Poland: Energy Update - July 2013
Sejm adopted the Small “Tri-Pack”
On 21 June 2013, Sejm adopted the so-called "Small Tri-Pack", i.e. the act amending the Energy Law, the introduction of which should prevent imposition of a financial penalty to Poland for failure to implement EU-directives on the free gas and energy market. On 20 June 2013, the European Commission filed another lawsuit to the European Court of Justice against Poland due to the lack of implementation of the provisions of Directive 2009/73 EC on the internal gas market.
Draft of the Small Tri-Pack was brought to Sejm on 19 October 2012 by members of the ruling party and was fiercely discussed until last. The now adopted Small Tri-Pack imposes i.a. an obligation on gas companies to sell a part of the gas via exchange market. The obligation shall amount in 2013 30% and shall increase to about 50% in the first half of 2014 and to 70% in July 2014.
The Small Tri-Pack provides for a partial release from the obligation of evidencing the purchase of the renewable energy for companies with high energy consumption (more than 100 GWh per year) in order to reduce the operating costs. In contrast, the prosumers, i.e. persons who generate energy for their own purposes in the so-called microsystems, have been released from the obligation to obtain the license for the power supply.
The environmental organization ClientEarth criticizes that the Small Tri-Pack, contrary to the EU-Commission requirements, did not contain any provisions on the priority of the energy from renewable energy sources, when applying to the grid access.
The Small Tri-Pack has now been brought to Senate. The next meeting of the National Economic Commission, which will examine the Small Tri-Pack, is scheduled for 2 July 2013. Should the Small Tri-Pack be set on the agenda of the on 11-12 July planned plenary session of the Senate and Senate approves the Act in the first reading, there is a chance that the President will sign the Small Tri-Pack already in July.
“Large Tri-Pack” - prospects and new hope
That will be the impact of the Small Tri-Pack adopted on 21 June 2013 by Sejm on the situation of RES-investors? What remains unchanged is the attitude of the banks, their reluctance to grant loans for the financing of RES-projects will already be then abandoned, when the economic circumstances of RES-investments for the next decades will be known - i.e. the law on renewable energy sources, which is a part of the so-called "Large Tri-Pack" will enter into force.
According to the announcements, however, the entry into force of the Small Tri-Pack will lead to an acceleration of works on the Large Tri-Pack, which includes the new gas law, the energy law and the law on renewable energy sources and is still being agreed on between the Ministry of Finance, Treasury and Economic Affairs. At the same time it is rumored that already in July, some details of the provisional amendments to the content of the EEQ-law as to the support system will be announced. However, given the previously announced numerous predictions, which ultimately did not prove to be true, this information should be considered cautiously.
More transparency as a means to combat the decline of green certificates
On 21.06.2013, the price of green certificates was on the Polish Power Exchange (TGE) 113 PLN / MWh (index PMOZE_A). It appears that the increase of the certificate price to the previous levels of about 180 PLN / MWh to a record low in February this year (100 PLN / MWh) was only temporary. The measures announced by the government to eliminate and prevent a recurrence of a certificate oversupply has caused a rise in prices in the short term, but they are still waiting for their introduction as a part of the Large Tri-Pack. Thus the problem of oversupply and the associated price drop of green certificates is still unresolved.
As a means to combat the oversupply of green certificates, the Polish Wind Energy Association (PSEW) has proposed to introduce into the Small Tri-Pack Article 20f, but this was ultimately not included in the adopted version of the law.
Thereafter, the Minister would keep a central register of all data on the RES-market (including amount of energy produced from RES, the number of requested, granted, denied, uncollected certificates), and constantly update and publish it. The corresponding data should be provided to him by the Energy Regulatory Office, the Central Statistics Office and the National Fund for the Environment and Water Management. This transparency in the RES market would allow according to PSEW to prevent market speculation and to take appropriate measures within the right time.
Predictability and transparency in the RES market are certainly a necessary step on the way to eliminate the oversupply of green certificates, but they alone will not solve the problem. There might be needed further measures and instruments, as they will be hopefully contained in the RES Act as a part of the Large Tri-Pack. As a part of this the issue of transparency of the RES market can and should be clarified.
Principles of landscape protection - a new barrier for RES- investments?
There is a new draft of the law, regulations of which can affect the locations of facilities for the production of renewable energy, namely the draft of the Chancellery of the Polish President amending some laws to strengthen the instruments of landscape protection of May 21, 2013. It has already been released for a public consultation. The draft essentially provides for the introduction of four instruments for the protection of the landscape, three of which may affect the implementation of investments in renewable energy sources:
The urban principles of landscape protection should be established at the level of the voivodship, which will constitute a local act and which will have to be considered as binding at the municipality level while adopting the study for area planning, the development plan, the decision on the location of development conditions and the building permit.
For investments in renewable energy sources any possible classification of the investment as the so-called landscape dominant in the meaning of amended Law on Spatial Planning and Development will be of particular importance. So far it is only known that this term refers to the objects with significant, visual impact on the landscape. The exact criteria for qualification of an object as a landscape dominant will be included in a relevant executive act. However, the statement of reasons of the draft already contains the note according to which in particular wind power plants with medium-and high-power capacity should form such landscape dominants. Building of such landscape dominants should be governed by more stringent procedures. For example, the revised Construction Law shall outlaw to build the investments classified as landscape dominants on the basis of a decision on the location of development conditions.
The third instrument, the draft law provides for is the extension of the scope of audit as part of the environmental impact assessment by the impact of a company on the landscape.
A fierce discussion on the draft is expected, not least because of the intervention in the territorial jurisdiction of the municipality by way of introducing binding urban principles on the voivodship level.
Investor will not transfer the conditions for connection to the network
Entrepreneurs investing in renewable energy projects often face the problem of admissibility of transfer of the conditions for connection to the network by the original recipient of these conditions to a new investor. This problem follows mainly from the lack of regulations of this issue in the Energy Law. Common practice is that the conditions for connection are transferred to entities other than the original recipients through an assignment agreement, however, such agreements may be considered ineffective in the light of the recent judgment of the Court of Appeal in Warsaw of 31 January 2013, ref No. VI ACa 895/12. In its judgment, the court made it clear that it is not possible to transfer the conditions for connection to the network on a new investor, due to the fact that the legal relationship between the energy company and the original recipient of these conditions is not of a contractual nature, but has an administrative character. Therefore, the court has ruled out the possibility of concluding contracts on transfer of rights from the conditions for connection to the network by entrepreneurs who are recipients of these conditions to investors seeking to acquire the rights to the renewable energy projects.
The present judgment sets a precedent. First of all, it is the first ruling on the admissibility of the transfer of the conditions for connection to the network, and the first that so clearly excludes legal admissibility of the assignment of rights to these conditions to a new investor. This judgment poses some risk for potential investors, which is the possible invalidity of assignment agreements entered into with a primary recipient of the conditions for connection to the network or the necessity to apply for new conditions for connection to the network in the event of acquiring the rights to the renewable energy project.
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