The European Bank for Reconstruction and Development has cut its financing of wind farms in Poland because there are fewer projects as government policies have made them unprofitable, a top EBRD official said. Private investors spent around 34 billion zlotys ($8.5 billion) on the construction of wind farms in Poland in the past few years, helping the country become less reliant on coal and taking it closer to European Union carbon emissions targets. “These investors are now suffering significant losses and are unlikely to incur new investment in Poland,” Grzegorz Zielinski, EBRD’s Poland chief, told Reuters. “I’m afraid that this could translate into a negative perception of Poland as a country unfavourable for private investors in regulated sectors,” he added.
Overall investment in Poland, across industries, fell 5.5 percent last year, the biggest decline in 14 years, according to the statistics office data. In the energy sector, the ruling Law and Justice party (PiS) wants coal to remain Poland’s dominant source of energy for many years. It sees renewable energy as unstable and has introduced laws on wind farms that have made many of them unprofitable. In 2016 the government unexpectedly banned building wind farms too close to dwellings and imposed a higher property tax on wind farm owners. The subsidy system for renewables, based on tradeable green certificates, has also become oversupplied and caused a slump in prices, which has hit wind farms’ cashflows. Critics say such policies may lead Poland to miss the EU target of generating 15 percent of its electricity from renewable sources by 2020.
EBRD provides financing for energy projects aimed at reducing emissions, mostly renewable sources and power distribution. It spent around 100 million euros on energy projects in Poland in 2016, down from around 250 million euros annually in the previous years. “Following a fall in investment in renewables (in general) EBRD also reduced investment in the energy sector in 2016,” Zielinski said. EBRD backed one of the country’s biggest wind farms Banie, in northwest Poland, last year, together with local lenders Alior Bank and BOS. The latter said in March it booked a $25 million writedown on wind-farm related loans for 2016. “We hope that 2017 will be an improvement when it comes to our investments in energy in Poland, but due to the investment uncertainty we do not expect a sudden increase in private investment,” Zielinski said.
Poland’s biggest private utility Polenergia and state-run PGE are due to launch the country’s first offshore wind farms after 2022. “We hope that these projects will go ahead and that we will take part in their financing,” Zielinski said. This year EBRD expects to spend a similar amount in Poland to 2016 when it provided financing of 780 million euros across all industries. ($1 = 4.0013 zlotys) (Editing by Susan Fenton)