Sector......................................436.2.2. Polish Energy Act ...........................................................................................436.2.3. Ordinance of the Minister of Economy on Electricity Purchase Obligation .....456.2.4. Power Purchase Obligation – Meeting the Target ..........................................47

9

6.2.5. Ordinance of Minister of Economy Concerning Detailed Principles of SettingEnergy Tariffs ................................................................................................49

7. FINANCING OF WIND ENERGY...............................................................................51

7.1. FOREIGN FOUNDING SOURCES ................................................................................517.1.1. Flexible Kyoto Mechanisms............................................................................517.1.2. World Bank.....................................................................................................537.1.3. The Global Environment Facility.....................................................................537.1.4. PHARE – European Union Assistance Program ............................................547.1.5. Instruments for Structural Policies for Pre-Accession.(ISPA) .........................547.1.6. The Altener Program ......................................................................................547.1.7. Bilateral Programmes .....................................................................................55

7.2. POLISH FOUNDING SOURCES...................................................................................567.2.1 Foundation EKOFUNDUSZ (ECOFUND)........................................................567.2.2 The National Found for Environmental Protection and Water Management....56

7.3. COMMERCIAL SOURCES ..........................................................................................587.3.1 The Bank of Environmental Protection ............................................................597.3.2 The Bank of Export Development....................................................................59

8. MAJOR WIND FARM PROJECTS IN POLAND........................................................60

8.1. PROJECTS COMPLETED ..........................................................................................608.2. PROJECTS IN THE DEVELOPMENT PHASE..................................................................618.3 JOINT IMPLEMENTATION PROJECT: SKROBOTOWO WINDPARK....................................62

9. SUMMARY.................................................................................................................65

ANNEX I. MICROSITING...............................................................................................68

ANNEX II. LIST OF ANNEX I COUNTRIES...................................................................70

REFERENCES...............................................................................................................71

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FOREWORD

Energy is fundamental to economic and social development. Yet, at the dawn of

the 21st century, we are confronted with the unacceptable fact that there are 2 billion

people without access to basic energy services. At the same time, we are facing the

greatest threat to our collective survival because of our unsustainable use of energy.

There is no doubt that we can and must use it more efficiently but there is equally no

doubt that the developing world will need more energy to address very pressing needs.

The challenge, which faces all of us, is how to meet this growing demand for energy

while at the same time addressing the equally urgent threat of climate change.

This study highlights the significant role that wind energy can play in that

challenge. As technology advances wind energy becomes competitive in increasingly

large areas and is therefore growing rapidly but still faces an uphill struggle against the

well established dominant electricity supply technologies - coal and gas.

The study makes an overview through the Polish wind energy market to bring it

closer to the potential investor. In the process, a number of technical, economic and

resource implications have had to be examined. The main inputs to this study have

been:

• an assessment of Polish wind resource and its geographical distribution.

• the level of electricity output required and whether this can be accommodated in the

grid system.

• the current status of the wind energy market and its potential growth rate.

• analysis of wind energy technology and its cost profile.

There is no doubt that wind energy can play a significant role in Polish energy

supply. This is not just something to look forward to with hope for the future - it is here

today as sound and growing businesses all over the world.

11

1. Introduction

We witness that energy is becoming an increasing concern worldwide. This has both

its local and global meaning:

locally, it relates to energy affordability and environmental destruction caused by

energy production processes, while

globally it relates to

• depletion of the traditional fossil fuel resources on one hand and

• climate change which seems to be more and more recognised as global

environmental threat for the humankind.

Limited resources.

The estimates of the available resources of the fossil fuels vary considerably. However,

the experts increasingly agree that oil will start becoming a scarce resource already

before the middle, and natural gas by the end of this century. Very recent estimates

show that oil consumption will peak already in about 2010 and decline afterwards due to

depletion of this resource. Coal, is an abundant resource, it may suffice for 300 -500

years more, but despite that it is so plentiful - is not an optimistic long-term solution. This

is explained by the numbers in Table 1, which show CO2 emissions per one kilogram of

burned fuel.

Emission [kg] Ratio to Natural Gas

Natural Gas 0,2 1.00

Oil 0,26 1. 3

Coal 0,33 1.65

Table 1. CO2 emissions per one kilogram of burned fuel. [1]

As one can see, burning coal leads to CO2 emissions nearly two times higher than those

for natural gas. Oil is somewhat better as the corresponding factor is 1,3. One can

conclude that - from the global environmental point of view - gas is the most

environmentally friendly fossil fuel. However, it should be remembered that burning

natural gas leads also to greenhouse gas emissions.

12

Fossil fuels (gas, oil and coal) are better or worse; still their resources are limited and

using them for energy production leads to antropogenic climate change.

Climate change.

Greenhouse Gases (GHGs), primarily carbon dioxide (CO2), methane (CH4) and nitrous

oxide (N2O) are naturally occurring in the Earth’s lower atmosphere. They trap heat

keeping the planet warm and helping to support life. Largely due to human activity, in

particular the burning of fossil fuels and deforestation, atmospheric concentrations of

GHGs have been rising. The evidence that there is a significant climate change effect

caused by human activity is growing. No doubt, the concentration of greenhouse gases,

notably of CO2, in the atmosphere is sharply increasing as illustrated in Fig. 1.

Fig 1. Increase of the concentration of CO2 in the atmosphere [EPA]

The physical picture is then quite obvious: once greenhouse gases absorb infrared

radiation, more (heat) energy that would be emitted back to the space by Earth’s surface

is trapped in the atmosphere, whereby the average temperature in our biosphere should

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13

increase. Intuitively, the results of such change are quite frightening: melting of Polar ice

and glaciers, rise of sea levels, desertification of vast areas of fertile land, and - foremost

- increase of the strength of the climatic phenomena (floods, hurricanes, El Ninio).

Indeed, the more energy is accumulated in the biosphere, the more energy is available

for such phenomena. Of course, such simple pictures can be challenged, and they are

challenged indeed.

Considering both fossil fuel depletion and climate change, the present patterns of

energy production and use may limit access to energy services for future generations

and - at the same time - may have a negative permanent impact on the environment.

To counteract such a scenario a significant effort has been made to find the ways of

achieving a sustainable energy development.

It is obvious that a given energy service can be obtained by using greater or smaller

amount of energy (e.g. better insulated building or more efficient lighting), in other

words, using energy more or less efficiently. It is easier to achieve common

understanding of sustainable energy and know what we practically mean by, when we

refer to this notion, if we define it in more operational terms. In this case, most often, one

understands two things:

• increasing energy efficiency

• increasing the use of renewable energy sources,

From the point of view of energy development renewable energies address two

problems caused by the reliance on fossil fuels:

• they are inexhaustible,

• their use for energy production does not have adverse environmental impacts

In order to summarize how the particular energy sources discussed above fulfil the

sustainability criteria we should examine the table below. Table 2 shows a picture, which

is to some extent arbitrary, nevertheless, rather widely accepted.

14

Energy Source Depletion Environmental Impacts

Gas exhaustible climate change (moderate)Oil exhaustible (quickly) climate changeFossil fuelsCoal exhaustible (long-term) climate change (strong)

natural 235 U exhaustible (quickly) reactor safety, nuclear waste

Fissionartificial239Pu hardly exhaustible as above, plus easy weapons’

proliferationNuclearenergy

Fusion practically inexhaustible rather minor radiation hazards

Geothermalenergy practically inexhaustible possibly wildlife in some areas

endangered

Wind inexhaustible landscape(?), noise(?), birds(?)

Hydro inexhaustiblemethane from biomass decay,microclimate, landscape, fish migration,cultural heritage

Biomassinexhaustible, but only ifharvested in asustainable way

conversion of wild areas intoagricultural land

Direct solar heating inexhaustible landscape(?) recycling of materials

So

lar d

eriv

ativ

es.

Direct electricity inexhaustible landscape(?) recycling of materials

Energy NOTused(energyefficiency)

exhaustible (a fraction ofenergy actually used)in this sense it can beconsidered inexhaustible

none

Table 2. Depletion and Impacts

Wind energy is largely free of environmental impacts which have long-term, inter-

generational or serious ecological effect. Furthermore, the negative impacts, if any, of

well-located wind farms are temporary and reversible. Unlike the fossil fuel and nuclear

fuel cycles there is no potential conflict with sustainable development. Once sustainable

development has been defined as "meeting the needs of present generations, without

compromising the ability of future generations to meet their own needs", wind energy

should be consider as completely sustainable, unlike conventional energy technologies,

since we will never run out of wind.

15

2. Wind Resources2.1. Wind Energy as a Component of Sustainable Energy Development

The winds are caused by pressure differences across the earth's surface. They

are a good energy resource because they are distributed over large areas of the Globe.

The origin of wind is the energy of solar radiation absorbed by the Earth. For this reason

wind energy is a renewable source, i.e. its resources are not depleted with time.

The Earth is absorbing energy from the solar flux of about 175000 TW. More then 30%

of this energy is reflected back to the space and nearly 70% is absorbed by the Earth..

The relevant numbers are given in Table 3.

Solar Radiation Intercepted by the Earth 175 000Solar Radiation Absorbed by the Earth 110 000

“theoretical”potential of

Solar Energy Involved in Evaporation hydro energy 40 000Solar Energy: Atmospheric Pressure wind energy 1 800Solar Energy Involved in direct Heating direct heat 68 000Solar Energy Utilised in Photosynthesis biomass energy 100Man’s Rate of Energy Use, 1980 10

Table 3. Solar Energy Fluxes (TW). [2]

One can see that the ratio of the present man’s rate of energy use to the total flux of

solar energy absorbed by the Earth is only 10-4. As seen in Table 3, it is estimated that

about 1% of the Sun energy received by the Earth is converted into kinetic energy of air

masses. The total physical potential of wind energy exceeds by a factor of about 180 the

present global energy needs. Of course only a small fraction of this potential can be

used in practice. The biggest share of solar radiation is converted into hydro energy

while relatively small amount into biomass. Still, wind energy constitutes a considerable

potential in the effort to achieve the global energy sustainability.

16

2.2. Harnessing Wind Energy

Humans have harnessed the energy of winds for over 2000 years. Until the

industrial revolution, windmills were used extensively to provide power for many

purposes such as pumping water or grinding grain. Nowadays, with new technology and

new materials, modern wind turbines have been developed to generate clean electricity

that we all need for lighting, heating, refrigerators and other appliances. Wind turbines

produce no pollutants, no waste products and no radioactivity. There are no harmful

effects to populations elsewhere in the world, or to future generations. Wind energy is

clean energy.

The main environmental concerns about the use of wind energy are impacts on land use

and landscape, noise, effects on wildlife, killing birds and disruption of radio

transmissions. Wind turbines can however be placed in areas used for grazing of

animals, or land of marginal value. Birds occasionally collide with wind turbines, as they

do with all other tall structures such as buildings. Overhead power lines present a far

greater threat to birds than the wind turbines. However, areas that are commonly used

by threatened or endangered species should be regarded as unsuitable for wind

development. Visual impacts can be minimized through careful design and location of a

wind power plant. Noise was an issue with some early wind turbine designs, but it has

been largely eliminated through improved engineering and appropriate distance from

nearby residences. To put this into perspective, a wind turbine 250 meters from a

residence is no noisier than a kitchen refrigerator. Potential interference to

telecommunications systems can be easily overcome by careful siting and minor

technical adjustments. All forms of energy production have an environmental impact, but

with wind energy the impacts are small, local, and manageable.

Governments all over the world are trying to reduce pollution. Wind energy will play an

important role in creating a cleaner and sustainable future. Along with other renewable

technologies and energy efficiency, it will be crucial in reducing global climate change,

acid rain and other environmental problems.

17

2.3. World Use of Wind Energy

Since the recession time in 1973 thousands of installations to utilize wind to

produce electric energy come into being. With an average growth rate of 30% annually

over the past five years, wind energy is the world’s fastest-growing energy source,

although it still accounts for a small portion of world electricity supply. Some 6,500

megawatts (MW) of new wind energy generating capacity were installed worldwide in

2001. This is the largest increase ever in global wind energy installations, well above the

capacity added in 2000 (3,800 MW) and 1999 (3,900 MW). The world’s wind energy

generating in 2001 stood at about 24,000 MW. Global wind energy market continues to

be dominated by the “big five” countries with over 1,000 MW of generating capacity

each:

2000

Additions

2000 Year End

Total

2001

Additions

2001 Year End

Total

Germany 1669 6113 2659 8750

United States 53 2566 1695 4261

Spain 713 2502 835 3337

Denmark 552 2300 117 2417

India 90 1167 240 1407

Table 4 Top Wind Energy Markets (by installed capacity, in MW)

Germany alone set a world and national record of more than 2,600 MW of new

generating capacity installed during the year. Germany, Denmark, and Spain are

demonstrating that wind can reliably provide 10% to 25% and more of a region or

country’s electricity supply [3]. In the United States, the wind energy industry left

previous national records in the dust with a blow-out year in 2001, installing nearly 1,700

megawatts (MW) or $1.7 billion worth of new generating equipment. The new

installations account for close to a third of the world wind energy generating capacity

added in 2001. Europe currently accounts for over 70% of the world’s wind power.

European countries made up two-thirds of the 2001 additions.

18

Fig 2. The world’s wind energy generating capacity in MW

Market growth in 2002 is likely to be in the 6,000 MW range, with a temporary slowdown

in the US market (due to the delay in extending the federal wind energy production tax

credit) offset by continued growth in several dynamic markets. The global industry could

therefore reach the 30,000-MW mark by the end of 2002.

19

2.4. The Power of Wind

A wind turbine can be placed almost anywhere in a reasonably open ground.

However establishing a wind farm is a commercial development and one has to optimise

all relevant parameters. This is important not only for the returns during the life time of

the farm, but also for raising capital to develop the site initially.

Wind speed data are the most important indicator of a site’s wind energy resource.

Multiple measurement are required for determining a site’s wind shear characteristics,

conducting turbine performance simulations at several turbine hub heights, and for

backup. Heights typical of recent wind measurement programs are 40 m. 25 m, and 10

m [4].

• 40 m: This height represents the approximate hub height of most utility-

scale wind turbines. Actual hub heights are usually in the 50 m to 65 m

range.

• 25 m: This level approximates the minimum height reached by the blade

tip portion of a rotating turbine rotor and will help define the wind regime

encountered by a typical turbine rotor over its swept area.

• 10 m: This is the universally standard meteorological measurement

height. However, in locations where the interference of local vegetation

(e.g., forest) at this height is unavoidable, an alternative low-level height

of 10 m above the forest canopy may need to be used.

When comparing data with other stations, all wind speed data should be extrapolated to

a common reference height (e.g.,30 m or 40 m). Wind speeds can be adjusted to

another height using the following form of the power law equation :α

=

00 h

hVVh

where

V - the unknown speed at height h

V0 - the known wind speed at the measurement height h0

α - the wind shear exponent.

20

As a first approximation, the wind shear exponent is often assigned a value of 0.143,

known as the 1/7th power law, to predict wind profiles in a well-mixed atmosphere over

flat, open terrain. However, higher exponent values are normally observed over

vegetated surfaces and when wind speeds are light or moderate (i.e., under 7 m/s or 16

mph).

A steady flow of reasonably strong winds is a necessary requirement for utilising the

power in the wind. The power available to a wind turbine is the kinetic energy passing

per unit time in a column of air with the same cross sectional area A as the wind turbine

rotor, travelling with a wind speed V. Thus the available power is proportional to the

cube of the wind speed [5].

3

21 AVPj ⋅= ρ

We can see that power is strongly dependent on wind speed. Doubling the wind speed

increases the power eightfold but doubling the turbine area only doubles the power.

Wind direction frequency information is important for identifying preferred terrain shapes

and orientations as well as for optimising the layout of wind turbines within a wind farm.

Therefore, choosing a site with the strongest and most persistent winds can significantly

increase the profitability of the venture. The density of the air will also have an effect on

the total power available. The air is generally less dense in warmer climates and also

decreases with height. Air density can range from around 0.9 kg/m3 to 1.4kg/m3. This

effect is small in comparison to the variation of wind speed.

As the wind power generated depends upon the cube of the wind velocity its accurate

estimate is a critical factor. This problem is dealt with by describing the wind speed

probability distribution over a year. The use of statistical tools is difficult as choices on

the length of sample can impact on the results. The data would be more useful if it could

21

be described by a mathematical expression. Various statistical distributions have been

suggested to describe the wind climate. The two parameter Weibull distribution has

been found to fit wind data with acceptable accuracy.

γ

βγ

ββγ

−−

⋅

⋅=

V

eVVf)1(

)(

where:

V is the wind speed

β is the scale parameter with units of speed

γ is a dimensionless shape parameter

For γ =2 the distribution reduces to a Rayleigh distribution and for γ =1 an exponential

distribution is obtained. These are special cases of the Weibull distribution. The scale

factor β is related to the mean wind speed for the site!

−Γ

=

γ

β11

V

where: Γ is the complete gamma function

The two Weibull parameters γ and β may be derived from the fits of the site data. The

mathematical description of wind frequency allows us to match it with the turbine power

curve. In thus way a measure of the average total power capture in a year is achieved.

Additionally, turbine cut in and furling speed may be adjusted to maximise the total

energy capture.

As it is seen assessment of wind potential is rather complicated task. The lack of such

estimates or inaccurate data may lead to wrong investment decisions.

22

2.5. Wind Resources Evaluation

It is only recently, that we observe an integrated, modern approach to the

measurement of wind potential. The consecutive steps of wind resource evaluation are

described below.

Preliminary Area Identification

Fig. 3. Average annual wind speed.

The first step in the development of a windfarm is the evaluation of business

opportunities by using world-, country-, wind-maps. Locations that are expected to have

an adequate wind regime can initially be identified then. This provides a broad picture of

the wind energy resource. Fig 3 illustrates the world wind potential, the darker are the

areas the higher are the annual averages of wind speed. The accuracy of any wind

resource estimate is obviously greatly affected by the accuracy of the wind data. Most of

the initial studies have had little access to measurements performed specifically for wind

23

energy estimation; then have rather relied on general meteorological data. However,

meteorological station sites are chosen for other reasons that measuring wind speed

(particularly agriculture, forecasting the weather and aviation). In general, wind is not the

most important measurement unless it is strong enough to be likely to cause destruction.

The measurement sites are thus not best suited to measure the unobstructed wind and

are rarely placed in the sites of highest mean wind speeds.

Area Wind Resource Evaluation

The next step is evaluation of wind recourse area. Visits to potential sites can often

reveal information about the strength and direction of prevailing winds. This stage

applies to wind measurement programs to characterize the wind resource in a defined

area or set of areas where wind power development is considered. The most common

objectives of this scale of wind measurement are to:

• Determine or verify whether sufficient wind resources exist within the area to justify

further site-specific investigations,

• Compare areas to distinguish relative development potential

• Obtain representative data for estimating the performance and/or the economic

viability of selected wind turbines,

• Screen for potential wind turbine installation sites.

Micrositing

The smallest scale, or third stage, of wind resource assessment is micrositing.

Its main objective is to quantify the small-scale variability of the wind resource over the

terrain of interest, like: wind speed distribution, extreme wind speed, turbulence, in-flow

angle, wind shear, temperature range [6]. Ultimately, micrositing is used to position one

or more wind turbines on a parcel of land to maximize the overall energy output of the

wind plant. More information is given in the Annex I.

24

3. Polish wind conditions.

The Polish wind potential is comparable to the wind potential of the “world wind

farms giant”- Germany. It also compares favourably with countries where a significant

share of energy is obtained from wind, such as Denmark or Sweden, which is illustrated

in the table below.

PolandAccording to “Law andeconomy aspects of usethe energy from renewa-ble sources use””(EC BREC,2000 )

DenmarkAccording toDansk EnergyManagement (1999)

SwedenAccording to EnergyManagement (1999)

Energy sources

[PJ/year ] [PJ/year] [PJ/year]Biomas 895 216 638Hydro energy 43 0,3 266Geothermalenergy

200 100 0

Wind energy 36 97 209Solar reflection 1340 84 194Total 2514 498,3 1307

Table 5. Polish technical potential of the renewable energy sources compared

with the technical potential of Denmark and Sweden [7].

According to the Institute of Meteorology and Water Management (IMWM) about 30% of

the Polish territory i.e. 60 000 km2 have the average wind speed over 4 m/s. Out of that

area, 30 000 km2 is described as accessible for location of wind farms. Assuming that it

is possible to install wind turbines of 4 MW capicity per one square kilometre, a

significant proportion of the Poland's electricity demands could be met by the wind

power generation. Moreover, it is expected that this potential can be even bigger.

Poland has never regarded wind energy as an energy source and therefore it is

inaccurate to assess the Polish wind potential on the basis of the existing wind data.

A preliminary estimate of the available resource is presented in Fig 4 as a map of wind

energy in watts/m2 at 10m above the ground. The figure shows the data from the state

25

network of meteorological stations. Not all areas of high wind speed potential are

highlighted, some because they cover too small areas, some because there is little data

and some because of local effects which are not fully recognised. The presentation of

the data does not take into account any constraints on the landuse, consequently no

estimate of the accessible resource is given.

Color Wind Conditions

GREEN FAVOURABLE

YELLOW GOOD

ORANGE SUFFICIENT

RED INSUFFICIENT

BROWN BAD

BLACK EXCLUDED

Fig 4. Wind potential of Poland [8].

The map in Fig 4 shows that the North of Poland particularly experiences high wind

speeds for a significant fraction of the year. The most favourable wind conditions are on

the Uznam Island, lane of the Baltic Coast from Swinouscie to Gdansk , Kaszubskie

Coast and in the North-Eastern part of Poland (Suwalszczyzna). In those regions the

average wind 30 metres above the ground speed exceeded 4,5 m/s. Estimates of IMWM

suggest that the experienced wind potential 20 metres above the ground ranges from

1250 to 2250 kWh/m2. Such yearly average winds may provide a positive return from

wind power generation. Good wind conditions exist also in the Mazowiecka Lowland,

central part of Wielkopolska. The map suggests that wind conditions in the other parts of

Poland are not sufficient to build wind farms. However, it is not necessarily to be true.

26

There are many factors influencing the wind speed, like local topography complexity,

orography factors. For instance favourable wind condition are in areas of Beskid Slaski

and Żywiecki, Bieszczady, Dynowskie Foothills and the east part of Sandomiesrka

Valley with the mean speed exceeding 4 m/s.

A few Polish commercial companies offer complete wind databases characterising wind

resources in different areas. The example of areas with accessible wind resource data is

presented below.

Fig 5. The example of areas with accessible wind resource data.

Even in regions with high average wind speed there are places less favourable for wind

farm location. The less favourable locations can be eliminated if the long term wind

speed measurements are carried out.

27

4. Polish Power Market

4.1. Polish Power System

The Polish power system is the largest in Central and Eastern Europe. As of

December 31, 1999 the installed capacity of the system was 34,208 MW, of which

31,407 MW in system plants and 2,801 MW in industrial plants. The newly

commissioned capacity was 230 MW in all the system plants.

Recently, total primary energy consumption of 3500 kWh/person per year ranked Poland

as number one among Central European countries. Poland has an energy consumption

of one third of the total of all these countries. However, Poland is an inefficient energy

consumer. It is estimated that up to 20 percent of energy generated is wasted but this

number is decreasing. E.g. in ZE Kraków (local distributor) only up to 11% of the energy

is lost. Poland uses about 70% of the EU’s average energy consumption per capita.

4.2. Market Description-General Remarks

The strategic importance of energy sectors led to their monopolisation after World

War II in all developed countries all over the world. The monopolisation as well as

specific character of electricity as a commodity are the main reasons for difficulties in

introducing market mechanisms into the energy sector. The centrally controlled energy

sector and government price control led to financial inefficiency. As a consequence one

witnessed economically unjustified cost increases which led to electricity price increases

and to lack of well defined development perspectives. It is expected to change once the

energy starts to operate on a free market basis. The pre-requisite for a free energy

market is free energy trade between generators and users.

In 1991 the Polish government decided to follow the example of Great Britain and other

countries by doing away with the single buyer market and replacing it with a pool pricing

and free market system under a new regulatory system. However, because of

commitments made by the single buyer (Polish Power Grid Company, PPGC), Poland

has now an uncomfortable hybrid market in transition with much higher risks that anyone

seemed to anticipate at first. Beside the new deregulated market there is still a player

who dominates and sets conditions.

28

At present the Polish power market is in transition to an open, free market. The Energy

Regulatory Authority (URA) is set up and operating, PPGC is no longer entering long

term contracts with producers, and an electricity trading exchange has been set up. In

theory, electricity producers sell, and major consumers buy electricity on the basis of

freely negotiated contracts.

The energy sector will be fully liberalised only when all participant have access to the

energy network on equal rights. The right to choose energy provider is the basic

principle of a competitive market. This rule is called Third Party Access (TPA).

Basic rules of functioning of energy market in Poland are included in the Energy Act and

its secondary legislation. They establish a framework for competition in sub-sector of

generation and supply and supervision by independent regulatory offices over

transmission and distribution.

29

The timetable of opening the market for the customers who get the right to choose their

supplier is the following:

• August 1998 for customers buying more than 500 GWh/a

• 1 January 1999 for customers buying more than 100 GWh/a




• 5 December 2005 for all customers

4.3. Market Participants

There are following participants of the Polish Energy Market [9]:

regulatory function is performed by ERA,

generation function is performed by about 15 of power companies,

transmission function is performed by PPGC,

distribution function is performed by 33 joint-stock companies,

power exchange function is performed be the Energy Exchange.

4.3.1. Regulation of the electric energy market As the activity consisting in energy transmission has a character of a natural monopoly,

where market mechanisms are limited, a regulatory body has been established: Urząd

Regulacji Energetyki (Energy Regulatory Authority, ERA) with the aim to stimulate the

business efficiency in the energy sector.

In accordance with The Power Law nomenclature, state interference into power system

take place through the so-called regulations basis on The Power Law.

Tasks in the scope of regulation of the energy economy regulation and development of

competition shall be implemented by the Chairman of the Energy Regulatory Authority

hereinafter referred to as "the Chairman of ERA". The Chairman of "ERA", is a central

government administration organ appointed for 5 years by the Chairman of the Council

of Ministers.

30

The main tasks of regulations are:

safety of the natonal energy system,

promotion of competition,

nature protection,

balance of entrepreneur and consumer interests,

economically justified schedule of costs,

safeguarding public interest,

control of consumer's service quality standards

To fulfil these tasks ERA is authorised to:

issue licences to energy utilities,

approve and control energy tariffs,

resolution of conflicts,

approve projects of energy market development,

impose penalties for breaking the Power Law.

4.3.2. Generation

With installed electric capacity of 34,208 MW (as of December 1999) of which 31,407

MW is installed in system plants and 2,801 MW in industrial units and electric generation

of 135 TWh, the Polish generation sector is the largest in Central and Eastern Europe.

Still the Polish demand is expected to grow by over 50% by 2020.

Below several most important pieces of information are given [10]:

• Installed capacity in power plants by types:

installedcapacity

[MW]

electricitygeneration

[GWh]Coal power plants 20.355 83.107

Brown coal power plants 8.396 49.671

Hydro power plants 2.105 3.984

Industrial power plants 2.801 7.65534.552 144.417

31

• Electricity generation by various sources:

Coal power plants 57,5 %

Brown coal power plants 34,4 %

Hydro power plants 2,8 %

Industrial power plants 5,3 %

• The largest cogeneration and fossil fuel power plants in Poland are shown in Table 6

and 7, respectively:

Power PlantElectricalCapacity(MWe)

ThermalCapacity(MWth)

PrimaryFuel

Bedzin 55 496 coalBialystok 173 557 coal

Bielsko-Biala 163 758 coalBydgoszcz 204 1,007 coal

Bytom 126 321 coalChorzów 94 471 coalGorzów 73 350 coal

Jaworzno I & II 266 364 hard coalKalisz 8 137 coal

Kraków-Leg 460 1,457 hard coalLódz 599 2,932 hard coal

Poznan 250 1,022 coalTorun 3 314 coalTychy 40 350 coal

Warszawa 934 5,494 coalWroclaw 387 1,415 hard coal

Wybrzeze(Gdansk/Gdynia) 353 1,478 coal

Zabrze 97 554 coalZielona Góra 23 238 coal

Table 6. Poland's 'EC' Cogeneration Power Plantsnote: capacities shown are 'nameplate' capacities; MWth = thermal megawatts

Source: Poland Ministry of Finance

32

Power Station Installed Capacity(MWe)

PrimaryFuel

Belchatów 4,320 brown coalKozienice 2,720 hard coal

Turów 2,120 * brown coalTadeusz Kosciusco 1,800 * hard coal

Rybnik 1,760 hard coalDolna Odra 1,720 hard coal

Opole 1,490 * hard coal1,200 brown coalPatnów 400 oil

Polaniec 1,490 hard coalJawórzno III 1,290 hard coal

Laziska 1,040 hard coalLagisza 840 hard coalSiersza 740 * hard coal

572 * hard coalSiekierki 50 hard coalAdamów 600 brown coal

626 hard coalOlstroleka 67 * hard coalSkawina 590 hard coal

395 brown coalKonin 93 * brown coal275 hard coalStalowa Wola 110 * hard coal220 hard coalBlanchównia 61 * hard coal

Plock 275 * oil235 * hard coalZeran 15 hard coal

Table 7. Largest Fossil Fuel Electricity Generating Plants in Poland* - also generates commercial thermal energy. Source: Utility Data Institute

Fig 6. Electricity power demand by months:

33

4.3.3. Transmission

4.3.3.1. Transboundary connections

The Polish power grid is interconnected with grids of the neighboring countries by the

high voltage inter-ties and is part of the CENTREL system, which links the Czech

Republic, Slovakia and Hungary. In 1995, the CENTREL system was connected with

Western Europe's system. Poland also has connections with Ukraine and Belarus.

Currently, both north-south and east-west connections are being expanded, as part of

the EU's Trans-European Energy Network project. Poland produces more electricity

than it consumes and the excess is exported as shown in Fig 7.

Fig 7. Energy foreign exchange of electricityin TWh.

4.3.3.2. Domestic Transmission

The Polish Power Grid Company performs the function of managing transmission.

PPGC was originally a state enterprise and was transformed into a joint stock company

in 1990. It owns 13 000 kilometers of high-voltage transmission lines of 220, 400 and

750 kV, 89 transformer stations of a total power of 113260 MW and a majority stake in

the joint stock company the Pumped Storage Power Plants.

34

Fig 8. Polish power grid.

PPGC’s key responsibilities are: programming and planning the development of the

whole power industry system, exercising of the role of its operator and the co-ordination

of co-operation with the power grids of other countries. PPGC purchases power for

resale to the distribution companies. The Company's responsibility is to secure cost

effective operation of the national power system on an open and competitive market.

The Company is also involved in the following related activities:

construction and operation of the grid and pumped-storage power stations,

35

technical and organizational support to the co-operation between Polish and other

national power systems,

financing and managing the power sector data base,

monitoring fuel reserves in the power stations,

protecting the natural environment against any adverse impact of power production.

As an energy utility PPGC is obliged to buy electricity and heat from unconventional or

renewable sources as stipulated by the Ordinance on electricity purchase obligation.

4.3.4. Distribution

The distribution function is performed by 33 distribution companies, which in 1993

were transformed into the joint-stock companies.

Fig 9. Service areas of distribution companies

36

The mission of the distribution companies is:

• distribution of electricity (and some power and heat generation),

• maintenance and expansion of power distribution networks in their service areas,

• consultation, engineering and other services.

Distributors are also obliged to buy electricity and heat from unconventional or

renewable sources as required by the aforementioned Ordinance of the Minister of

Economy of 15 December 2000 on electricity purchase obligation. Distributors are also

allowed to purchase electricity directly from industrial power generators. This segment of

the market is outside of the PPGC’s control. The generators have been granted the

possibility to sell electricity directly to the service enterprises without participation of

distribution company network and to large industrial users located close to the power

plant, supplied by 110 kV lines if the technical and metering conditions meet the

required conditions.

37

5. Wind Energy in the Polish Power System

5.1. Market Aspects

Wind Energy is a specific kind of energy because one can never be sure how

much energy will be produced. Apart from the case when the producer sells the

electricity directly to the local distribution utility, the trade must be done on the balance

market. It is worth to mention that the balance market is a temporary solution in the

Polish energy market and it is possible that the situation may change soon. Thus the

success depends on goodwill of three following market participants: electricity producer,

local distribution utility and a buyer (another distribution utility). Due to the fact that it is

difficult to set the hourly graphic considering production of the electricity, the local

distributor offers the electricity on the balance market. Simultaneously the buyer

(another distribution utility) to balance the trade sells an equal amount of energy back to

the local distributor. It is a virtual (accounting) operation without a real physical flow of

electricity called the ”trade ”over the grid” where the physical electricity flow is balanced

by contracts. Recently, the PPGC which operates the balance market decided to set the

prices so that the price of purchase and sale are equal.

5.2.Technical Aspect

5.2.1. Grid constrains Majority of wind farms are planned to be situated in the Northern part of Poland.

According to Fig 8. it seen that the high voltage lines are poorly developed in that region.

Moreover, the existing power grid is strongly overloaded in peak Additionally, there are

no big energy consumers that would use the produced energy. Therefore, the problem is

how without increasing demand for electricity and limited possibilities of transmission,

balance the electricity produced in the planned wind farms? In the service territory of the

main power distribution utilities in Northern Poland (ESSA, ZEKSA, ZESSA) the reported

total capicity of planned wind farm projects is 1500 MW for off-shore wind farms and

1000 MW for on-shore wind farms[11].

38

Fig 10. ESSA electricity system with planned wind farms as of September 2001.

According to researches from the Technical University of Szczecin there is no possibility

of connecting of all planned wind farms to the grid on ESSA territory without

modernisation of the HV grid. On the other hand, a quick development of the HV

electricity grid is difficult because of poor financial situation of the distribution utilities.

Resolution of this impasse may take some time.

5.2.2. Power quality constrains

Polish wind power market does not exist yet, however questions and problems about

their impact on power quality are widely discussed. According to the Polish Energy Law,

before receiving the grid connection conditions, the investor should make a technical

survey of the influence of a newly connected turbine on the grid (Dz. U. Nr 85 poz. 957

39

dated 13.10.2000). The shortage of experience with wind power generation leads

controversial opinions among the Polish utility experts [12].

It is well known that the operation of wind turbines has an impact on the power quality in

the grid. Depending on the grid configuration and the type of wind turbine used, different

power quality problems may arise.

Wind power production varies following the natural variations of the wind. If the wind

turbine is operating at fixed-speed, the tower shadow and wind speed gradients will

result in fluctuating power. The power fluctuations caused by the turbine may cause

flicker disturbances. In order to evaluate the significance of the flicker, disturbance

measurements and subsequent flicker calculations must be performed. In the case of

variable-speed wind turbines, one of the drawbacks is the injection of higher harmonics

into the grid. Depending on the type of inverter used, different orders of harmonics are

produced.

However, as experience shows, those problems can be solved. Indeed, wind turbines

have caused no major power quality problems in the EU-countries, which is the result of

compliance with the guidelines described in IEC 61400-21 and DEFU report KR 111-E

5.3. Formal procedures of establishing a wind farm

Below the consecutive steps of the formal procedures required to establish a wind

farm are briefly described.

License.

Wind farms usually have the total output power over 5 MW thus the investor should

apply to the Energy Regulatory Authority for the appropriate license to produce

electricity. The license is granted for 10 to 50 years. According to The Power Energy Act

applicant has to:

• live in Poland(residence) or possess a base in Poland,

• have sufficient technical and financial resources,

• employ only specialists ( the staff dealing with the electricity grid and other

equipment is obliged to posses appropriate certificates issued by commission of

certification according to Art. 54 of Energy Act),

40

• have the land development decision,

• have the building decision,

• have property right by purchasing or leasing the area.

The building decision.

The building decision, is issued by the Administrator of the Municipality on the basis of

the decision of the Municipal Building Supervision and Land Development Department

Regulation (L.B. no 15 point 138, 1999). The decision should be taken within 30 days.

The Municipal Building Supervision and Land Development Department, before decision

may apply for additional opinion of:

• the governor and Provincial Branch of the Sanitary State Inspectorate,

• minister of health and social welfare (location near the health resort),

• Environment Protection and Building Supervision (establishing e.g. the level of

allowed noise emissions by wind power plants 40 dB night – B.L no 66 point 436,

1998),

• Regional Nature Protection Inspectorate (regarding investments in recreational

regions),

• Department, State Inspectorate of Civil Air Force (depending on the tower height

Polish norm- PN-65/L 48002, if higher than 100 m. than appropriate signalling and

marking on navigation maps is needed ),

• Main Headquarters of Civil Defence, Headquarters of State Air Force, etc.

When the investment is in conflict with plans of the local Development, or the investor

does not obtain all of necessary permissions, the Municipal Building Supervision and

Land Development Department Regulation may refuse the building decision.

The amount of permissions needed depends on the Municipal Building Supervision and

Land Development Department

The land development decision.

In most cases lands with good wind potential are agricultural lands thus the investor

should apply to the Municipal Building Supervision and Land Development Department

for the decision allowing to change the development of the land. The related fees to the

41

decision should be covered by the municipality (L.B. no 89 point. 415 1994), but in

reality the investor must pay for them.

Connection to the grid.

The local distributor is obliged to connect the generator to the grid if the relevant

requirements are fulfilled (Law Bulletin no. 85 2000). In most cases the new connection

lines are needed (a few hundred meters) and almost always the investor must pay for

the connection. Only when power lines are planned in the land development plans the

investor pays only 25% of a total connection cost.

The first step made by the investor should be an application to the local distribution

utility for connection conditions. The investor should present following the documents:

land property right, technical parameters of the wind farm, technical expertise about the

influence of the new connected turbines on the grid (L.B. no 85 point 957 dated

13.10.2000). The conditions should be defined within 3 months. After that period the

investor has 2 years to sign a connection agreement [13].

The farm can be connected to the grid after fulfilling all of the detailed requirements of

the local distribution utility. (L.B.. no 85 point 957). The investor is allowed to start the

building process only having signed the connection agreement.

Building permits.

The are no specific normative legal regulations regarding stationary wind energy

construction in Poland. Therefore, it necessary to follow the general regulations (L.B. no

89 point 414 1994) that may apply to the specific farm.

42

6. Legislation

The development of the Polish wind power market must be considered within the

legal framework at both the national and international level. The appropriate legal acts

are briefly described below.

6.1. International framework

Poland signed United Nation Framework Convention on Climate Change (UNFCCC) in

1992 and ratified it on 28 of July 1994 becoming party to the convention. According to

UNFCCC the countries agreed to undertake efforts to mitigate the climate change.

The climate change as a result of human industrial activity is a growing threat for

humankind. CO2 emissions from industrial activities are considered as the main gasses,

which create the greenhouse gas effect, or global warming. During the Climate

Conference in Kyoto this threat and the need for action has been recognized by a large

number of politicians and policy makers worldwide. The international community has

made commitments to halt the growing CO2 emissions. The Kyoto protocol specifies

quantitative limits of GHG emissions and commitments of UNFCCC countries of their

individual emission reductions. Parties to the Convention are obliged to reduce GHG

emissions (mainly: CO2, CH4, N2O and so-cold industrial gases: HFCs, PFCs and SF6)

by at least 5% relative to the 1990 level (for Poland the base-year is 1988) till 2008 -

2012 [14 ].

Polish commitments are the following

• to stabilise the Greenhouse Gases (GHG) emissions in year 2000 at the 1988 base-

line (UNFCCC Art.4.a and 4.b.)

• according to the Kyoto Protocol Poland declared to reduce the GHG emissions by

6% compared to the 1988 level in the first clearing period:2008-2012.

This 6% reduction will become binding once Poland has ratified the Kyoto protocol.

The Kyoto Protocol has also set a basis for the so-called flexible mechanisms: Emission

Trading (ET), Joint Implementation (JI), Clean Development Mechanism (CDM) [15].

Those flexible mechanism are wider described in the chapter dealing with financial

issues.

43

6.2. Polish Legal Framework

6.2.1. Development Strategy of Renewable Energy Sector.

The strategy makes the political background for development of renewables. The main

aim of the Strategy is to increase the share of energy from renewable sources in

Poland’s primary energy balance up to 7.5% in 2010 and 14% in 2020 respectively [7].

In accordance with the existing prognosis it is possible that Poland may not reach the

target in 2010.

But the aim of the document has also political meaning to encourage further action for

sustainable energy development and to emphasise importance of renewable energy

sources.

6.2.2. Polish Energy Act

The Polish Energy Act was accepted by the Polish Parliament in August1997 and

entered into force in January 1998 [9]. Since then it has been amended several times.

The Act defines the principles for developing a national energy policy, for the supply and

use of energy, and for the operation of energy enterprises. It also defines the agencies,

which have jurisdiction over the issues of fuel and energy economy. The purpose of the

Act is to create conditions to provide energy security, rational use of energy, and the

development of competition. Competition is considered to be an important factor for

environmental protection, decreasing costs and safeguarding customer interests [16].

The energy law defines the conditions of conducting economic activities in the energy

sector, imposes certain obligations on economic entities, and guarantees certain rights

for them. The key provisions of the law include:

• the establishment of a solid legal framework to define the rights and duties of

producers, distributors, and users of energy and to establish licensing procedures;

• the foundation of an independent regulatory authority to ensure competition within

the energy sector;

• the guarantee of Third Party Access (TPA) of enterprises to energy distribution grids

or pipelines, provided that the third parties produce energy domestically and have

met contractual and governmental obligations.

44

The major task of the new law is to introduce a competitive market in the electricity and

gas industries

Several articles of the Act deal with renewable energies.

• Article 3 item 20 – defines unconventional power sources as those which do not use

organic fossil fuels ,

• Article 3 item 21 – defines renewable energies –as those which use accumulated

solar energy in different forms especially hydro energy, wind energy, biomas,

photovoltaic energy.

It should be noted that in the subsequent amendment presently discussed, the notion of

unconventional energy source has been eliminated and only renewable energy sources

are taken into account.

• Article 9 item 3 –stipulates that the minister, responsible for economic affairs, may

oblige, in form of a decree, the energy utilities to buy electricity from unconventional

or renewable sources or electricity co-generated with heat, also heat from

unconventional or renewable sources and precisely determines their range of

responsibility.

• Article 15 item 7 – states that the principles of the energy policy should promote

development of the unconventional and renewable energies ,

• Article 16 Item 1-states that energy utilities are obliged to develop plans to secure

present and future demands for gas fuels, electricity or heat, taking into account

modernisation, extension and construction of new unconventional and renewable

energy sources (Item 3.2).

• Article 32 Item 1–states that when producing electricity with the total power over

5 MW the appropriate licence is needed

• Article 56 Item 1a- states that those who do not obey the law imposed in art. 9 item 3

will be penalised accordingly,

• Article 56 Item 3 defines Penalties for breaking the power purchase obligation The

amount of penalty can not exceed 15 % of income of the punished entity in the

previous year.

45

6.2.3. Ordinance of the Minister of Economy on Electricity PurchaseObligation

The government of Poland tries to stimulate the generation of renewable energies by a

new ordinance to the Energy Law that came into effect as of December 15th 2000 [17].

The Ordinance stipulates that power utilities had to purchase 2.4% of the electricity from

renewable sources in 2001. This percentage will be gradually increased up to 7.5% in

2010. Although the current Polish government is surprisingly sceptical whether these

levels will be reached, penalties have been imposed on energy utilities that did not meet

these targets. However, the penalties were rather symbolic. Therefore energy utilities

are waiting to see what will happen because the Ordinance to the Law is new and

although some penalties for “breaking” the Law have been imposed, there are still some

ambiguities. It is worth to note that the obligation is not specifically concern the wind

energy, and it will face competition from much cheaper renewables such as.

hydropower.

According to the Article 1 Item 1 of the ordinance energy utilities are obliged to buy

electricity and heat from unconventional or renewable sources connected to the

common grid regardless of the installed particularly electricity and heat from:

♦ hydro plants,

♦ wind plants,

♦ biogas , especially obtain from :

- waste water treatment plants,

- municipal waste disposal sites,

- agricultural waste processing,

♦ biomass,

♦ biofuels,

♦ solar photovoltaic cell,

♦ solar heat generation collectors,

♦ geothermal heat.

46

Item 3 characterises the common network mentioned in Article 1 Item 1 as the

electromagnetic grid on the national territory and a heat network connected with a

relevant heat source.

Article 2 stipulates that the obligation mentioned in Article 1 Item 1 shall be deemed

fulfilled if:

the share of electricity in the actual total annual sales of electric from unconventional or

renewable sources is at least: 2,4% in 2001, 2,5% in 2002, 2,65% in 2003, 2,85% in

2004, 3,1% in 2005, 3,6% in 2006, 4,2% in 2007, 5,0% in 2008, 6,0% in 2009, 7,5% in

2010 and subsequent years. This is illustrated in Fig. 11 where the yellow parts

represent the increase over the target for 2001.

Fig 11. Obligation of energy utilities to purchase energy from unconventional and

renewable sources.

0

2

4

6

8

Tota

l sha

re o

f ren

ewab

le e

nerg

ies

in

ener

gy b

alan

ce, [

%]

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Years

47

Article 3 states that the obligation considered in Article 1 Item 1, does not apply to:

• electricity or heat generated outside the territory of the Republic of Poland

• electricity co-generated with heat, with the total gross efficiency of fuel chemical

energy into electricity and heat not less than 65%, calculated as an average figure in

a calendar year in which the electricity purchase is effected

• electricity produced by pumped water in pump-storage power plants

• electricity or heat from nuclear fission

Article 4 Item 1 stipulates that the justified (reasonable) costs of electricity purchase,

incurred in connection with meeting the obligation of Article 1 Item, can be included in

the calculation of tariffs of the energy company making the purchases. It is assumed that

the cost burden on each electric energy unit sold is the same for all customers.

6.2.4. Power Purchase Obligation – Meeting the Target

After one year of functioning of the Ordinance of the Minister of Economy of 15

December 2000 on electricity purchase obligation, energy utilities were asked to prepare

reports about electricity purchases from renewable sources. The questions concerned

the amount, kind and price of traded renewable energy in 2000. The results were

surprising. Three of the energy utilities, i.e. STOEN S.A., GZE S.A. oraz ZE Tarnów

S.A., did not purchase any electricity from renewable sources apparently there are no

green energy producers in their service area. The share of electricity from renewable

sources varied from 0,001% in ZE Kalisz S.A. up to 27,33% in ZE Toruń S.A. However

ZE Totuń S.A. is the owner of the big hydroplant where it has purchased most the of

required green energy. Only 8 of 33 energy utilities fulfilled the purchasing in 2000 and

in 2001 there was no a great difference. Additionally, penalties for breaking the law have

been imposed (Art. 56 point 1a of Energy Act). However, as mentioned above they were

rather symbolic.

The situation of other energy utilities in 2000 is presented below in the table.

48

The name ofenergy utility

Theestimated

performanceof renewable

energypurchasingobligation

Beskidzka En S.A. 2,51%Będziński ZE S.A. 0,01%Elbląskie ZE S.A. 1,07%ENERGA 1,50%En Kaliska S.A. 0,001%En Poznańska S.A. 0,59%En Szczecińska S.A. 0,81%Lubelskie ZE S.A. 0,02%Łódzki ZE S.A. 0,01%Rzeszowski ZE S.A. 0,68%ZE Białystok S.A. 0,28%ZE Bydgoszcz S.A. 3,26%ZE Częstochowa S.A. 0,22%ZE Gorzów S.A. 0,15%ZE Jelenia Góra S.A. 6,35%ZE Koszalin S.A. 1,50%ZE Kraków S.A. 6,08%ZE Legnica S.A. 0,03%ZE Łódź-Teren S.A. 1,06%ZE Opole S.A. 1,48%ZE Płock S.A. 0,39%ZE S.A. w Olsztynie 1,65%ZE Słupsk S.A. 5,26%ZE Toruń S.A.-ogółem 27,33%ZE Toruń S.A.-bez EWWłocławek 0,27%

ZE Wałbrzych S.A. 0,47%ZE Warszawa-Teren S.A. 1,991%ZE Wrocław S.A. 2,93%Zamojska KE S.A. 0,18%ZEORK S.A. 0,13%Zielonogórskie ZE S.A. 0,13% Th

e m

inim

al sh

are

of e

lect

ricity

from

rene

wab

le so

urce

s in

the

tota

l sal

e of

ener

gy u

tiliti

es in

200

0 –

2,4%

49

6.2.5. Ordinance of Minister of Economy Concerning Detailed Principles ofSetting Energy Tariffs

In accordance with the Polish Energy Act, Energy utilities are obliged to submit

calculation of their tariffs to the Energy Regulatory Authority in order to have them

approved [18].

The mechanism for setting prices is based mainly on the calculation of the so-called

justified (reasonable) costs. At the moment it is hard to define the meaning of such

reasonable cost. If one assumes that reasonable costs are costs that guarantee income

one can consider this costs as expenses in order to get a profit. In this aspect

reasonable costs of running wind power plants are: the depreciation, taxes and local

fees, insurance costs, financial costs, administrative costs, maintenance costs, salaries,

etc.

Additionally, there are also some specific factors that influence the price fixing. These

factors cause that the price of the wind energy in individual countries or regions is

different. Wind energy is strictly connected with the average annual wind speed.

However, even more important is the schedule of wind speed. Obviously the higher is

annual wind speed the lower are energy prices. According to International Energy

Agency (IEA), prices of wind energy are comparable to prices of energy from

conventional sources if the average wind speed is higher then 6.5 m/s. One should

consider the influence of the interest rate on energy prices especially when talking about

high cost technologies like wind turbines. The lower is the interest rate the lower are

energy prices. The repayment period has a crucial influence. The shorter is repayment

period the higher is its cost, what directly affects the energy prices from the expensive

energy sources. Giving a loan, banks and other financial institutions take financial risk

into consideration. The higher is the risk the higher is the discount rate. Wind turbines

are characterised as the medium risk investment and this risk has a tendency to

decrease. One should also consider costs of wind turbines. It is predicted that the

installed power of wind turbines will double every three years and the cost of wind

turbines should decrease about 15% in the same time.

50

In Chapter I Ordinance describes detailed principles of setting the tariffs, defines the

production unit as a separated complex of equipments belonging to an energy utility

designed for the electricity production, described by the technical and trade data.

In Chapter II Article 3 the Ordinance states that energy utilities set tariffs in way

assuring:

• covering reasonable costs,

• protection of consumers interests against the unjustifiable prices level,

• elimination of “hidden” subsidies.

Article 4 states that energy utilities set tariffs adequately to the economy of electricity

delivery, types and character of consumers and their demand.

Article 6 dictated that the tariff is established for 12 months.

Article 7 stipulates that the energy utilities dealing with electricity production should

clearly specify in their tariff:

• the electricity prices,

• fees for reserve powercapacity,

• fees for system services,

• rebates for failing to meet quality standards of offered services,

• financial penalties for an illegal electricity consumption.

Article 10 of Chapter 3 states that reasonable production costs should include:

• planned costs of annual activity of energy utility including financial costs,

• planed annual cost of modernisation, development and investments in the area of

environmental protection.

51

7. Financing of Wind Energy

The development of wind energy projects is facing financial problems. Wind

farms belong to technologies in which cost of the electricity production is relatively high.

However, in a number of cases wind energy can be competitive if financing of wind

turbines takes advantages of available soft credits or subsidies [19]. Experiences show

that the most important sources that facilitate financing of wind ventures are Polish

sources such as ECOFUNDUSZ or the National Found for Environmental Protection and

Water Management. These institutions give preferential loans and grants, which

usually do not exceed 50% of the project cost. Notwithstanding the funds

available in Poland, the possibilities of utilising foreign financial sources are

growing. It is possible to apply to the international institutions such as World Bankor the Global Environment Facility. It is worth to note, that there are some additional

possibilities of financing resulting from The Kyoto Protocol so called Flexible

Mechanism. The foreign and national founding sources are presented below

respectively.

7.1. Foreign Founding Sources

7.1.1. Flexible Kyoto Mechanisms

Emission Trading Kyoto Protocol allows transferring both reduced emission reductions and emission

quotas between UNFCCC Anex I countries. Industrialised countries can finance GHG

emission reduction abroad in order to obtain so-called “emission reduction units” Those

units can be accounted for as fulfilling the commitment of the “donor” country. Poland is

included in the list of countries where the emission transfer can take place.

The main arguments for Emission trading are:

• trading the emission reduction units(ERU) leads to more efficient use of the available

resources,

• commitments of industrialised countries to reduce theirs emission, oblige them to find

out the cheapest way to obtain it,

52

• emission reduction costs are relatively high in industrialised countries while in non-

OECD countries are relatively low.

Joint Implementation

The developed countries have already taken advanced technologically steps that have

led to GHG emissions reduction. Further reduction would then means significant

expenses. However in the global perspective it does not matter where the GHG are

being reduced. There may exist a significant potential for low-cost options in countries

with economies in transition and in developing countries. As a consequence, the

developed countries take interest in Joint Implementation and are willing to reduce the

GHG emission in countries where unit prices of GHG reduction are much lower. The

general idea is that one country (the "donor" country) might seek "credit" towards its own

target reductions by investing in greenhouse gas reductions in another country (the

"host" country).

The international co-operation mechanism within the confines of UNFCCC - Joint

Implementation offers significant benefits for participating countries, for instance:

• increase of GHG emissions reduction,

• technology and know-how transfer ,

• foreign investments,

• job creation.

Poland, can participate in JI projects both as the financing party or a beneficiary. The

relatively low cost of the reduction of greenhouse gas emissions, as well as a well-

developed institutional background to support the implementation of investment projects

result in that Poland is perceived mainly as a host country. The possible projects

concern co-operation between foreign and Polish private companies, local governments,

and state-owned companies. However fulfilling the UNFCCC commitments is the

responsibility of the national governments rather then companies or local

administrations. The JI projects implemented in Poland are handled by the JI

Secretariat, established in December, 1995, currently operating within the structures of

the Executive Office of the Climate Convention, located within the National Fund for

Environmental Protection and Water Management (NFOSiGW).

53

Clean Development Mechanism

Clean Development Mechanism refers to GHG reduction projects between the

developed and developing countries, which do have reduction commitments. The CDM

does not apply to Poland and is briefly described only for completeness. The CDM

allows only officially confirmed emission reduction transfers. The main aim of CDM is to

gradually involve the Third World countries in the international climate policy.

Additionally this mechanism should contribute to transfer of technology and know-how to

developing countries.

7.1.2. World Bank

Poland rejoined the World Bank in 1986 and Bank lending to Poland started in 1990.

Since then the Bank has committed over US$ 5.0 billion for 33 operations. About US$

2.9 billion of this amount has been disbursed and US$ 712 million repaid (as of

September 1999).

Although the World Bank lends for fossil fuel projects it also continues to support

projects with global environmental benefits. Synergies with local environmental

objectives and the additional costs required to secure these global benefits must be fully

funded by international sources of financing such as the Global Environment Facility.

This is consistent with the Bank's commitment to support international conventions on

global issues, such as the United Nations Framework Convention on Climate Change,

and to assist borrower countries to meet their obligations under such conventions.

7.1.3. The Global Environment Facility

The Global Environmental Facility is a financial mechanism that provides grant and

concessional funds to help finance projects to protect the global environment and to

promote environmentally sound and sustainable economic development. The GEF was

established to forge international co-operation and finance actions to address four

critical threats to the global environment: biodiversity loss, climate change, degradation

of international waters, and ozone depletion. Related work to stem the pervasive

problem of land degradation is also eligible for GEF funding.

Engaging the Private Sector

54

It is clear that global environmental problems like climate change and biodiversity can

be solved only if the private sector participates in its vast technical, managerial and

financial resources and expertise.

The private sector is recognized as an important stakeholder in GEF activities and has a

critical role to play in addressing the global environmental challenges in partnership with

the GEF. The GEF encourages the private sector to seek opportunities to collaboratively

engage in the identification of project concepts and objectives as well as in the

financing, and monitoring and evaluation of GEF projects.

7.1.4. PHARE – European Union Assistance Program

The PHARE program has been in place in Poland since 1990. The program was

created on European Union’s own initiative in order to support the countries of Central

Europe in the process of economic transformation and strengthening of democracy to

the stage where they are ready to assume the obligations of EU membership. The main

priorities for Phare funding are common to all countries, although every one is at a

different stage of transformation. The key areas include restructuring of state enterprises

including development of energy and environment safety.

7.1.5. Instruments for Structural Policies for Pre-Accession.(ISPA)

The ISPA found is designed for accession countries to facilitate financing of ventures

in the field of environmental protection and transportation, and help them to adapt to the

European Union standards and requirements. As noted in Agenda 2000, the applicant

countries generally face much greater environmental problems than the present Member

States, particularly with regard to water pollution, waste management and air pollution.

Major efforts will therefore be needed, involving considerable amounts of technical and

financial aid from the Union. Over the period from 2000 to 2006, a total of EUR 1 040

million a year (at 1999 prices) has been made available for infrastructure projects in the

field of environment and transport.

7.1.6. The Altener ProgramThe Altener program was set up by the European Commission to promote renewable

energy use in the European Union. The aim was to reduce annual EU CO2 emission

55

levels by 180 million tonnes by 2005. One of the targets of the Altener program was to

treble electricity production from renewable sources, excluding large hydro sources,

from 25 Terawatt hours in 1991 to 80 TWh in 2005. The goal for wind energy was 8,000

Megawatts of installed capacity, which should provide 20 Terawatt hours of electricity

per year, i.e. 25% of the contribution of the new renewables. The program was also

opened for accession countries to help them to develop and promote the utilization of

renewable energy.

7.1.7. Bilateral Programmes

Bilateral assistance has been realised in Poland since 1990 and it has been provided

on the basis of bilateral agreements. In over 70 % is earmarked for investment projects.

Countries taking part in this effort are: Belgium, Denmark, Finland, Holland, Japan,

Norway, Germany, Switzerland, Sweden, USA and Great Britain.

56

7.2. Polish Founding Sources

7.2.1 Foundation EKOFUNDUSZ (ECOFUND)

Ecofund is Polish financial institution which manages the Debt for Nature swap (eco-

conversion) funds. The idea is to use part of Polish debt to the “Paris Club” in

environmental protection investments in Poland. The following countries agreed to

convert part of their debt: USA, France, Switzerland, Sweden, Italy and Norway. In total

the funds at stakes are over 570 million dollars [20].

Wind energy which contributes to GHG emission reduction is one of priorities of the

Ecofund is assistance. The financial aid is given in form of non-returnable subsidies or

soft loans .The size of subsidy depends on the nature of the investment. For renewable

energy undertakeings the subsidy can reach up to 50% of total investment cost. An

important element of EcoFund’s strategy is thorough monitoring of the use of the

awarded money during the project execution. To this end, every project is divided into a

number of stages finished with technical and financial acceptance inspections.

7.2.2 The National Found for Environmental Protection and WaterManagement The National Found for Environmental Protection and Water Management is Poland’s

largest institution for the development of the environmental sector. The National Found

was created in 1989 in order to improve the state of the natural environment in Poland.

The National Fund is responsible for adapting policy and regulations to the rules

applicable within the European Union. The aim of the National Fund is to finance

projects, whose implementation will be the most beneficial to the environment. The

applicant, who submits an application for such a project, may receive financial

assistance from the National Fund. The applicant also makes choice of appropriate

technology and contractor in accordance with the Public Tender Law. The main sources

of financial assistance are loans and subsides. Preferences in grating loans are based

on applying lower interest rates in relation to commercial credits, a possibility of partial

remissions and on grace. Depending on the character and scale of undertaking, as well

as on the financial and economic condition of the borrower, the interest rates are applied

in relation to the official rediscount rate i.e. the rate at which the Polish National Bank

57

lends money to banks. In case of loans for renewable energy ventures the loan interest

rate is 0,5 of the rediscount rate. The loan may be partially remitted after fulfilling all

stipulated conditions, especially timely completion, full compliance with all the conditions

of the agreement and achieving the planned environmental effect of the investment.

Subsides are extended mainly for projects with high levels of risk (pilot projects, the

development of new technologies) or of an experimental nature. Another forms of

financing projects in the field of environmental protection by the National Fund are

supplements to commercial credits. This compensates for the difference in interest rates

of commercial bank credits and the preferential rates used by the National Fund.

Supplements to credits allow preferential financing of environmental projects from the

financial resources of commercial banks. National Fund also supplies debt financing to

projects that benefit the environment. National Fund is also interested to take an equity

share in such projects.

Fig 12. Forms of Environmental Protection Funding by the National Fund (MPLN)

58

7.3. Commercial Sources

Financing investments of wind power plants is one of the most complicated issuses

because is connected with number of risks. The most important of them are:

• correctness of the business plan and market analysis, economic conditions in trade

and whole market , etc.,

• technical complexity of process,

• building permits, licences, etc.

Additionally the pay back time is quite long. It is worth to underline that all these risks

could be significantly reduced [21].

For a long time investing in wind turbines in Poland was perceived as a hobby rather

than a financial venture. Recently, as a result of huge development of wind turbines

efficiency, decreasing costs of wind turbines and obligations of energy utilities to

purchase electricity from renewable sources, investing in wind energy has become a

serious challenge for commercial investors. The investor can now easier sell produced

electricity because of the law regulations. Moreover, there is a chance to enter a long-

term agreement of electricity delivery with power utilities which secure a stable long-term

income. The risk connected with technological complexity can now be considered as

moderate. Although there are still risks connected with turbine location it is worth to

emphasis that turbines themselves are mass-produced and have a guarantee period.

Considering the size of engaged funds, possibility of long-term income protection,

investing in wind turbines is comparable to investing in property.

There are some issues that should be considered before investing in wind power plants,

mainly:

• choice of the suitable location in order to optimise project efficiency

• the correct financial structure: on the one hand ensuring sufficient level of investment

protection and on the other, to make the most of available financial sources

• appropriate income negotiated with energy companies

• choice of a suitable turbine supplier ,assuring high quality and efficiency of wind

turbines

It is commonly known that investments in wind turbines requires huge financial

resources. This mean necessity of looking for different potential investors. Obviously,

59

there is a possibility to access the preferential funds such as NFEPGW or Ekofundusz.

Nevertheless, these sources (although are very important to decrease the total cost of

investment) providy only a basis for proper financing. Thus is worth to underline that a

commercial venture requires commercial financial sources. The main methods to

finance investments using external sources are:

• leasing

• securities emission

• investment credits

7.3.1 The Bank of Environmental Protection In the area of wind energy The Bank of Environmental Protection worked out the

programme supporting small wind turbines (up to 0,75 MW) on following conditions:

• maximum amount of loan -1 million zlotych. Loan will cover less then 50 % of total

investment cost,

• maximum period for realisation - 6 months since the loan has become available for,

investor

• credit interest rate -0,4 of the rediscount rate.

7.3.2 The Bank of Export Development

• offers long-term financing period (up to 15 years) for potential investors,

• amount of own engaged capital: 25% of total financial package,

• variable interest rate in zlotych of 19,5%-21,5% for 3 months,

• fixed interest rate in zlotych of 13%-15%,

• foreign exchange, variable interest rate of 6,3%-8,3% for 3 months,

• foreign exchange, fixed interest rate credit of 6,5%- 8,8%.

60

8. Major Wind Farm Projects in Poland

8.1. Projects Completed

Presently, there are only two professional wind farms in Poland: in Barzowice and

Cisowo. There iare also several individual wind turbines which cannot be considered as

wind farms. The major of completed projects are listed below in the table and the biggest

ones are briefly described.

Location Power [MW]

Lisewo 150

Swarzewo 95

Zawoja 160

Wrocki 160

Kwilcz 160

Slup 160

Rembertow 250

Starbiewo 250

Swarzewo 1200

Rytro 160

Cisowo 660

Rymanow 320

Nowogard 255

Barzowice 5000

Cisowo 18000

Table 8. Completed wind power projects.

Barzowice Wind Farm the first Polish 4,99 MW wind farm is located in Barzowice in the

Darłowo Municipaity. The wind farm consists of 6 turbines of 833 kW each. The capacity

of wind turbines, which is below 5 MW allows producing electricity without licence as

otherwise would be required by Polish Law. Soon after it has been opened the Koszalin

Energy Utility refused buying the electricity produced by the Barzowice Wind Power

61

Plants SA. Finally the new price of purchase of the electricity was set i.e. 10 gr for 1

kWh, the price that is equal to the price of the electricity produced in lignite power plants

Cisowo Wind Farm is the biggest wind farm in Poland consisting of 9 wind turbines

[Vestas] with total power of 18 MW. The farm is located on the ground belonging to

Koszalin distribution utility, which lease the site. The investor has a long term power

purchase agreement with Koszalin Utility. There are additional 4 wind farms expected to

be added to existing farm with the total capacity about 28 MW.

8.2. Projects in the Development Phase

Despite of the existing barriers the wind energy sector is still developing. Additionally,

the approach of distribution utilities to wind energy is changing for better and it is

possible that they will not oppose the development of wind energy sector any longer. As

an example, several different projects of wind farms in the Koszalin distribution utility

service area are presented below. Tables show the plans of wind for different stages of

completion [22].

Location Power [MW]

Barzowice 3

Barzowice 4,5

Drozdowo 9

Cisowo-Zakrzewo 10

Cisowo 2

Stramnica 4

Table 9. Farms that received the connection conditions in Darlowo Commune

Location Power [MW]

Place Commune

Budzistowo Kolobrzeg 12

Karscino Karlino 60

Moltowo Goscino 20

Wartkowo Goscino 30

Table 10. Farms that submitted the necessary documents to the distribution utility

62

Location Power [MW]

Place Commune

Karcino Kolobrzeg 60

Poblocie Wielkie Karlino 30

Tymien Ustronie Morskie 50

Paszecin Rabino 40

Grzmiaca Grzmiaca 40

Rzepkowo Sianow 100

Swierszczewo Bialy Bor 50

Table 11. Farms that are expected to be connected to the grid.

8.3 Joint Implementation Project: Skrobotowo Windpark

This is an example of the first Polish Joint Implementation Project in framework of the

Dutch-Polish Memorandum of Understanding. The project concerns a 60 MW wind farm

located in the Northwestern part of Poland in the Karnice Municipality, financed partly by

Dutch government in exchange for Emission Reduction Units, ERUs. The wind farm will

consist of 30 wind turbines of 2 MW each. Nuon International Projects, based in

Arnhem, and Epa, based in Szczecin, Poland, jointly collaborate in the development and

operation of this wind farm. Nuon, one of the largest multi-utility companies in The

Netherlands will be the main shareholder in the Special Purpose Company (SPC) to be

founded for realisation and exploitation of the plant. EPA will primarily develop the

project depending on acquisition of the necessary permits. The main turnkey contractor

will be Vestas, realizing the project up to the start of operations. Moreover, Vestas will

support the operations and maintenance by providing warranties to the project, and train

EPA staff to perform maintenance. Also the National Fund for Environmental Protection

and Water Management is interested to take an equity share in the project.

The wind farm is expected to generate 125,000 MWh per year, and has an assumed

operation lifetime of 20 years. Without implementation of this project the electricity

demands of 125,000 MWh would be satisfied by coal and gas fired plants. Furthermore,

63

through implementation of this project know-how of wind energy will be transferred to

Poland. It can pave the way for follow-up projects. The project is expected to be

operational as of January 1st 2003 [23].

Wind Resource Assessment

The project is split up in two parts, Skrobotowo village (36 MW) and Drozdowo (24MW).

A wind study has been carried out for the envisaged wind farms in the neighbourhood of

Skrobotowo and Drozdowo. Basis on measurements at Wrzosowo executed during the

period of September 1999 – December 2000 it has been derived that the mean wind

speed are:

at 40 meters 6.4 m/s



Accurate monitoring of the mean wind speed is essential in order to be able to

determine the final amounts of ERU’s.

The accessibility to the two sites should be no problem. It is expected that a new

substation 110/20kV or 110/10 kV needs to be constructed for this project. If a new

station is to be built it will be located near or under the 110 kV grid line running north of

the Drozdowo site.

Guidelines for JI projets

The validation of the project was performed in accordance with the ERU-PT Guidelines

for JI projects, version 1.0, issued by the Dutch Ministry of Environmental Affairs in May

2000. This validation report focuses on the validation of the baseline study and the

monitoring plan. Applicable guidelines are set out in volume 2A (Baseline studies,

monitoring, reporting Guidelines for JI-projects’, Ministry of Environmental Affairs, May

2000), chapters 2 and 3.

The essential articles of the baseline study are:

-Project information (articles 2.1 and 2.2)

-Greenhouse gas sources and system boundaries (article 2.3)

-Description of the current delivery system (article 2.4)

-Key factors influencing the baseline and the project (article 2.5)

64

-Selection of the most likely baseline (article 2.6)

-Estimation of project emissions (article 2.7)

-Estimation of the baseline emissions (article 2.8)

-Crediting time (articles 2.9)

-Estimation of emission reduction (articles 2.10)

-Evaluation of additionality (article 2.11)

All the necessary criteria and methodologies for control of operations, recording,

monitoring, measurement, reporting and calculations of emission reductions or removals

are included in the monitoring plan, including factors that have influence on baseline

validity.

Projected ERUs

The amount of avoided Green House Gases, GHG emission will be calculated on the

basis of coal consumption needed, in the theoretical power plant, to produce the same

amount of electricity that wind farm will do (baseline). The amount of ERU's (Emission

Reduction Units), transfer to the Dutch side will result from the amount of net electrical

power production, sold to Polish Power Grid Companies, during the commitment period.

During the years 2008 - 2012, the Dutch side will receive over 580 of ERUs as

recompense of financing the project.

In the project, scenario ”Continuation of the current situation” was selected as the most

likely baseline to be used for this study. According to EUROPROG 26th 1998, the

average electricity produced in Poland in 2008-2012 amounts to 188.70 TWh/year. In

the same time CO2 equivalent emissions will be at the 178,600 kton/year level. NOx and

SO2 emissions are estimated adequately at 290 and 600 kton. It follows that the average

emission factor used to calculate the total CO2 emission is 0.94648 kton/TWh for the

budget period.

As mentioned above the farm is expected to generate approximately 125.078

GWh/year. The own electricity use of the project will be 1.787 GWh/year. Thus, the net

output of the project is calculated at 123.291 GWh/year and the annual emission

reduction 116.7 kton per year (116,700 ERUs) or 583.5 kton CO2 for the budget period

(583,500 ERUs). Assuming that the price per ERU will be 9 Euro, the total ERU’s will

amount to 5,251,500 Euro in the budget period.

65

9. Summary

One of the most important elements of sustainable energy development is

utilization of energy from renewable sources. By the beginning of 2002, global wind

power installations have reached 25,000 MW [24]. This provides enough power to

satisfy the needs of around 14 million households, more than 35 million people.

Recently in Poland there is almost 30% electricity overproduction. With almost

60% share of energy generated from coal in state energy balance the Polish coal lobby

tries to restrain the development of any new energy sources. The long-term policy of

coal utilisation and subsidies to energy system in the past lead to difficulties in the

development of renewable energy sources. The conventional energy sources still not

pay their full external costs, and are distortedly subsidised.

Wind energy is a modern approach in the Polish energy system. In The European Union

the system supporting utilisation of energy from renewable sources has been functioning

for 15 years. In Poland it exist only for short a time and for this reason it will be very

difficult to obtain the required share of the renewable energy in energy balance in 2010.

The development of wind energy offers opportunities for the local and regional societies

development, energy independence, diversification and decentralisation of energy

sources, jobs creation and environmentally oriented modernisation of the energy sector.

Estimates indicate that realisation of Development Strategy of the Renewable Energy

Sector will contribute to 30-40 thousands jobs, and what is very important, to reduction

of GHG emission of 18 million ton.

The Northern part of Poland is the best for wind farm location. Unfortunately it has

a very poorly developed transmission grid. The possibility of electricity transmission to

the other parts of Poland seems to be limited. To make matters worse there are still

unclear procedures of power purchase agreements. The local distribution utilities are not

willing to purchase “expensive” electricity from wind farms. Although the cost of wind

power from efficient wind farms has declined significantly, it is still almost two times

“higher” then electricity from the conventional sources. It is worth to mention that big

system hydro power plants are included into renewables in Poland.

66

The foreign investors are very interested in developing wind market because in Poland

because it is good business for them. There is lack of producers of professional wind

turbines who can compete with foreign technology. It is very important to oblige the

foreign companies to produce as many components of wind turbines as possible here in

Poland.

There are two significant financial sources that provide support to wind energy:

EKOFUNDUSZ (ECOFUND) and The National Found for Environmental Protection and

Water Management (NFOSiGW). All existing wind farms in Poland would not have been

built without the financial help of these institutions. The most popular form of financial

assistance is soft loan with preferential interest rate. There is a chance for additional

financing. Poland as a party to United Nation Frame Convention on Climate Change

(UNFCCC) is obliged to stabilise its GHG emissions and according to the Kyoto Protocol

to decrease them by 6% by 2008-2010. Poland as an Annex 1 country is also allowed to

participate in the flexible mechanism ventures.

As with any new market entrant, policy plays a huge role in helping to overcome market

barriers. The government of Poland tries to stimulate the generation of renewable

energies i.a. by a new ordinance to the Energy Act that has entered into effect on

December 15th 2000. The Ordinance stipulates that power utilities are obliged to

purchase 2.4% of the electricity they sell from renewable sources in 2001. This

percentage will gradually increased up to 7.5% in 2010. The government of Poland has

also accepted the Development Strategy of Renewable Energy Sector. The main goal is

to obtain 7,5% share of renewable energies in the state energy balance in 2010 (almost

half of the European Union’s target). The undertaken actions should lead also to obtain

14% share of renewable energy in 2020. In fact only 8 of 33 energy utilities fulfilled the

renewable energy purchase obligation in 2000 and in 2001 there was no a big

difference. Merely symbolic penalties have been imposed on the others. Consequently,

energy utilities have assumed a “waiting position” because the Ordinance to the Law is

new and there are still some ambiguities whether the penalties will be applied or not.

The future of wind energy will most likely depend on a combination of prices and political

support. Government should be aware of the need for provisions to encourage

renewable energy as they restructure and privatise the power market and grasp the

67

opportunity offered by wind energy to provide both a secure power supply and to combat

Global climate change. In the light of EU accession and taking into consideration that

Poland has good conditions to develop wind energy market one should expect that the

market become the real market in next few years.

68

Annex I. Micrositing

Turbulence is the variability of the wind at the specific site, mathematically:

where:

σ -deviation during a time period (10 min. - 1 hour)

u -average value during a time period (10 min. - 1 hour)

The value of turbulence generated from obstacles and other wind turbines should be

less than 20%.

The turbines should not be placed closer than length of 3 rotor diameters.

Sites should not be only classified by the mean wind speed but also by the extreme

winds. If the investor does not determine the extreme wind speeds it can lead even to a

catastrophe.

uTI

σ=

<Other

69

The most profitable angle of wind flow on rotor disc is 0 deg. It is worth to mention that

sometimes it is better to place the wind turbine behind a top. Even though the highest

wind speed is right on the top, that can be a more favourable location.

Air temperature is an important descriptor of a wind farm’s operating environment and is

normally measured either near ground level (2 to 3 m), or near hub height. In most

locations the average near ground level air temperature will be within 1oC of the average

at hub height. It is also used to calculate air density, a variable required to estimate the

wind power density and a wind turbine's power output.

Ultimately, micrositing is used to position one or more wind turbines on a parcel of land

to maximize the overall energy output of the wind plant.

0 1000 2000 3000 4000

13001400150016001700

Ter

rain

[m]

Horizontal distance [m]

0 1000 2000 3000 4000

Spe

ed

0 1000 2000 3000 4000-30-20-10

010203040

Flow slope

Terrain slopeTurbine positions

Flo

w a

ngle

[deg

]

70

Annex II. List of Annex I countries

Australia

Austria

Belarus a/

Belgium

Bulgaria a/

Canada

Czechoslovakia a/

Denmark

European Economic

Community

Estonia a/

Finland

France

Germany

Greece

Hungary a/

Iceland

Ireland

Italy Japan

Latvia a/

Lithuania a/

Luxembourg

Netherlands

New Zealand

Norway

Poland a/

Portugal

Romania a/

Russian Federation a/

Spain

Sweden

Switzerland

Turkey

Ukraine a/

United Kingdom of Great

Britain and Northern Ireland

United States of America

a/ Countries that are undergoing the process of transition to a market economy.

71

References

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[2]. Guła A. 2001 Physical Aspects of Solar Radiation. Materiały kursu TEMPUS.

[3]. Wagner A. - Strategy of the Development of Wind Energy in Europe. Materiały II

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Kielce 2002.

[4]. Latko A. – Anemological Conditions Analysis in Wind Energy Applications. Ibiden.

[5] Soliński I. 1999 - Energetyczne i ekonomiczne aspekty wykorzystania energii

wiatrowej.

[6]. Petersen E.L., Mortensen N.G., Landberg L. 1994 - Wind Resource Estimation and

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Services.

[7]. Strategia Rozwoju Energetyki Odnawialnej w Polsce.

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[10]. 2002 - Internal ABB materials.

[11]. Barzyk G. Jabłoński H., Jaroszyk L. 2001 - Some aspects of wind turbines

connection to the grid.

[12]. Sobczyk B. Wybrane problemy związane z wykonaniem ekspertyz dla farm

wiatrowych przyłączonych do sieci rozdzielczej 110 kV. Materiały Międzynarodowej

Konferencji Naukowo-Technicznej “Elektrownie wiatrowe”. Kołobrzeg 2002.

[13]. Jarosz W., Oleksy A. Określanie i uzgadnianie warunków przyłączenia podmiotów

do Krajowego Systemu Elektroenergetycznego. Ibiden.

[14]. Galon-Kozakiewicz 2001 - Poland as a party to the United Nation Framework

Convention on Climate Change (UNFCCC). Materiały kursu TEMPUS.

[15]. Froggatt A. 2000 -The Liberalisation of Europe's Electricity Markets -Is the

environment paying the price for cheap power?

[16]. Soliński I. 1996 – Konkurencyjność odnawialnych i nieodnawialnych nośników

energii. Przegląd Górniczy nr 1.

72

[17]. Rozporządzenie Ministra Gospodarki z dnia 15 grudnia 2000 r. w sprawie

obowiązku zakupu energii elektrycznej ze źródeł niekonwencjonalnych i

odnawialnych oraz wytwarzanej w skojarzeniu z wytwarzaniem ciepła, a także ciepła

ze źródeł niekonwencjonalnych i odnawialnych oraz zakresu tego obowiązku.

[18]. Rozporządzenie Ministra Gospodarki z dnia 14 grudnia 2000 r. w sprawie

szczegółowych zasad kształtowania i kalkulacji taryf oraz zasad rozliczeń w obrocie

energią elektryczną.

[19]. Martin N. 1997 – Taxing Energy, Windpower Monthly, Vol 13, No.10,44

[20]. Bzowski J.J. 2001 Finansowanie przez Ekofundusz przedsięwzieć związanych z

wykorzystaniem odnawialnych żródeł energii. Materiały kursu TEMPUS.

[21]. Kiecko R. Finansowanie Inwestycji. “Konieczność czy Idealizm” (see above).

[22]. Czaja E., Lewandowski K., Lenkiewicz Z. Doświadczenia Zakładu Energetycznego

Koszalin S.A. w zakresie przyłączeń farm wiatrowych do sieci rozdzielczej.

Konferencja “Elektrownie wiatrowe” (see above).

[23]. 2001 - Skrobotowo Windpark, Project proposal submitted by Nuon, EPA and The

National Found for Environmental Protection and Water Management.

[24]. www.elektrownie-wiatrowe.org.pl

http://www.elektrownie-wiatrowe.org.pl/

Documents

Wind Energy in Polish Power System