Moody's: Poland's new law will likely curb investments in renewables

Poland's new law will likely curb investments in the renewable energy sector and will provide some upside to wholesale power prices, Moody's said in a new report. "We expect it will result in a tightening of the reserve margin, and the amount of electricity generation capacity in Poland above anticipated peak demand, as many of the existing thermal power plants will need to be decommissioned," the report read. On the other hand, the reserve margin tightening will "provide some upside to the wholesale power prices," which will be positive for conventional power producers PGE and Energa, Moody's predicts. Moody's also notes that under EU law, Poland is required to generate 15 percent of its electricity from renewable sources by 2020 versus the 13 percent at present. The rating agency believes that limiting growth in wind generation will make reaching this target challenging and the ability to deliver on it will depend on the pace of development of alternative technologies, such as biomass and biogas that appear to be promoted by the government. In addition, the new law will result in an increase in the tax burden for wind farm generators starting from 2017, which will negatively impact the profitability of wind farm generators and will act as a further constraining factor on the sector growth.