WARSAW, Sept 11 – Polish utility Energa estimated it would save about 110 million zlotys ($31.20 million) next year if it scrapped long-term contracts it had signed to buy certificates that showed some of its power was generated from renewable sources.
Polish utilities, which mostly generate electricity from coal, have been required to buy the so-called “green certificates” to meet renewable electricity targets and support the renewable power industry.
The government, which wants to help the coal industry, has been seeking to change the scheme of support for renewable sources. It has been testing a system of auctioning electricity from renewable sources.
Energa said it would start legal cases to show contracts it signed in the past to buy the certificates were non-binding, saying the deals required it to buy certificates outside of the public tender process in violation of public procurement law.
“Energa will continue to fulfill the obligations to buy green certificates but not under the contracts signed in the past, which it considers invalid”, Energa’s spokesman said.
The firm said it would save about 110 million zlotys in 2018 if it no longer had to buy the certificates under the contracts. The firm said it expected savings of 2.1 billion zlotys in the coming years, without giving a precise timeframe.
Energa said its assumptions on savings were based on annual electricity retail sales at 19 terrawatt hour (TWh) and a substitution fee of 43 zlotys per megawatt hour.
The substitution fee is a payment utilities can choose to pay in lieu of buying certificates.
Poland passed a law in August changing the substitution fee from a fixed amount to one linked to the certificate’s market price.
Shares in Energa rose by 3 percent at 1300 GMT while the Warsaw blue chip index was up by 1.3 percent.
“The company has assessed all legal risks and decided to terminate the contracts. The news has a positive impact on Energa’s share price,” Ipopema Securities analyst Robert Maj said.
($1 = 3.5261 zlotys)