On 27 June 2016 the Polish President signed a new bill introducing changes to the Act on Renewable Energy Sources ("Amending Act"). On 22 June 2016 the President signed a new Act on investments in wind power plants ("Act on Windfarms"). Both acts have been widely criticised by the renewable energy sources ("RES") industry, and on reading they suggest that the current Polish government is willing to significantly reduce support for RES.

Changes to the auction system

Even though the main auction-based support scheme rules (set out by us in another recent Legal Insights: here) are maintained, the Amending Act significantly modifies the auction system. Auctions will be divided into groups characterised by the reference to, in particular, the efficiency of an installation (instead of the type of technology). The Amending Act introduces individual groups of RES installations for which the auctions will be held separately. Moreover, for each of the groups there will be separate auctions for installations with capacities below and above 1MW. The aforementioned groups are as follows:

  1. installations where the total installed capacity level, regardless of the source of origin, exceeds 3,504 MWh/MW per year;
  2. installations using biodegradable waste to generate electricity;
  3. installations emitting not more than 100kg/MWh of CO2, with a total installed capacity level exceeding 3,504 MWh/MW per year;
  4. auctions for members of an energy cluster;
  5. auctions for members of an energy cooperative;
  6. installations using exclusively agricultural biogas for electricity generation;
  7. other installations.

Additionally, certain aspects will be decided by way of secondary law. This refers, among others, to:

  1. the maximum volume and value of electricity generated by RES installations, which may be sold in auctions in 2016;
  2. the order in which auctions will be held in 2016;
  3. the reference (maximum) price for each type of technology will be determined separately not later than 30 days before the first auction in 2016.

Energy clusters

The Amending Act introduces a concept of "energy clusters", which are civil law agreements on generating and balancing the demand for, or trade in energy from RES, and other sources or fuels within the distribution grid, with a voltage not exceeding 110 kV. The agreements are concluded between civil law entities such as natural and legal persons, entities without legal personality, scientific units, research and development units or local governmental units. An energy cluster covers either one district (powiat) or five municipalities (gmina). Separate auctions will be held intended exclusively for energy clusters.

Changes concerning larger RES installations and green certificates

Large RES installations are defined in the Amending Act as installations with a capacity equal to or exceeding 500 kW. According to the Amending Act, a mandatory energy purchase by an entity called an "obliged seller" is no longer applicable for such installations. In the absence of an obligation to purchase energy from RES, many large installations may suffer from a reduction in their revenues and overall profitability.

The Amending Act fails to deal with the issue of the surplus of green certificates. The price of one certificate is now lower than PLN 100/MWh, which, according to industry experts, does not allow any installation to become profitable.

The Act on Windfarms

The Act on Windfarms is described by experts as an "anti-windfarms act". The purpose of this act is to determine places where wind power plants can be built and sets out the minimum distance required between a wind power plant and residential buildings, forests or national parks. The distance is set at 10 times the height of a wind power plant (in practice approximately between 1.5 and 2 km). This requirement seems very strict. It will be a challenge to find plots of land which meet the statutory distance requirement, in many cases it will be impossible to build new or expand already existing plants. In addition, the new definition of a wind power plant will lead to an increase in the real estate tax imposed on the owners of the plants.

Summary

The Act on Windfarms has already been signed by the President and will come into force 14 days after its publication (i.e. on 15 July 2016). The amended support scheme came into force on 1 July 2016. Some of the aspects of the new RES regime are still to be determined by way of secondary legislation (including reference prices which should be published before 31 August 2016). However, it appears that the Polish government intends to reduce support for the RES industry and will most likely treat biomass installations preferentially as opposed to PVs and windfarms.