Evolution of Hydropower Support Schemes in Poland and Their Assessment Using the LCOE Method

Izabela Godyń,Anna Dubel

doi:10.3390/en14248473

Izabela Godyń, Anna Dubel

Open Access

https://doi.org/10.3390/en14248473

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Abstract

Hydropower as stable power installations play an important role among renewable energy sources. Yet, their share in renewable energy is small. Currently, it is only 10% of energy from renewable energy sources (RES), compared to 27% in 2010. Therefore, the aim of this paper is to assess the RES support schemes in Poland related to hydropower, such as green certificates, auctions and FIT, with the use of the Levelized Cost of Electricity (LCOE) analysis in order to determine which support scheme is best incentivizing hydropower development. The evolution of the hydropower support scheme in Poland is presented. The total LCOE and possible revenues from support systems for various segments of hydropower installations are graphically analyzed for two analysis periods (15 and 50 years) and for two discount rates (7% and 11.4%). The analysis shows the great importance of the support schemes in the profitability of the hydropower plants investments. The LCOE graphical analysis proves to be suitable for showing sensitivity analysis of capital and operating costs of various sizes of hydropower plants. The analysis shows that the LCOE in micro-power plants is usually higher than the support and revenues available in the green certificates or auctions or FIT schemes in Poland.

Highlights

Obligations in the field of energy policy of EU member states and the resulting ambitious plan for the development of energy based on renewable energy sources (RES) requires support from investors in order to increase the attractiveness of this type of investment ensuring its profitability [1,2]
The data are broken down by power plant capacity: (1) till 1 MW—these are installations that can benefit from FIT, and installations with a capacity of up to 20 MW, which can benefit from the support system in the form of auctions divided into small and large power plants with significantly different construction and operating costs (2) up to 5 MW and (3) power above 5 MW
Micro and small hydropower plants hardly have the ability to reach this level of Levelized Cost of Electricity (LCOE)

Summary

Introduction

Obligations in the field of energy policy of EU member states and the resulting ambitious plan for the development of energy based on renewable energy sources (RES) requires support from investors in order to increase the attractiveness of this type of investment ensuring its profitability [1,2]. The dynamic development of wind energy and photovoltaics brought a significant decrease in investment costs. A number of technologies, such as hydropower or biogas energy production, still require support as the costs of energy production are far higher than market prices. This is the first premise for differentiating support systems for individual RES technologies. The policy of many countries is implemented in two sub-areas: (1) development of wind and photovoltaic energy as the cheapest and most willingly undertaken investments by investors, (2) development of stable RES (hydropower, biogas), but much more expensive to build. There are a lot of schemes to support energy production from RES in Europe

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