EC clears EUR-22.5bn Polish offshore wind state aid scheme

The European Commission (EC) announced on Thursday its approval of a Polish scheme with a budget of EUR 22.5 billion (USD 27.5bn) to support offshore wind projects in the Baltic Sea.

The Commission has concluded that the scheme aligns with EU State aid rules and provides financial backing that is necessary and has an incentive effect. It has also determined that the positive environmental effects of the scheme outweigh any possible negative effects in terms of distortions to competition.

Poland plans to grant aid for 25 years in the form of a two-way contract-for-difference (CfD) premium, but only up to 100,000 full load hours per megawatt of installed capacity. As part of the two-phase scheme, beneficiaries will get payments equal to the difference between the reference price and the market price for electricity, when the latter is lower. When the market price is higher, though, they will be the ones to pay the difference to the state.

Because of the very limited number of projects currently in development, they will be granted aid using the exception to the auction requirement in the first phase of the scheme. The reference price for such projects will be administratively fixed based on their costs, up to PLN 319.60 (USD 86.4/EUR 70.8) per MWh. The EC will assess individually the specific level of operating aid for each project that secures an environmental permit.

The second phase of the scheme envisages allocating support through tenders, as of 2025, with a fixed reference price that is based on the respective bid.

The Polish Energy Regulatory Office has so far awarded CfDs to a few projects, including the 1-GW Baltica 3 and the 1.5-GW Baltica 2 projects of Ørsted A/S (CPH:ORSTED) and PGE Polska Grupa Energetyczna SA (WSE:PGE); the 350-MW F.E.W. Baltic II project of RWE AG (ETR:RWE); and the Baltyk II and III projects of Equinor ASA (NYSE:EQNR) and Polenergia SA (WSE:PEP).

(EUR 1.0 = USD 1.220)

(PLN 1.0 = USD 0.270/EUR 0.222)

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