The amendment to the Polish Act on Renewable Energy Sources (RES)

On 29 August 2019 an amendment to the Act on Renewable Energy Sources (RES Act) as well as the Act on Investments in Wind Power Plants and the Construction Law Act (Amendment Act) entered into force. The Amendment Acts’ predominant objective is obtaining a target of 15% renewable sources (RES) overall in its gross final consumption of energy by 2020 as established in the EU Renewable Energy Directive.

On 29 August 2019 an amendment to the Act on Renewable Energy Sources (RES Act) as well as the Act on Investments in Wind Power Plants and the Construction Law Act (Amendment Act) entered into force. The Amendment Acts’ predominant objective is obtaining a target of 15% renewable sources (RES) overall in its gross final consumption of energy by 2020 as established in the EU Renewable Energy Directive. The main modifications consist in clarifying and connecting the scope of the auction systems and implementing the law with regulations which have the aim to create an end-consumer friendly guaranteed tariff system for renewable energy producers who use stable and predictable energy sources (e.g. biomass, biogas, water) with a total capacity up to 500 kW (FiT system) and a total capacity for 500 kW up to 1 MW (FiP system). This enables producers to generate revenue at a guaranteed energy cost-covering level. Furthermore, the Act on Investments in Wind Power plants was amended by abolishing the prohibition of modernizing and repairing of existing RES installations and by reconsidering the previous state in which building permits hold an extended validity. The change of the definition of wind power plants results in a limitation of the taxable base (only the construction parts) for calculating real property tax which is favorable for investors. Unfortunately, the Amendment Act does not implement modifications related to the distance criterion of wind farms (10h) but allows the construction of buildings in the areas of already existing installations. The long-term prospect of this amendments is securing a constant and independent energy source access for Poland and ensuring low energy costs for end-consumers. At the same time investors shall be attracted by the Polish RES sector.

Below the key changes to the Polish RES regulations are briefly presented:

Change in total funding obtained by RES installations

The Amendment provides a simplified approach to calculating state aid. The new system is based on the so-called corrected price and is composed of the reduction of the electricity price by the value of the investment aid received.

New auction baskets

The Amendment Act offers a new and transparent auction basket structure which is based on technological criteria. Auctions are coordinated separately for the five auction baskets and installations in each basket are competing for the same pool of funds:

There are separate auctions for installations within each of these baskets:

• installed before 1 July 2016; and those
• installed after close of relevant auctions and with total installed electrical capacity of
• < 1 MW (“Small Installations”)
• > 1 MW (“Large Installations”)
  
  

Admission to an auction

Deposit rates for auction participants

One condition for producers who want to enter an auction is submitting a bank guarantee or cash deposit to the Energy Regulatory Office (“ERO”). The Amendment specifies following rates:

• PLN 60,00/kW for new installations
• PLN 30,00/kW for existing installations

Prequalification for new installations

A pre-qualifications procedure conducted by the President of the ERO is necessary for new installations which want to be admitted to auctions. These RES installations need to obtain a certificate (valid for 12 months). Under the Amendment Act, the eligibility criteria for new projects will be limited to the following documents:

• grid connection conditions issued by, or a grid connection agreement executed with, the relevant grid operator
• final and non-unappealable decision on environmental conditions
• a valid construction permit (not for offshore wind farms)
• schedule for implementing the project

Time limits for building a winning RES installation

The Amendment Act introduces stricter time limits for constructing and launching RES installations:

• 18 months for PV plants
• 24 months for onshore wind farms
• 72 months for offshore wind farms
• 32 months for other RES installations
  
  

New support system for biogas and hydro power plants with capacity below 1 MW

The Amendment Act introduces a separate feed-in tariffs (FiT) mechanism for smaller RES installations using biogas plants and hydro power plants with a total installed capacity of up to 500 kW or micro-installations with a total capacity of less than 50 kW. Under this mechanism, producers are entitled to sell unused electricity to an obligated seller at a fixed purchase price of 90% of the reference price minus the value of investment aid received.

In the case of a feed-in-premium (FiP) mechanism, the unused energy is sold to an entity, other than the obligated seller, chosen by the producer.

Amendments regarding onshore wind farm projects

Definition of a “wind farm” and the real estate tax

The Amendment Act introduces a modified definition of a wind power plant. It consists of two parts, the construction part of a wind turbine and technical equipment which generates electricity. The revised definition will only cover the construction part of technical devices such as wind farms. This modification results in the limitation of the taxable base for calculating real property tax to the value of foundations and the tower.

Modification of the distance criterion

Article 12 of the Act on Investments in Wind Power Plants was also amended under which an existing wind farm that does not comply with the minimum distance requirement now may undergo repair or maintenance works as well as be modified in a way that changes its performance parameters. Such actions are only permitted if they do not increase its environmental impact or installed capacity.

Extension of the validity of building permits

Building permits for wind farms issued before the effective date of the Act on Investments in Wind Power Plants (16 July 2016) remain in force, provided that the occupancy permit will be issued not later than five years from the Act’s effective date (16 July 2021). This effectively extends the deadline for investors and entitles them to continue construction works and obtain occupancy permits.