RES Auctions Simulation - Webinar _2015_05!14!2430

Advisory

RES auctions simulation - Webinar PWEA, PwC, DZP

15 May 2015

Confidential

PwC

15 May 2015

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PwC

15 May 2015

Webinar

2


?

Approximately 1 hour

Questionnaire during webinar

Please ask questions

Contact us if you have more questions! [email protected] [email protected] [email protected]

PwC

15 May 2015

Hosts

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Grzegorz Skaryski Vicepresident of the board

Jan Biernacki Senior Associate, Energy Group

Pawe Grzejszczak Partner

Agenda

Page

1

2

3

4

Introduction..

The RES act and the auctions..

The results of the auctions...

Your questions.

5.

9.

12.

26.

PwC

15 May 2015

Introduction

5

Section 1


PwC

15 May 2015

The purpose of the Webinar is to summarize the results of simulation of the RES auctions

6


Section 1 Introduction

Stage 1

Submitting the projects

Stage 2

Submitting the bids

Stage 3

Receiving the results

Stage 4

PWEA Seminar

19 May Save the date! 28.04 7.05 8.05 13.05 15.05

Today Auction results visible in

Zieloneaukcje web page Budgets and volumes declared Simplified calculator shared

Registrations only via credit card Voluntary survey held

PwC

15 May 2015

Our event has gathered huge interest on the market

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over 3700 MW total capacity of submitted projects

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Wind

Biomass

3550 MWe

123 MWe

PV 33 MWe

Hydro 4 MWe

Biogas 4 MWe

Biodegradable waste 2 MWe

Our event attracted.

90

139 Number of submitted projects

Number of users

Number of submitted technologies

PwC

15 May 2015

Our event attracted both Polish and international attendants

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n = 55

of which 44% were RES projects developers

24% were vertically integrated energy companies

and 27% were individual investors

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

The RES act and the auctions

9

Section 2


PwC

15 May 2015

How close is the simulation to the real auctions?

10


Section 2 The RES act and the auctions

Auctions components

Prequalification

Submitting capacity

Submitting volume and price

Volume and budget

Algorithm

ZieloneAukcje.pl

Real auctions

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

The reference prices were based on draft of RES act from 2012 where

correction factors for different technologies were considered

PwC

15 May 2015

Controversies over auctions

11


Section 2 The RES act and the auctions

1 3 4 2 Volume

allotment for < 4000

MWh/MW units

Impact on competition of cap

of volume for < 4000 MWh/MW

technologies

Pre qualification procedures

Lack of binding pre-qualification requirements

Regulations in regards to

projects executed in

phases

Market concerns in respect of support

scheme for projects executed in phases

Potential importance

devaluation of small scale developers

According to results of Zielone Aukcje

survey, market participants express concern in respect

of potential negative effects on small

scale RES developers

PwC

15 May 2015

The results of the auctions

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Section 3


PwC

15 May 2015

Question to you..

What's the closing bid (cut-off price) for projects: planned, < 4000 MWh/MW, > 1 MWe ?

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Section 3 The results of the auctions

PwC

15 May 2015

Before we had a chance to see the results we have came out with certain hypothesis

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Will it occur?

Yes

Yes

Yes

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

Which restriction will turn out to be more severe? Volume or budget?

Budget

Budget

Budget

PwC

15 May 2015

Volume submitted to RES simulation auction demonstrates a significant preference of market participants for wind energy

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100% 100%

378%

4%

100% 100%

589%

103% 100% 100%

2% 4%

PwC

15 May 2015

The volumes among baskets were.

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2,3 TWh

2,3 TWh*

23,2 TWh

14,7 TWh*

7,7 TWh

4,9 TWh*

Existing installations Planned installations

PwC

15 May 2015

How much capacity is that?

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Large scale installations (>1MW) Small scale installations (

PwC

15 May 2015

260

410

240 301

431

350

383 410

323

522

743

500

The bids ranged from.

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Large scale installations (>1MW) Small scale installations (

PwC

15 May 2015

Price offered by existing projects with capacity utilization below 4,000 MW/MWh was noticeably higher as those offered by its planned equivalents

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0,4 0,7

0,4 - - - 0,2

5,3

1,7

260 280

- volume qualified through auction process

Submitted electricity volume in TWh spread out by offered price in PLN/MWh

383 PLN/MWh

Cut-off

price

Existing installations with capacity utilization below 4,000 MW/MWh

- volume unqualified through auction process

280 300 300 320 320 340 340 360 360 380 380 400 400 420

PwC

15 May 2015

Only 17% of submitted volume for planned large scale projects with capacity utilization below 4,000 MW/MWh/year has qualified

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8,8 9,4 1,7 - 2,9 0,3 7,3

34,5 27,6 26,9

17,0

240 260 260 280 280 300 300 320 320 340 340 360 360 380 380 400 400 420 more than 420

- volume qualified through auction process - volume unqualified through auction process


323 PLN/MWh

Cut-off

price

Planned large scale installations with capacity utilization below 4,000 MW/MWh

PwC

15 May 2015

A significant price variation for planned large scale RES installation with no capacity restrictions may result from a relatively small sample for this category

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3,5 - - - 0,9 3,4 - - 2,3 0,5 - 0,3 0,6

3,6

300

320

320

340

340

360

- volume qualified through auction process


522 PLN/MWh

Cut-off

price

Planned large scale installations with no capacity restrictions

360

380

380

400

400

420

420

440

440

460

460

480

480

500

500

520

520

540

540

560

- volume unqualified through auction process

PwC

15 May 2015

Vast majority of registered projects with capacity utilization below 4,000 MW/MWh/year were solar power projects

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53,8 26,1 14,3 40,8 12,8 14,1 23,9

400 450


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

743 PLN/MWh

Cut-off

price

450 500 500 550 550 600 600 650 650 700 700 750

PwC

15 May 2015

Planned small scale projects featured only various biogas projects with combined capacity of 1,7 MW

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58,5 120,0 - 16,2

350 400


Planned small scale installations with no capacity restrictions

Submitted electricity volume in GWh spread out by offered price in PLN/MWh

500 PLN/MWh

Cut-off

price

400 450 450 500 500 550

PwC

15 May 2015

Who was the closest one in terms of correct hypothesis?

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1

2

3

4

Category Hypothesis

Outcome

Assesment

Cut-off price for planned 1MW

Underbidding

Volume and budget restrictions

Technology breakdown

360 PLN/MWh 340 PLN/MWh 340 PLN/MWh

323 PLN/MWh

Budget Budget

All but wind

? Yes Possible

/ Price submitted for technologies other

than wind farms were on average 14% below

reference price

PwC

15 May 2015

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?

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PwC

15 May 2015

Your questions

26

Section 4


Thank you

Documents

RES Auctions Simulation - Webinar _2015_05!14!2430