An extract from The Renewable Energy Law Review, 5th Edition
The policy and regulatory frameworki The policy background
The policy regarding renewable energy has been a key element of the most essential strategic documents in Poland. One of them, the Energy Policy for Poland until 2040, stipulates the government's plans for the development of the energy market. With respect to renewable energy in 2030, the share of renewables in the final gross energy consumption shall be at least 23 per cent and not less than 32 per cent in the power sector (mainly wind and PV); 28 per cent in heat; and 14 per cent in transport (with a large contribution from electromobility). In another important policy, the National Energy and Climate Plan for 2021–2030, the government declared that Poland will achieve a 21–23 per cent share of renewables in the final gross energy consumption. To achieve these goals, subsidy schemes have been introduced for investors in renewables.
Over the years, Poland has supported renewable energy sources through a system of tradeable certificates of origin (the green certificates). Green certificates are transferable property rights that may be received by a producer of electricity from a renewable energy source in which the energy was generated for the first time before 1 July 2016. Support may be granted for a maximum period of 15 years but no longer than until 31 December 2035.
The green certificates system is being slowly replaced by the new support scheme in the form of auctions. The winners of the auctions obtain the right to settle the negative balance between the applicable auction price and the power exchange price (average market price). The negative or positive balance is settled on a monthly basis upon an application submitted by a renewable energy source producer to the settlement operator (Zarządca Rozliczeń). Auctions for renewable energy are carried out separately within five technology baskets, separately for installations with an installed capacity of up to 1MW and above 1MW, and separately for electricity generated in:
- renewable energy source installations commissioned before 1 July 2016;
- modernised renewable energy source installations; and
- new renewable energy source installations (i.e., planned installations, which will generate electricity for the first time after the closing of the auction session).
In auctions held to date, the majority of support was granted to onshore wind farm projects generating more than 1MW and PV projects generating up to 1MW.
According to information from the President of the ERA, because of the auctions held in 2020, over 1.56GW of PV installations, nearly 0.93GW of new wind farms and over 4MW of new capacity in other renewable energy technologies may be developed.5 In 2020, nearly 75.3TWh of electricity from renewable energy sources was allocated for sale in all auctions, with a total value of over 27.4 billion zlotys. However, only four out of eight auctions were resolved (the remaining four were not resolved because a sufficient number of bids was not submitted). Consequently, 54.5TWh of electricity was sold, with a total value of nearly 12.9 billion zlotys.6
As regards auctions in 2021, it should be noted that they were held twice – over the course of May and June, and in December. In May–June, in total, nearly 37TWh of electricity was contracted, worth over 8.5 billion zlotys.7 In December, a total of nearly 14TWh of electricity was contracted, with a value of over 3.2 billion zlotys.8
An alternative to the auction system has been envisaged for small capacity installations that may be supported by two other schemes, namely feed-in tariff (FiT) and feed-in premium (FiP) systems. FiPs and FiTs are dedicated for installations using only the following sources for electricity generation:
- agricultural biogas;
- biogas obtained from landfills;
- biogas obtained from a sewage treatment plant;
- another biogas other than those specified above;
- hydropower; or
Producers of agricultural biogas may also benefit from the support system in the form of certificates of agricultural biogas origin confirming its production and introduction to the gas distribution grid, which are granted by the President of the ERA. The certificate is granted for 15 years, counting from the date of first production of agricultural biogas or electricity from agricultural biogas but no longer than until 31 December 2035.ii The regulatory and consenting framework
The key acts regulating the specific areas in Poland are statutes, which are the acts adopted by parliament (i.e., the Sejm and the Senate, which is the higher chamber of parliament) and signed by the President. With respect to the energy sector in Poland, the general rules are provided in the Energy Law. The Energy Law sets forth the rights and obligations of market participants as well as the powers and obligations of the administrative authorities (such as the President of the ERA). Most importantly, the Energy Law stipulates the rules of conducting business activities in the energy market in Poland by regulating the terms of grid connection to the transmission and distribution grid as well as by regulating the requirements regarding obtaining the energy licences necessary to conduct business activity (e.g., in electricity generation).
In the case of the renewable energy sector, the key statute regulating the rights and obligations of the renewable energy investors is the Act on Renewable Energy Sources, which describes previously mentioned subsidy schemes (i.e., green certificates, the auction system, and the FiT and FiP systems). Another important act for the renewable energy sector is the newly adopted Wind Farms Act, which sets the framework regulations for offshore wind farms.
Acts of parliament are not the only source of law regulating the energy market in Poland. Technical information is usually regulated in secondary legislation such as regulations, which are issued by government bodies. In the case of renewable energy, the issuing body is usually the Ministry of Climate and Environment or the Minister of Infrastructure.
The energy market in Poland is regulated. Although the President of the ERA, as a Polish regulator, does not have a competence to issue binding acts on a national level such as statutes or regulations, it shapes the framework for business activities in the energy market by, among other things, issuing administrative decisions for specific market participants. In these decisions, the President of the ERA is entitled, among other things, to impose financial penalties for violation of the provisions of energy-related acts and, most importantly, to grant licences for energy companies. In the case of renewable energy sources, the President of the ERA is entitled to issue licences for the generation of electric energy from renewable energy installation, which are issued at the end of the development process for renewable projects. This obligation does not apply to micro and small installations.
When developing a renewable energy project but before obtaining the generation licence from the President of the ERA, the investor shall also obtain many permits that are needed for the construction and operation of such a project. Polish law requires several permits to be held, wherein the most important decisions are the following:
- A local zoning plan or zoning permit, which constitutes a legal basis for location of renewable projects. As regards the local zoning plan, the municipality council adopts it as a resolution that covers a group of plots not necessarily owned by the same landowner and that are not issued for the benefit of one party, whereas zoning permits are issued by the relevant authority to the particular addressee. In practice, when there is no local zoning plan, the investors must obtain zoning permits to be able to continue the development of the project.
- A decision on environmental conditions, which determines the environmental conditions for a renewable energy project and approving its environmental impact assessment (EIA). It needs to be obtained prior to the zoning permit (if, in the specific case, it is needed as pointed out above) and construction permit.
- A construction permit, which is a decision allowing construction works to start. However, in some cases, solely a notification on construction works is sufficient.
- A use permit, which is a decision allowing for the use and operation of a renewable energy project. However, in some cases, solely a notification on construction works' end is sufficient.
Obtaining the environmental decision is one of the critical stages in the permitting process for renewable energy projects. The environmental decision is issued by the head of the municipality, or the mayor or president of the city in which the project will be implemented. The procedure for issuing the environmental decision is initiated at the request of the party who plans to implement the project (i.e., the investor). At the very beginning of the proceedings, the relevant authority examines the application for issuing the environmental decision to assess to which category the project should be qualified (i.e., with an obligatory EIA or a facultative EIA). Under Polish law, there are two groups of projects for which an environmental decision needs to be obtained:
- projects that can always significantly affect the environment (for which it is obligatory to perform an EIA prior to issuing the environmental decision); and
- projects that may potentially affect the environment (for which an EIA is not obligatory but may be required by the authority that is responsible for issuing the environmental decision).