Poland Introduces Auction-Based Support System for Biomethane Production in Installations Above 1 MW

Poland will launch a new auction-based support scheme for biomethane production in installations above 1 MW. The proposal, as outlined in the draft amendment to the Act on Investment in Wind Power Plants and Some Other Acts, calls for amendments of the Renewable Energy Sources Act (OZE Act) aimed at increasing the energy security of Poland, speeding up the transition in the energy sector, and providing stable conditions for investment by large biomethane producers. Whereas small biomethane plants below 1 MW have already tasted the advantage of a feed-in premium (FIP) system, larger plants have for long lacked investment opportunities. The legislative proposal tries to reverse this loss by implementing a competitive auction process, anchoring biomethane producers with the kind of financial security it requires for long-term sustainability.

The President of the Energy Regulatory Office will be charged with organizing and conducting auctions at least once a year and will have the mandate of implementing auction-based support. Eligibility to bid will require biomethane to be produced on the basis of biogas, agricultural biogas, or a combination of both, with feedstock having to comply with set standards of sustainability. The auction process will be structured according to the installed electric capacity of installation units, with auctions for installations below 2 MW, between 2 MW and 6 MW, and above 6 MW. The Council of Ministers will establish the number and monetary amount of biomethane to be auctioned in three-year periods, offering a transparent and predictable framework to market participants. Moreover, the Minister of Climate and Environment will establish an annual reference price per MWh of biomethane on the basis of investment costs, operating costs, and market conditions.

The proposed system has rigorous sustainability and compliance requirements to satisfy EU standards. Biomethane for support should be produced exclusively from approved biomass or agricultural biogas substrates to guarantee that it is included in Poland's renewable energy and greenhouse gas reduction targets. Newly commissioned or newly manufactured equipment, which is not more than 48 months at the time of the first biomethane production, will be eligible. Furthermore, producers shall be asked to obtain a certificate of eligibility from the President of URE before participating in the auction process, introducing regulatory oversight.

The draft law contains provisions for international participation as well, wherein foreign biomethane producers can participate in the auctions under specific conditions. Participation shall include a mutual arrangement between Poland and the state on whose territory the production plant is located, agreeing to each other's access to support. The biomethane must also be physically injectable into Poland's gas grid. Imported biomethane shall, in order to maintain the integrity of the national support scheme, be subject to auction-based aid up to 5% of the total volume of auctions each year.

According to the regulatory impact assessment, the proposed support system will contribute to the installation of approximately 53 biomethane installations with an average capacity of 2.8 MW by 2030. The installations will produce up to 300 million cubic meters of biomethane annually and contribute significantly to Poland's renewable energy plans. The support given to the auction system will be projected to total close to PLN 1.3 billion every year as of 2034. The system will be funded largely through the Renewable Energy Fee (pol. Opłata OZE), but the impact on power prices is expected to be comparatively minimal, i.e., cost-saving for consumers but market stability building.

The introduction of this auctioning-based scheme is a substantial regulatory development in Poland's renewables policy. By breaking down the investment hurdles that have constrained the construction of large biomethane plants, the draft law seeks to establish the financial security required to drive market expansion. In the process, it also assists in advancing Poland's overall energy transition goals by enabling increased biomethane use in the gas grid and elsewhere. While this draft bill is going through the pipe, industry watchers are monitoring carefully how it gets enacted and can shape the overall renewable energy environment in Poland.