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Final Amended Version of Renewable Energy Sources Act in Poland is Now Pending the President’s Signature

On August 2, the Senate – the upper house of the Polish Parliament – passed the law amending the Renewable Energy Sources (RES) Act and certain other laws, which is now pending the President’s signature. We addressed this issue in our posts published on June 7, 2019 and June 11, 2019. Compared to the drafts discussed in the previous posts, there have been several material changes which may potentially have a bearing on the business. What is particularly hazardous for investors still using the green certificate support is the amendment, which briefly appeared at the commissions stage, introducing a maximum total price per MWh of energy and on property rights. Thankfully, it has been removed from the wording of the act in the course of the legislative process.

Once the act has been signed by the President and published in the Journal of Laws, it will come into effect within 14 days.

Expanding the Prosumer Catalogue

The RES Act amendments in their current shape not only add entrepreneurs to the prosumer catalogue (more about that here), but also energy cooperatives, which generate electricity for their and their members’ purposes. Unlike under the non-cooperative regime, electricity generation will be balanced at the ratio of 1 to 0.6, which will make the use of RES slightly less competitive for these entities than for individuals or entrepreneurs.

Removing the Amendment Related to the Advantageous Settlement System After the Support Period

 Ultimately, the passed act will not feature the solution from its previous incarnations (more about that here), allowing for obtaining further funding for generating more electricity than provided for in the auction bid. Removing this amendment will result in a situation in which, even under highly favourable weather conditions, a RES installation owner who has won the auction will not be able to take advantage of this fact.

Auction Bids From Installations Already Generating Energy Prior to Auction Results Date

 What was also changed was the solution which allowed entities previously generating and selling electricity to participate in the auction. Unlike in the draft amendment described here, entities need not sell all the energy at the energy exchange prior to the auction results – it is enough for the price for the electricity sold on a given day not to exceed the average daily market price.

Amount and Value of Energy to Be Purchased at the Auction

 There were no changes as to the amount and value of energy intended for purchase at the auction in the wind farm and PV baskets (compared to the draft described in the June 7 post).

Expanding Grid Access Agreement Validity

 In the passed act, the validity period of grid access agreements was expanded to June 30, 2021. In order to expand the period, an appropriate motion must be filed within three months following the amendment effective date.

Other Solutions Unchanged Compared to the Previous Incarnations

 The solutions of the following issues have remained unchanged:

  • Expanding the validity of wind turbine building permits

  • Expanding the sale commencement period for electricity generated by the auction-winning installation and the maximum acceptable installation age

  • Highly simplified procedure for reporting prosumer installations and principles of settling with grid operators

Further Support for Prosumers

The introduced market changes, however, are not limited just to amending the laws. The government has adopted a two-pronged strategy by introducing the “My Electricity” program, whereby individuals can expect a PV installation purchase subsidy. Under the program, the support provided will be up to PLN 5,000 per installation. A budget reserve of PLN 1 billion has been earmarked for executing the program. The Minister of Energy claims that, in the event of a warm public welcome and the budget drying up quickly, a possibility of expanding the support pool may not be ruled out.

Further financial support for prosumers, apart from already existing mechanisms (the possibility to make the installation costs tax deductible, preferential loans and voivodeship-wide support systems), will certainly result in increased popularity of household PV installations. All this will make such installations increasingly attractive.

Final Outcome – Transformation Moved on SME, Cooperatives and Individuals; 2019 Will Be a PV Year in Poland

We believe that the government, unable to counter the coal energy price spikes in Poland, has come to a reasonable realization that business and some individuals might try to tackle high energy prices out of their own pockets – and, at the same time, help Poland reach the EU RES quota along the way.

Looking at the amended legislation, we may conclude that the next several years may see a PV installation boom in Poland. The government’s initiative in this regard is still highly valuable.

This way, enterprises, cooperatives and individuals will be able to shoulder some of the efforts to limit energy consumption costs, while at the same time, bringing Poland a tad closer to meeting the RES energy generation quota set by the EU for 2020.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Igor G. Hanas International Investment Lawyer Squire Patton Boggs Warsaw
Senior Associate

Igor Hanas’ practice focuses on the energy and industrial construction sectors, and infrastructure projects, including the PPP model. Igor advises foreign and domestic investors, general contractors and service providers on all aspects of turnkey projects, starting from procurement and negotiations, through financing, performance, corporate and contractual issues and cross border technology import to handover of the investment.

Igor advises clients in regulatory matters including license (concession) issues in relation energy, chemical and...

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