RES Auctions Simulation - Webinar - 2015 - 05!14!2430

Advisory
RES auctions simulation Webinar

PWEA, PwC, DZP
Confidential
15 May 2015
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RES auctions simulation - Webinar PWEA, PwC, DZP
PwC
15 May 2015
1
Webinar
Approximately 1 hour
Questionnaire during webinar
Please ask questions

Contact us if you have more questions!
g.skarzynski@psew.pl
jan.biernacki@pl.pwc.com
pawel.grzejszczak@dzp.pl

PwC
15 May 2015
2
Hosts
Grzegorz Skaryski
Vicepresident of the board
Jan Biernacki
Senior Associate, Energy Group
Pawe Grzejszczak
Partner

PwC
15 May 2015
3
Agenda
Page
Introduction.. 5.
The RES act and the auctions.. 9.
The results of the auctions... 12.
Your questions.26.
Section 1
Introduction

PwC
15 May 2015
5
Section 1 Introduction
The purpose of the Webinar is to summarize the results

of simulation of the RES auctions
Stage 1
Stage 2
Stage 3
Stage 4
Submitting the projects
Submitting the bids
Receiving the results
PWEA Seminar
28.04 7.05
8.05 13.05
19 May
Save the date!
15.05
Today
Registrations only via credit card
Voluntary survey held
Budgets and volumes declared

Simplified calculator shared

PwC
Auction results visible in

Zieloneaukcje web page
15 May 2015
6
Our event has gathered huge interest on the market

Our event attracted.
over 3700 MW
total capacity of submitted projects
139
Number of submitted projects
90
Number of users
Number of submitted technologies
Wind
3550 MWe
Biomass
123 MWe
PV
33 MWe
Hydro
4 MWe
Biogas
4 MWe
Biodegradable waste
2 MWe

PwC
15 May 2015
7
Our event attracted both Polish and international

attendants
of which
44% were RES projects developers
24% were vertically integrated energy companies
and
27% were individual investors
n = 55
45%
estimates that number of executed RES projects will

decline in the coming years
31% forecasts that the number will not change
and
22% anticipates that the number will increase
n = 55
PwC
15 May 2015
8
Section 2
The RES act and the auctions

PwC
15 May 2015
9
Section 2 The RES act and the auctions
How close is the simulation to the real auctions?

Auctions
components
ZieloneAukcje.pl
Real auctions
Prequalification
Submitting capacity
Submitting volume
and price
Volume and budget
Algorithm
PwC
The reference prices were based on

draft of RES act from 2012 where
correction factors for different
technologies were considered
The same as declared in the

project by the Ministry.
We declared it in different order
(after submitting capacity)
We used guidelines from RES

act yet the rules of the auction
have not been determined yet
?
15 May 2015
10
Section 2 The RES act and the auctions
Controversies over auctions
1
Volume
allotment for
< 4000
MWh/MW units
Impact on
competition of cap
of volume for <
4000 MWh/MW
technologies
Pre
qualification
procedures
Regulations in
regards to
projects
executed in
phases
Potential
importance
devaluation of
small scale
developers
Market concerns in
respect of support
scheme for projects
executed in phases
According to results
of Zielone Aukcje
survey, market
participants express
concern in respect
of potential negative
effects on small
scale RES
developers
Lack of binding prequalification

requirements

PwC
15 May 2015
11
Section 3
The results of the auctions

PwC
15 May 2015
12
Section 3 The results of the auctions
Question to you..
What's the closing bid (cut-off price)

for projects:
planned,
< 4000 MWh/MW,
> 1 MWe ?

PwC
15 May 2015
13
Before we had a chance to see the results we have came

out with certain hypothesis
Price level cut-off for < 4000
MWh/MW, > 1 MW projects (new)
360 PLN/MWh
340 PLN/MWh
340 PLN/MWh
Bids of which technology will be

closest to reference prices?
All but wind
All but wind
All but wind

PwC
Will it occur?
Yes
Yes
Yes
Which restriction will turn out to

be more severe? Volume or
budget?
Budget
Budget
Budget
15 May 2015
14
Volume submitted to RES simulation auction

demonstrates a significant preference of market
participants for wind energy
Planned installations
Existing installations
Large scale installations (>1MW)
Small scale installations (<=1MW)
589%
378%
100%
100%
100%
100% 103%
4%
<4,000
MWh/MW
Other
installations
100%
100%
2%
<4,000
MWh/MW
- volume attributed to featured technology as

per draft Ministerial Decree
PwC
Other
installations
<4,000
MWh/MW
4%
Other
installations
- volume submitted for RES simulation

auction as percentage of volume attributed
by the Government
15 May 2015
15
The volumes among baskets were.

The use of volume (as % of total available) and total quota among baskets
Total
available
2,3
TWh
23,2
TWh
2,3
TWh*
98%
70%
14,7
TWh*
Other
installations
<4,000
MWh/MW
4,9
TWh*
2%
4%
<4,000
MWh/MW
Other
installations
75%
4%
<4,000
MWh/MW
7,7
TWh
Other
installations
* - volume shown as total volume in the auction minus volume for installations < 4000 MWh/MW. Please mind the fact the literal budget split is different

PwC
15 May 2015
16
How much capacity is that?

Total capacity qualified in the auctions
Technology
Wind
40 MWe
519 MWe
1 MWe
PV
12 MWe
Biomass
78 MWe
Others
4 MWe
2 MWe
2 MWe
Total
44 MWe
599 MWe
15 MWe

PwC
15 May 2015
17
The bids ranged from.

743
522
383
410
410
260
<4,000
MWh/MW
500
323
240
Other
installations
<4,000
MWh/MW

PwC
431
350
301
Other
installations
<4,000
MWh/MW
Other
installations
15 May 2015
18
Price offered by existing projects with capacity

utilization below 4,000 MW/MWh was noticeably
higher as those offered by its planned equivalents
Existing installations with capacity utilization below 4,000 MW/MWh
Submitted electricity volume in TWh spread out by offered price in PLN/MWh
Cut-off
5,3
383
PLN/MWh
price
400 420
1,7
0,4
0,7
380 400
360 380
- volume qualified through auction process

PwC
0,4
340 360
0,2
320 340
300 320
280 300
260 280
- volume unqualified through auction process

15 May 2015
19
Only 17% of submitted volume for planned large scale

projects with capacity utilization below 4,000
MW/MWh/year has qualified
Planned large scale installations with capacity utilization below 4,000 MW/MWh
Cut-off
323
PLN/MWh
34,5
0,3
7,3
more than
420
400 420
380 400
27,6
360 380

PwC
26,9
340 360
17,0
price
8,8
9,4
1,7
2,9
320 340
300 320
280 300
260 280
240 260

15 May 2015
20
A significant price variation for planned large scale RES

installation with no capacity restrictions may result
from a relatively small sample for this category
Planned large scale installations with no capacity restrictions
Cut-off
522
3,6
PLN/MWh
price
0,6
3,5
0,9
3,4
2,3
0,5
0,3
540
560
520
540
500
520
480
500
460
480
440
460
420
440
400
420
380
400
360
380
340
360
320
340
300
320

PwC

15 May 2015
21
Vast majority of registered projects with capacity

utilization below 4,000 MW/MWh/year were solar
power projects
Planned small scale installations with capacity utilization below 4,000 MW/MWh
Submitted electricity volume in GWh spread out by offered price in PLN/MWh
Cut-off
743
PLN/MWh
price
53,8
26,1
14,3
40,8
12,8
14,1
23,9
700 750
650 700
600 650
550 600
500 550
450 500
400 450

PwC

15 May 2015
22
Planned small scale projects featured only various

biogas projects with combined capacity of 1,7 MW
Planned small scale installations with no capacity restrictions

Submitted electricity volume in GWh spread out by offered price in PLN/MWh
Cut-off
500
PLN/MWh
price
58,5
120,0
16,2
500 550
450 500
400 450
350 400

PwC

15 May 2015
23
Who was the closest one in terms of correct hypothesis?

Category
Cut-off price
for planned
<4000 MWh/MW
> 1MW
Underbidding
Volume and
budget
restrictions
Technology
breakdown
Hypothesis
Outcome
Assesment
323 PLN/MWh
Yes
Possible
Budget
Budget
All but wind
Price submitted for

technologies other
than wind farms were
on average 14% below
reference price
360 PLN/MWh
340 PLN/MWh
340 PLN/MWh

PwC
15 May 2015
24
You will find more on 19 May PWEA Seminar
What would happen if volume was reallocated after auctions?
Is there an underbidding risk?
How to prequalify to the auction?
What strategy to use during the bidding?

PwC
15 May 2015
25
Section 4
Your questions

PwC
15 May 2015
26
Thank you

RES Auctions Simulation - Webinar - 2015 - 05!14!2430

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Advisory

RES auctions simulation Webinar

For best audio quality, we recommend using headphones

Questionnaire during webinar

Please ask questions

RES auctions simulation - Webinar PWEA, PwC, DZP

RES auctions simulation - Webinar PWEA, PwC, DZP

The RES act and the auctions.. 9.

The results of the auctions... 12.

RES auctions simulation - Webinar PWEA, PwC, DZP

The purpose of the Webinar is to summarize the results

Submitting the projects

Submitting the bids

Receiving the results

Budgets and volumes declared

RES auctions simulation - Webinar PWEA, PwC, DZP

Auction results visible in

Our event has gathered huge interest on the market

total capacity of submitted projects

Number of submitted projects

Number of submitted technologies

RES auctions simulation - Webinar PWEA, PwC, DZP

Our event attracted both Polish and international

44% were RES projects developers

24% were vertically integrated energy companies

27% were individual investors

estimates that number of executed RES projects will

31% forecasts that the number will not change

22% anticipates that the number will increase

RES auctions simulation - Webinar PWEA, PwC, DZP

Section 2 The RES act and the auctions

How close is the simulation to the real auctions?

Volume and budget

The reference prices were based on

The same as declared in the

We used guidelines from RES

Section 2 The RES act and the auctions

Controversies over auctions

Lack of binding prequalification

RES auctions simulation - Webinar PWEA, PwC, DZP

RES auctions simulation - Webinar PWEA, PwC, DZP

Section 3 The results of the auctions

What's the closing bid (cut-off price)

RES auctions simulation - Webinar PWEA, PwC, DZP

Section 3 The results of the auctions

Before we had a chance to see the results we have came

Bids of which technology will be

RES auctions simulation - Webinar PWEA, PwC, DZP

Which restriction will turn out to

Section 3 The results of the auctions

Volume submitted to RES simulation auction

Small scale installations (<=1MW)

- volume attributed to featured technology as

- volume submitted for RES simulation

Section 3 The results of the auctions

The volumes among baskets were.

Small scale installations (<=1MW)

RES auctions simulation - Webinar PWEA, PwC, DZP

Section 3 The results of the auctions

How much capacity is that?

Small scale installations (<=1MW)

RES auctions simulation - Webinar PWEA, PwC, DZP