The Dentons Energy and Natural Resources Team has prepared a detailed summary of the Bill on wind turbines investments of which you were notified in the Client Alert of 19 February 2016.
Please note that as of date this is a preliminary stage of the parliamentary procedure, with no confirmed schedule of further works on the bill.
The Act proposes a definition of a wind turbine, expressly including and identifying its technical elements (i.e. the foundations, tower, rotor with blades, complete drive train, power generator, control systems and gondolas along with attachment and rotation mechanism). Further, the wind turbine would be treated as a structure (Polish: budowla), extending the current application of this term beyond the foundations and the tower. This means that the provisions of the Construction Law on due maintenance and on construction disasters would apply to the whole wind turbine together with its technical elements.
Expected increase of real estate tax burden
The above amendments may impact the real estate tax obligations of investors. So far, the 2% real estate tax is imposed based on the value of foundations and tower (according to the prevailing tax practice only these elements qualified as the “structure” within the meaning of the Construction Law). Under the new regulations, the local authorities may require that the 2% real estate tax is paid also on the value of the rotor with blades, complete drive train, power generator, control systems and gondolas along with the attachment and rotation mechanism.
Therefore, the Act may result in increased tax costs of wind turbine investments (unless dedicated exemptions are introduced in the real estate tax law).
Minimum distance requirement
A new wind turbine may be located only in an area covered by the local zoning plan. New local zoning plans allowing the location of a wind turbine have to prescribe the maximum allowed height of a wind turbine and include the buffer area in which the wind turbines, households and building of mixed purpose shall not be built.
The buffer area, i.e. the minimum distance between a wind turbine and any household or building of mixed purpose shall be equal or higher than ten-times the total height of the wind turbine (tower plus blade).
The minimum distance requirement is defined in different ways, depending on the phase of the investment, as the shortest distance between:
- The horizontal footprint of a household or a building of mixed purpose.
- The border of the area covered by the zoning decision concerning a household or a building of mixed purpose.
- The demarcation line of the area where the location of a household or a building of mixed purpose is allowed under the local zoning plan.
- The circle with the radius of the wind turbine’s blade centered at the tower.
- The border of the area covered by the zoning decision concerning wind turbine.
- The demarcation line of the area where the location of wind turbine is allowed under the local zoning plan.
The minimum distance requirement also applies to certain forms of nature protection (i.e. national parks, nature reserves, landscape parks and Natura 2000 areas) and to promotional forest complexes. In this case the minimum distance requirement is defined as the shortest length connecting the border of the said areas and the circle, border or demarcation line indicated above.
The whole buffer area would have to be included in the area covered by the given local zoning plan. This means that unless the draft local zoning plan will cover the whole buffer zone area it could not be adopted. The aim of this provision is to preclude location of a wind turbine at the border of the area covered by the local zoning plan and, as may be the case, at the border of a given municipality.
New additional operation permit
A new type of operation permit is proposed. This permit would be issued by the Technical Supervision Authority (UDT). It would not substitute the current occupancy permit, but would be required in addition thereto and prior to commencement of the operation of the wind turbine. Literally, the operation permit would be issued for each wind turbine separately.
The application for an operation permit should include, among others, operational instruction of a wind turbine and a copy of the occupancy permit confirmed as final and binding.
Prior to issuing the operation permit the Technical Supervision Authority would have to, inter alia, identify a wind turbine, check its technical state and marking and participate in the operational tests. The Technical Supervision Authority would also be empowered to impose the technical conditions of operation of a wind turbine that would have to be respected by the wind turbine operator, unless such technical conditions become specified in a respective regulation to be issued by the Minister of Economy.
Also the Technical Supervision Authority would have to approve in advance every repair and modernization works of the technical elements of the wind turbine. The meaning of “repair and modernization works” has not been defined in the draft.
The operation permit would expire after two years or earlier on the day of commencement of repair of modernization works. This means that the operation permit has to be renewed at least every two years, as well as with each repair. It would be possible to apply for a renewal of the operation permit after 18 months from the issuing of the current permit.
Dangerous damage to the wind turbine or unfortunate accidents concerning the operation of the wind turbine would have to be reported to the Technical Supervision Authority.
The investor would have to pay a fee for engaging the Technical Supervision Authority. The value of the fee is proposed to reach the maximum level of 1% of the investment value per turbine and per each engagement of the Technical Supervision Authority. Until the respective regulation of the Minister of Economy is adopted, the fee would be charged in the maximum amount allowed. No deadline for adoption of the respective regulation was envisaged in the draft law.
Operation of a wind turbine without the new operation permit or contrary to the decision on suspension of the wind turbine operation or anyhow modifying a wind turbine without the consent of the Technical Supervision Authority would be treated as a criminal offence (misdemeanor) for which the offender could be sentenced to a fine, restriction of liberty or 2-years imprisonment.
Moreover, a fine (minor criminal sanction, Polish: kara wykroczeniowa) could be imposed on the person who makes it impossible or hinders the activities of the Technical Supervision Authority required prior to issuing the operation permit or who does not notify the Technical Supervision Authority of dangerous damage to the wind turbine or unfortunate accident concerning the operation of the wind turbine.
Change of the permitting authorities
Draft law provides for change of the authorities issuing decisions for wind turbines in the following way:
- Decision on environmental conditions for a wind turbine will be issued by the Regional Director of Environmental Protection (previously mainly the Mayor).
- Building permit will be issued by the Voivod (previously mainly by the Starost).
The new operation permit would be required for the purpose of confirming eligibility of already operating wind farms for the benefit of mandatory purchase of renewable electricity at the statutory price by obligated suppliers and for future and modernized wind farms the eligibility to benefit from the auction scheme. This condition would be checked against each and every turbine in a given RES installation (wind farm).
As of date it is proposed too, that the new operation permit would have to be identified already in the auction offer, while it remains unclear how this would match the subsequent requirement to start generating electricity from the successful installation within as long as 48 months following the closing of the auction.
The draft law contains many transitional provisions. Below we present their summary as per the stage of project development starting with the operating wind turbines to the least advanced projects.
- Wind turbines operating on the day of entry of the Act into force
The operators of the existing wind turbines would have to obtain the operation permit within one year from the entry in force of the Act.The existing wind turbines which would not meet the minimum distance requirement could only undergo repair or maintenance indispensable for operation of the wind turbine, excluding any works leading to enhancement of parameters of the wind turbine or expanding the environmental impact thereof. Provisions concerning the new operation permit would apply to renovation and other works which means that basically an operation permit would have to be obtained on each occasion.
- Non-operating wind turbines with a building permit in place
Building permits for the wind turbine issued prior to the entry of Act into force would remain valid if the occupancy permit would be obtained within three years from the entry in force of the Act (unless already obtained). Provisions concerning the new operation permit would apply as well.
- Wind turbines under pending building permit proceedings
Building permit proceedings for wind turbines covered by a zoning decision (i.e. where no local zoning plan is available) complying with the minimum distance requirement would be completed based on the previous legal framework but for no longer than one year.
Building permit proceedings for wind turbines covered by a zoning decision not complying with the minimum distance requirement would be discontinued.
Building permit proceedings for wind turbines covered by a local zoning plan complying with the minimum distance requirement would be completed on the previous legal framework.
Building permit proceedings for wind turbines covered by a local zoning plain which does not comply with the minimum distance requirement would be conducted based on the previous provisions of law but the building permit would not be issued.
Building permits for wind turbines issued on the basis of a zoning decision or a local zoning plan complying with the minimum distance requirement would remain valid if the occupancy permit would be obtained within three years from the entry in force of the Act (unless already obtained).
Provisions concerning the new operation permit would apply to all such cases.
Building permit proceedings initiated before the Act enters into force would be conducted by the authority that initiated the proceedings.
Please note that the intention of the Act is for owners of all the real properties within the buffer area to qualify as parties to the proceedings on the issuing of a building permit.
- Wind turbines with a zoning decision in place
Zoning decisions complying with the minimum distance requirement issued before entry into force of the Act would expire after one year and one day from the entry in force of the Act unless a building permit would be issued before this day. Provisions concerning the new operation permit would apply to such case.
Zoning decisions not complying with the minimum distance requirement would expire on the day of entry in force of the Act.
- Wind turbines under pending zoning decision proceedings
Pending zoning decision proceedings regarding wind turbines would be discontinued.
- Wind turbines covered by local zoning plan
Local zoning plans in force at the entry of the Act in force would remain valid (the same would apply to zoning studies and Voivodship zoning plans).
- Wind turbines under pending local zoning plan proceedings
The previous provisions would apply to drafts of local zoning plans or their amendments which would be made public before the entry of the Act in force.
- Wind turbines with a decision on environmental conditions in place
The draft Act does not refer to this type of decision.
- Wind turbines under pending decision on environmental conditions proceedings
Decision on environmental conditions proceedings initiated before the Act would enter in force would be conducted by the authority that initiated the proceedings.
The draft law provides for a number of transitional provisions concerning households or buildings of mixed purpose. However, as the whole Act favors the construction of households or buildings of mixed purpose these transitional provisions are not as much restrictive as those concerning the wind turbines. Still, following the entry in force of the Act no buildings could be constructed within the buffer zone limiting the rights of the real estate owners in affected areas.
Entry in force
It is proposed for the Act to enter in force after 14 days from the date of publication (apart from provisions concerning the RES Act, which would enter in force with the main regulation on auctions, currently on 1 July 2016 [while correct corresponding reference is missing we believe it to be a clerical mistake]).iled summary of the Bill on wind turbines investments