Details emerge of scope of proposed Renewable Energy Sources Act - International Law Office

International Law Office

Energy & Natural Resources - Poland

Details emerge of scope of proposed Renewable Energy Sources Act

December 05 2011

Introduction
Guaranteed offtake
Substitution fee
Corrective coefficients
Term of the support


Introduction

Recent press releases have shed some light on the long-anticipated Renewable Energy Sources Act, due to be enacted in coming months. The act is expected to provide a comprehensive regulation of the Polish renewables market, including:

  • general and detailed rules for doing business in the renewables sector (also encompassing micro-installations for household purposes);
  • rules for state monitoring of the renewables market;
  • provisions on the preparation and implementation of a national activities plan; and
  • promotion of international cooperation with respect to renewable energy sources.

Most importantly, it will also regulate the renewables support scheme, currently covered by the Energy Law. This update outlines some of the details of the act that have been reported in the press in recent days.

The act will not change the fundamental instruments of renewable energy support; it will still be based on green certificates and guaranteed offtake of electricity by the default suppliers of electricity.

Guaranteed offtake

The duty of sellers of last resort to purchase green energy will remain. The price applicable to guaranteed offtake will also remain unchanged as the average price of electricity on the competitive market in the previous calendar year (as determined and published annually by the president of the Energy Regulatory Office (URE)).

Substitution fee

The substitution fee (ie, the amount to be paid by sellers of electricity that do not surrender a respective amount of green certificates) is currently a fixed value that is indexed only once a year. According to press releases, the new act will introduce a dynamically calculated substitution fee that is pegged to the price of electricity. The URE price (ie, the price at which sellers of last resort are obliged to purchase electricity) will be subtracted from PLN470 (this value is indexed annually by the consumer price index) to calculate the substitution fee for each year (ie, the substitution fee equals PLN470 minus the URE price).

Corrective coefficients

The renewables support system does not currently differentiate power plants on the basis of generation technology or capacity. Instead, every plant is treated equally with respect to the level of support granted. According to press releases, the act will introduce corrective coefficients. A renewable energy source will therefore receive a number of green certificates, calculated as a product of the volume of electricity generated and the corrective coefficient. Corrective coefficients will depend on the type of renewable energy source (eg, wind, biogas, hydrothermal or solar) and its capacity. For wind energy, there will be three categories:

  • onshore wind farms up to 250 kilowatts (kW);
  • onshore wind farms above 250 kW; and
  • offshore wind farms.

Corrective coefficients will be published every three years by the Minister of Economy for a five-year period. It remains unknown how the corrective coefficient will be determined, except for vague guidelines stating that it should be established by taking into account:

  • technological progress;
  • analysis of electricity generation cost by different types of renewable energy sources; and
  • Polish energy policy adopted in accordance with the Energy Law and the national action plan for renewables.

For any given project, the corrective coefficient will be fixed for a 10-year period, starting from the date on which the project becomes operational.

Term of the support

The act will also time limit the support. Green certificates will be issued to renewable energy sources for 15 years from the day on which the plant becomes operational (the corrective coefficient used to calculate the number of green certificates awarded is fixed for 10 years from the same date). These new rules will also apply to those installations that were operational before the entry into force of the act - in such cases, the term during which the project is eligible for green certificates will be counted as 15 years from the date on which the first electricity eligible for a green certificate was generated, and the corrective coefficient will be fixed for a period of 10 years from the same date.

In this sense, the new law will not be retroactive, as the new rules will not affect the number of green certificates awarded to the project before the new law comes into force (ie, there will be no adjustment of the historically awarded green certificates to the new rules and the green certificates awarded after the entry into force of the new rules will not be adjusted for the number of certificates awarded before).

For further information on this topic please contact Konrad Kosicki at Norton Rose Piotr Strawa and Partners LP by telephone (+48 22 581 4900), fax (+48 22 581 4950) or email (konrad.kosicki@nortonrose.com).


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