A proposal to amend the Act on Renewable Energy Sources (the “Draft”) was published on 12 July 2017. The Draft proposes changing the way the substitution fee is calculated. The lower and upper chambers of the Polish Parliament have already accepted the Draft. This means that the Draft will now be passed to the President for signature. As it was submitted as a Deputies bill, the Draft is on a relatively fast legislative track, but more comprehensive amendments to the Act on the Renewable Energy Sources as a governmental bill are being processed and consulted in parallel. The amendment has been heavily criticised, not only by investors, but also by the Regulator.
Currently, the substitution fee amounts to PLN 300.03/MWh. The Draft proposes connecting the substitution fee with market prices for green certificates. The substitution fee will constitute 125% of the value of the annual average price of property rights resulting from the certificates of origin, but not more than PLN 300.03/MWh. Based on the current market prices, this may amount to PLN 40 - 50. According to the Draft’s justification, this method of calculation will improve the sustainable development of renewable energy sources and may lead to a reduction of the oversupply of green certificates. However, it does not seem that the amendment will resolve the oversupply problem. According to the Regulator’s comments to the press, there is no connection between calculating the fee in accordance with the Draft and the sustainable development of renewable energy sources.
Additionally, the Polish system of certificates of origin has already been approved by the European Commission. The substitution fee constitutes an important element of the green certificates scheme. Therefore, any change to the support scheme should be notified to the European Commission in light of compliance with the state aid rules.
The amendment may also have a significant impact on long-term contracts on the sale of property rights. If the amendment enters into force (within 30 days from publication), then revenues for generators from the majority of such long-term contracts will drastically drop.