Regulation of electricity utilities – power generation

Authorisation to construct and operate generation facilities

What authorisations are required to construct and operate generation facilities?

The construction of generation facilities may require a number of administrative decisions related to the investment process, including a decision on environmental conditions, water permits and building permits. The planned investment must be compliant with the binding local zoning plan, and in the absence thereof, a zoning permit needs to be obtained. After completion of the construction and before the operation of the facility, an occupancy permit is required. In order to operate generation facilities, an integrated permit or sectoral permits (such as air emission permits and waste management permits) may be necessary. Special legal requirements concern the construction of a nuclear power plant.

For the purposes of connecting the generation facility to the transmission or distribution grid, a grid connection agreement has to be concluded with, as the case may be, the TSO or the DSO. The conclusion of such agreement is preceded by the issuance of the grid connection terms by the TSO or the DSO which typically refer to more technical conditions of connecting to the grid.

The operation of the generation facility requires obtaining a licence to generate electricity issued by the president of the ERA. Exceptions to the licence obligation cover generating electricity in conventional facilities with the total installed capacity not exceeding 50MW, in certain small RES installations and from agricultural biogas, exclusively from agricultural biogas in cogeneration and exclusively from bio liquids.

Grid connection policies

What are the policies with respect to connection of generation to the transmission grid?

The TSO is obliged to connect the customer to its grid, if such grid connection is technically feasible and economically viable and the customer complies with the terms and conditions for grid connection, which are determined by the TSO in accordance with the transmission network code. Connection to the transmission grid is performed on an equal treatment basis, however the RES installations benefit from the priority access to the grid.

Alternative energy sources

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

In Poland, renewable energy generation is financially supported through various support schemes, namely: tradable certificates of origin systems (which include the green certificates system and the agricultural biogas certificates system), auctions support system, as well as feed-in-tariff (FIT) and feed-in premium (FIP) systems.

The auctions system is based on a reference price that constitutes the maximum price for energy generated in specified RES installations that producers may obtain. In accordance with the auctions system, RES operators should submit offers to sell energy generated in RES installations at a price lower than the reference price (bids exceeding the reference price are rejected). In general, the support consists in the right to cover the negative balance resulting from comparing the price included in the offer and the price actually applied in the sale transactions in the given period.

The recent amendment to the Act on RES also introduced FIT and FIP systems (ie, financial support mechanisms for small-capacity hydro and biogas installations). Under the feed-in-tariff system, generators can sell electricity introduced into the power grid at a fixed purchase price. The feed-in-premium mechanism is based on the right to cover negative balance on the principles analogous to those in the auction system.

The current combined heat and power (CHP) technologies support system, based on tradable certificates of origin, expires at the end of 2018. The new support system for CHP installations - to be determined in the prospective Act on promoting electricity from high-efficiency cogeneration - is in the public consultation phase. Most likely it will take the form of the auctions or premiums, depending on the type of the generating unit.

Climate change

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

Poland participates in the EU system of reducing greenhouse gas emissions. The EU has set goals to reduce carbon dioxide by 20 per cent by 2020 and 40 per cent by 2030 (compared to 1990 levels). Poland is obliged to follow those goals. Owing to the fact that Polish power plants use mostly coal and lignite, and the share of other types of resources is small, the objectives of reducing emissions have an impact on the energy market. In the coming years, a growing number of generation facilities will have to purchase carbon dioxide emission allowances. An increase in the share of renewable energy sources in the energy mix and the modernisation of existing generation facilities to reduce emissions may be expected to deal with the increasing climate change costs.

Storage

Does the regulatory framework support electricity storage including research and development of storage solutions?

Storage installation operators may participate in the capacity market in accordance with the Capacity Market Act. As a result of offering readiness to deliver specified capacity or volume of electric energy to the electricity grid and actually delivering specified volume of electric energy to the grid, such operator will be entitled to remuneration. Detailed rules of determining the remuneration have been set forth in the Capacity Market Act and the secondary legislation to it.

In addition, energy demand management installations, which include energy storage installations, are excluded from the obligation to pay the connection fee typically paid to the TSO or the DSO for connection of the installation to the electricity transmission or distribution system, provided that such energy demand management installations fulfil specific technical requirements determined by the TSO and the DSO in the relevant grid code.

Government policy

Does government policy encourage or discourage development of new nuclear power plants? How?

Inter-ministerial discussions on nuclear power are currently underway in Poland. The Energy Policy 2030 envisages the construction of the first nuclear power plant and it also provides for the creation of favourable conditions for the development of the nuclear power sector. However, the Polish government is currently working on the Energy Policy 2050 which is supposed to replace the existing one and constitute a long-term plan for the development of the energy sector. The details of the Energy Policy 2050, including possible support schemes for nuclear power plants, have not yet been revealed.