Poland: Energy Legal Alert / July 2013
RES Act to be debated in the Polish Parliament in September
In order to facilitate progress on the Renewable Energy Sources Act and approve the draft of the new Act at a governmental level, the work on its conclusive stipulations has now been redirected to a special committee composed of representatives of the Ministry of Economy, the Ministry of Finance, as well as representatives of the Economic Council to the Prime Minister, including amongst others Jan Krzysztof Bielecki and Adam Jasser. As a result of redirecting the work on the RES Act to be jointly continued by representatives of several governmental departments, the Ministry of Economy no longer stands as the deciding entity in respect to the final shape of the new act. The Ministry of Economy announced that a new version of the RES Act will be published in August 2013, while in September of this year the new draft of the RES Act should be tabled for debate in the Polish Parliament.
According to the announcements of Andrzej Czerwiński, President of the Parliamentary Energy Committee, as the work on the RES Act is considered to constitute a priority, the RES Act has been excluded from the large energy tri-pack and will be processed first. It will be only upon adoption of the final version of the RES Act that the work on the new gas law and energy law will be reinstituted.
Abandonment of the green certification scheme?
At the moment, intensive work with regard to the final shape of the RES Act is being carried out by a committee appointed specifically for that purpose. The new version of the RES Act is to launch completely new rules of support for renewable energy sources.
As per unofficial information, the existing concept, as introduced within the latest version of the RES Act and based upon supporting renewable energy sources through a system of green certificates along with correction coefficients, the value of which was to depend on the technology applied and installed capacity of the facility, is to be abandoned. The above support scheme is to be replaced with a cheaper auctioning system, a combination of the feed-in premium scheme and contracts for difference. The income from production of energy from renewable energy sources would constitute the sum of the market price for sale of electric energy and a supplement, the total value of which is to be determined for the entire support period at a specific level. The value of support would be determined through the so-called Dutch auction where the asking price is gradually lowered. It is presumed that the value of the supplement will increase in the event the market price for electric energy falls and, respectively, it will fall in the event the market price for electric energy increases.
The above system is modelled on the support scheme for renewable energy sources adopted in the Netherlands. The details concerning the new concept for the support scheme for renewable energy sources are yet to be established. As a result of the abovementioned announcement, we can almost be certain that the government will in the end abandon the system of green certificates corrected by correction coefficients.
Further stipulations of the new RES Act
Irrespective of the introduction of new rules aimed at simplifying the support scheme for renewable energy sources, on 23 July 2013, Jerzy Pietrewicz from the Ministry of Economy presented further stipulations of the planned RES Act.
According to the announcements of the Ministry of Economy, the previously proposed priority of renewable energy facilities with regard to connection to the grid will be retained in the new version of the RES Act. The support period for renewable energy sources will be limited to 15 years, and the Ministry confirmed additionally that the concept of annual adjustment of the substitution fee has been abandoned.
The Ministry of Economy announced changes with respect to promotion of small and micro installations, where promoting development of dispersed energy sources with small installed capacities will be effected through CAPEX support and introduction of administrative facilitations for dispersed energy sources. Furthermore, it was confirmed that support for co-combustion technologies will be limited. The Ministry of Economy announced that the acquired rights of investors who have already erected renewable energy facilities will be respected within the new RES Act. However, there remains the question of how the legislator is going to deal with the issue of the transition period between the old support rules based on the system of tradable certificates of origin and the planned introduction of new rules based on the Dutch auctioning system.
Can we reach the 15% level of energy produced from renewable energy sources by 2020?
According to the information published by the Energy Regulatory Office, the volume of electric energy from renewable sources produced up until mid July 2013 constitutes one fourth of energy from renewable sources produced in the entire 2012. The key reason for a decrease in the volume of energy produced from renewable sources was related to a decrease in the volume of energy produced from co-combustion of biomass and coal. Another reason is the suppression of new investments in renewable energy stemming from the absence of future rules for support for renewable energy sources, including amongst others the uncertainty as to the future shape of the RES Act.
In the face of a decrease in the volume of energy produced from renewable sources, there arises the question of whether Poland will be able to meet the obligatory target of 15% share of energy produced from renewable sources in the overall gross energy consumption by 2020, as set out by Directive 2009/28/EC. As a result of introduction in the RES Act of the new rules for support based on the auctioning system, it would be advisable to set up suitable mechanisms that would ensure that Poland is able to meet the obligatory target of 15% imposed on it.
Facilitations for prosumers
On 26 July 2013, the Polish Parliament adopted the amendments of the Polish Senate to the act amending the energy law and certain other laws, i.e. the so-called small tri-pack. The final version of the act includes provisions aimed at encouraging prosumers, i.e. natural persons that manufacture electric energy for their own purposes, to sell any surplus energy to local distributors.
The amended act introduces facilitations with regard to connection to the grid and sale by natural persons of surplus of energy produced within a micro installation with an installed capacity of up to 40kW. Additionally, the owner of an installation with an installed capacity of up to 40kW will not be obliged to conduct a business activity for the purpose of selling the surplus energy. Prosumers will furthermore be able to connect to the grid at no charge and have the guarantee that their energy will be purchased by a supplier of last resort. However, the supplier of last resort will not be obliged to purchase the energy sold by a prosumer at the full price. It will be obliged to purchase the energy at 80% of the average price of electric energy from the previous year.
In addition to the changes introduced by means of the small tri-pack, another incentive for prosumers to invest in renewable energy installations is to be the Prosumer Programme of the National Fund for Environmental Protection and Water Management. The programme will provide support for the purchase and construction of small and micro renewable energy installations used to manufacture heating and electric energy for single- and multi-family residential buildings. It is planned that up to 100% of funding will be available to cover the qualified costs of the venture, with 1% of interest on the loan. At the moment, intensive work with regard to the final shape of the programme and format of the funding is being carried out. The programme should be tabled for approval by the supervisory board of the National Fund for Environmental Protection and Water Management by the end of the third quarter of 2013.
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