Poland’s Ministry of Climate and Environment (MKiS) has proposed a change to the Offshore Wind Act. The new proposal suggests setting separate maximum prices for different offshore wind areas, replacing the current single price system. This change aims to reflect project costs better and reduce expenses for consumers.
Why the Change Is Needed
Currently, the Offshore Wind Act sets a single maximum price for all bids in offshore wind auctions. This price is determined by the Minister for Climate, in consultation with the Minister of State Assets. However, the MKiS believes that different price limits for each area would be more accurate for offshore wind projects.
The ministry explained that offshore wind farms are located in diverse areas with different geophysical conditions and distances from shore. These factors affect construction and operational costs. Setting area-specific price limits would ensure more accurate pricing for each project.
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Minimizing Costs and Maximizing Participation
The MKiS stressed that the primary goal of setting maximum prices is to control excessive costs. It also ensures enough projects are able to participate in the auction. If a single price is applied across all areas, higher-cost projects may be excluded from the auction. This could reduce the number of bids and lower competition, potentially resulting in fewer than three bids per auction.
The ministry also noted that a uniform maximum price could create inefficiencies. Less expensive projects may submit higher bids, trying to compete with more costly areas. This could result in unjustified financial support for some projects.
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Next Steps for the Proposed Changes
The Ministry of Climate expects to finalize the proposal by the fourth quarter of 2024. If adopted, the change would offer more flexibility to offshore wind auctions. It would also help keep costs under control while encouraging more competitive bidding.