Poland: Changes To RES Act In Poland

On 28 June 2017, a draft amendment to the Act of 20 February 2015 on renewable energy sources (the RES Act) and the Act of 20 May 2016 on wind energy investments (the Distance Act) was published. The draft amendment (Proposed Amendment) is still at an early stage of legislative work and still needs to go through the intra-departmental and public consultation stage. The Proposed Amendment will be forwarded for further processing by Parliament only after the completion of the consultations.

In a related move, on 12 July 2017 a parliamentary draft amendment to the RES Act was submitted to Parliament with a view to change radically the calculation of the substitution fee in the certificate of origin system (Parliamentary Draft).

New division into baskets in the field of auctions

The Proposed Amendment deals with the so-called "technological baskets", which are groups of renewable energy installations (RES installations) that compete for the same pool of funds in one auction. All RES installations are to be categorized under six groups, corresponding to the division for reference pricing (there will be a few groups with different reference prices in one basket):

  • Power generation from exclusively non-agricultural biogas, as well as RES installations using biomass, bioliquids (incl. installations for dedicated biomass combustion and multi-fuel combustion and hybrid systems)
  • Waste-to-energy installations
  • Electricity generation from exclusively: (i) hydropower, (ii) geothermal power; (iii) offshore wind energy
  • Electricity generation from exclusively: agriculture biogas
  • Electricity generation from exclusively: (i) onshore wind energy (ii) solar power
  • Hybrid RES installations

As is currently the case, there will be separate auctions for installations with installed power of (i) up to 1 MW and (ii) exceeding 1 MW, as well as for installations that commenced energy generation before 1 July 2016 (Existing Installations) and after 1 July 2016 (New Installations).

Adjusted method of calculating support in the auction

There will be a change to the mechanism of factoring in investment aid granted to producers of RES installations which win auctions. The proposed mechanism will factor in the value of the investment aid to reduce the price offered at auction. Therefore, an auction winning producer of an RES installation with capacity of at least 500 kW will receive compensation for the negative balance to the bid price minus the value of the investment aid (adjusted price). Equally, a producer of an installation up to 500 kW will sell energy at the price set in the offer minus the value of the investment aid (i.e. the adjusted price). Also, the "fixed purchase price" in the feed-in tariff system will be reduced by the amount of the investment aid.

There is no definition of "investment aid" in the Proposed Amendment.

Implementing the changes to the auction system

The Proposed Amendment provides for other modifications to the auction system, including:

  • The Council of Ministers will publish a schedule of the purchase and sale of RES electricity, setting the maximum quantity and value of electricity from renewable energy planned for auction for the next three years.
  • There will be less bureaucracy to pre-qualify New Installations - i.e. for formal evaluation of projects seeking a certificate of admission to an auction. Investors will have to submit only: the interconnection conditions or interconnection agreement to the grid, a valid building permit, the schedule of works and expenditures for RES installations.
  • A higher deposit will be paid by RES installations producers at auction. For Existing Installations, the amount will stay at PLN 30 for every 1 kW of installed capacity (PLN 3,000 for 1 MW). For New Installations, the deposit was increased to PLN 60 per 1 kW of installed capacity (PLN 6,000 per 1 MW).
  • The minimum bid price at auction will be the average sale price of electricity on the competitive market in the previous quarter as per the President of Energy Regulatory Office (ERO).
  • The RES Act currently rules out RES support for producers using old equipment, setting the age of equipment benchmark at 48 months prior to the generation of energy (72 months for offshore wind farms). The Proposed Amendment has a shorter cut-off point of 36 months, with 18 months for solar installations and 24 months for onshore wind farms.
  • A shorter deadline to start electricity generation for New Installations that received support at auction will apply. The new deadline will be 36 months (now 48), with 18 months for solar, 24 months for onshore wind energy, and offshore wind energy remaining unchanged at 72 months.
  • Auction-winners and relevant grid operators must adjust their interconnection agreements to include a deadline for generating energy for the first time in the RES installation; the deadline must comply with the timeframe set by the RES Act for a New Installation generating energy for the first time.
  • At the request of the producer in an RES installation, the President of the ERO may agree to the transfer of the rights and obligations arising from an auction win to the purchaser of the RES installation. Upon approval, the rights and obligations transfer to the purchaser of the RES installation, but the seller remains jointly and severally liable for any failure to meet obligations within two years of disposal of the RES installation. The obligation of the aforesaid consent obviously does not refer to the sale of shares in a company developing the project which won the auction.

Guaranteed tariff for RES installations up to 1 MW

The Proposed Amendment introduces a new support system similar to existing feed-in tariff systems, which let producers sell energy that was not used for their own needs at fixed prices. This system is only for RES producers with installed capacity of <1 MW producing energy from biogas (irrespective of origin) or hydro. A producer seeking to use the system must obtain a certificate from the President of ERO confirming it can sell unused energy at a fixed price. This is open to RES installations that are already operational or are in the development phase (building permit required). The Council of Ministers will present an annual statement on the maximum power for each type of installation for which the President of the ERO can issue a certificate—hence, as in the auction system, not every RES installation will be allowed to obtain the certificate.

A holder of the above certificate may submit a declaration on joining the feed-in tariff system. Upon joining, producers with a micro or small RES installation (i.e. <500 kW or 900 kW in cogeneration, connected to a network of <110 kV) will be entitled to: sell electricity to the obligated seller at the "fixed purchase price"; or (ii) sell energy to another entity and obtain a negative balance as the difference between the market price of energy and the "fixed purchase price". Producers in installations with capacity of 500 kW to <1 MW will only be entitled to sell energy to entities other than the obligated seller and receive a negative balance. Support is provided for a period of 15 years from the date of first supply to the network.

The "fixed purchase price" will be 80 percent of the reference price as of the date of the declaration of accession to the feed-in tariff system, less the investment aid received (see point 2 above).

Installation commenced without support at auction

The Proposed Amendment also regulates the status of RES installations built between the effective date of the Proposed Amendment and 31 December 2020 without obtaining support at auction. These RES installations, under certain conditions, can take part in auctions on the same conditions as New Installations that have not yet been built. The condition for obtaining this right is to sell all electricity on the stock market or another market organized in Poland. The producer has to declare that it will be selling energy in the way mentioned above at least 14 days before commencing generation in the RES installation.

Submission of a declaration and fulfillment of the mandatory sale of energy on the stock market allow an existing RES installation to seek support at auction, but does not guarantee support itself.

New provisions on modernization of RES installations

The Proposed Amendment introduces a definition of modernization understood as the performance of works consisting in reconstruction of the original plant or change of its utility or technical parameters. Modernization during the support period, including support in the form of obtaining the right to receive certificates of origin, will not result in loss of the right to support or affect its length.

In the case of modernization of RES installations which no longer receive any support (in the form of certificates of origin, from the auction system or feed-in tariffs) it is possible to take part in auctions under certain conditions. These conditions are: (i) reconstruction as a result of modernization of the original RES installation or change due to modernization of the utility or technical parameters, if it results in an increase in installed capacity or an increase in electricity production; (ii) the costs incurred and documented for the modernization of such installations were at least 40 percent of eligible costs for construction of the new reference installation. The list of eligible costs will be set out in a regulation of the Minister of Energy.

Changes applying to the construction process of the wind power plants

The Proposed Amendment also makes changes to the Distance Act, including:

  • The wind turbines must still be at least ten times their height away from residential buildings; however, the residential building may be located in the vicinity of the wind turbines at the distance sufficient to meet the noise tolerance requirements established by Polish law.
  • The provision which provided for the expiry of all building permits for wind power issued before the effective date of the Distance Law unless a use permit was obtained within three years is repealed. Building permits will expire on general provisions.
  • A strict new regime is introduced for the removal of decommissioned wind turbines from the real estate on which they were built. The investor that completed the construction of the wind power plant or was the last operator of the wind farm is obliged to dismantle its visible parts and to perform post-decommissioning groundworks. The wind farm operator is under obligation to return the property to the owner in its original condition. If the investor is not a natural person then the management board of the investor bears liability to the property owner.

Real estate tax

The Proposed Amendment includes proposals for amendments to provisions of the Distance Act and the Act on Building Law, which have been interpreted by administrative courts and some tax authorities to increase the real estate tax ("RET") on wind farms by including the technical elements of the wind power plants within the scope of RET.

According to the justification for the Proposed Amendment, the proposed changes will result in RET covering only construction elements of the wind power plant. In particular, it provides for:

  • A return to the definition of construction under the Building Law prior to the effective date of the Distance Act by reincorporating wind power plants in an exemplary catalog of technical devices, of which only the construction elements are considered as constructions for the purpose of RET
  • Modification of the Annex to the Building Act by incorporating only construction elements of the wind power plants in category XXIX
  • Change of the definition of a wind power plant in the Distance Act by indicating that only construction elements of a wind power plant are a construction within the meaning of the Building Act
  • Removal of a transitional provision (Art. 17 of the Distance Act) on RET on wind power plants, which was interpreted by some tax authorities and administrative courts as a basis for seeking RET on technical elements of wind power plants from 1 January 2017.

The Proposed Amendment does not currently contain any regulations relating to the RET on wind power plants in 2017. On the one hand, the justification for the Proposed Amendment refers to the fact that the purpose of introducing the provisions of the Distance Act referred to above was not to increase RET on wind power plants but on the other, it also stresses that after the entry into force of the Proposed Amendment, the RET on wind power plants should be lower than in 2017. Therefore, at this stage it is difficult to assess the impact of the changes introduced by this law on the ongoing disputes caused by entry into force of the Distance Act.

Change in the substitution fee

There is a proposal to change the substitution fee in the Parliamentary Draft. The unitary substitution fee is currently PLN 300.03 per MWh (for certificates of origin from renewable energy—"Green Certificates"—and for certificates of origin from agricultural biogas—"Blue Certificates"). It is proposed that this fee be set out separately for Green and Blue Certificates as 125 percent of the annual average price announced by the Polish Power Exchange respectively for Green and Blue Certificates, but not more than PLN 300.03. In the case of Green Certificates, the annual average price in 2017 is PLN 73.63, which means a decrease in the Green Certificate substitution fee from PLN 300.03 to PLN 92.04. The fee in 2017 for Blue Certificates will remain unchanged, as 125 percent of the annual average price is over PLN 300.03. If the changes proposed under the Parliamentary Draft are enacted, this will mean a significant decrease of revenue of all wind farms which entered into long-term agreements for sale of the certificates of origin (most frequently as security for repayment of bank loans) which provide for the price of a certificate of origin to be calculated as a percentage of the substitution fee.

The Sejm adopted the Parliamentary Draft on 20 July 2017 and the Senate approved it on 27 July 2017. The Parliamentary Draft is now awaiting the signature of the President. The amendments introduced by the Parliamentary Draft will enter into force 30 days after publication.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
21 Sep 2017, Seminar, London, UK

Is there such a thing as "energy law"? What do "energy lawyers" do? And why should it be of interest to anyone else?

28 Sep 2017, Seminar, London, UK

On 26 July the FCA published its long-expected consultation paper on the extension of the SMCR to all FCA-authorised firms. The so-called "core regime" introduces the key concepts of regulator-approved senior managers, firm-approved certification staff and conduct rules applicable to virtually all staff.

3 Oct 2017, Conference, Zurich, Switzerland

As the founding Partner of the Europe-Iran Forum, Dentons Europe will once again support this year’s event. This compelling event which explores all Iran-related topics will take place in Zürich on 3rd and 4th October.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.