How long will building permits for wind power plants remain valid?
Under the current Polish law, it is still possible to carry out projects based on permits for construction of wind power plants whether issued before or after 16 July 2016, but based on proceedings initiated before that date. Construction is still possible under the old conditions, before the later restrictions came into force. This could improve the unsatisfactory development of renewable energy in Poland. But how long will the old permits remain in effect, and must the projects be put into operation by 16 July 2024?
Until 2016, wind farms in Poland were growing rapidly. Their growth was halted by entry into force of the Act on Investments in Wind Power Plants of 20 May 2016, commonly referred to as the “Distance Act.” It introduced new, highly restrictive rules for construction of these installations, including the industry’s most restrictive rule, pursuant to which the distance of a wind turbine from the nearest residential buildings or protected areas must be at least 10 times the height of the turbine. Since residential development in Poland is scattered, today it is difficult to find areas with sufficient space for construction of wind farms.
But the Distance Act preserved building permits for wind power plants issued prior to the effective date of the act, as well as allowing completion of pending proceedings for issuance of permits under prior law. This has led to a situation where building permits obtained under the old law have become the only real opportunity to implement wind power plants in Poland.
Between 2016 and 2019, market electricity prices remained relatively low, limiting the feasibility of obtaining financing for wind projects. Additionally, the Renewable Energy Sources Act prevented new installations from entering the green certificate system, while RES auctions for new wind farms with a capacity larger than 1 MW, i.e. the newly established RES support system, were not announced until the fall of 2018. As a result, holders of building permits for wind farms delayed the start of construction for a long time.
Renewal of validity of permits
The Distance Act contained a transitional provision under which building permits issued before entry into force of the act, and permits issued after entry into force of the act in proceedings initiated before that date, remained in effect, provided that an operating permit was issued for the power plant within five years after entry into force of the Distance Act (i.e. by 16 July 2021). The parliament noted the risk of expiration of numerous building permits, to the detriment of the Polish energy market. Therefore, in 2019 it added a new provision to the Distance Act aimed at extending the validity of building permits once again. Under this provision, Art. 37(1) of the Construction Law applies to building permits for wind power plants for which an operating permit was not issued by 16 July 2021, but the three-year period specified that article, after which the building permit expires, runs from 16 July 2021.
This three-year period is approaching its end on 16 July 2024. Due to the unclear provisions of the amended Distance Act, the effects of the passing of this deadline may be interpreted differently, including a highly unfavourable interpretation for existing but unexecuted building permits.
It seems that the originators of this solution assumed that the deadline for obtaining an operating permit for wind farms for which a building permit was issued before entry into force of the Distance Act, or as a result of proceedings for issuance of a permit initiated before entry into force of the Distance Act, would expire no earlier than 16 July 2024.
Doubts exist as to how Art. 37(1) of the Construction Law should be interpreted in the context of expiration of building permits for power plants handed over for operation by 16 July 2021. Under that article, a building permit expires if construction has not begun within three years after the decision became final or if construction has been interrupted for more than three years.
The explanatory memorandum to the amendment to the Distance Act points out the discrepancies that have arisen between the Distance Act and the Renewable Energy Sources Act with regard to the expiration dates of building permits and the deadlines for the first delivery of power from RES installations that won an auction held in 2019. The winners of such auctions would not be able to take full advantage of the right granted to them to build installations within 33 months of granting the support, as they would effectively have to complete implementation of the project and start generating electricity no later than five years after entry into force of the Distance Act, i.e. by 16 July 2021.
Under this rationale, it appears that the reference to Art. 37(1) of the Construction Law is intended to postpone for an additional three years the legal effect of failing to obtain an operating permit by 16 July 2021, meaning that the permit will not expire before 16 July 2024.
Different interpretations
This solution must be criticised because it introduces ambiguity by specifying that the same decisions lose their legal force on one date and expire on another, later, date. Nevertheless, assuming the intention expressed by the proponents in the explanatory memorandum, it seems that the aim of the amendment was to keep these permits in effect until 16 July 2024.
Nor can we overlook Art. 13(6) of the Distance Act, which states: “The province building inspector shall order the demolition of the built part of a structure in the event of failure to obtain an operating permit, at the investor’s expense, unless, within one year after expiration of the building permit, the investor obtains a new or replacement building permit for that power plant.” Addressing the final consequences of failure to obtain an operating permit, this provision may suggest that the purpose of the law is to expressly set a final date for termination of projects not meeting the new requirements imposed on wind power plants by the Distance Act.
But neither can we reject the interpretation that even though in the explanatory memorandum the proponents only pointed out the risk of discrepancies between the deadlines under the Distance Act and the deadlines resulting from the 2019 RES auction, the need to complete construction of a wind power plant within 33 months of settling an auction (pursuant to the RES Act) applies to all potential auction participants, including in future years. For example, participants in RES auctions held in, say, 2022, would be required to complete construction of a wind farm in about 18 months. A similar point of view seems to be shared by the Ministry of Development and Technology, which indicated in a document dated 15 December 2022: “Building permits for wind power plants issued before 16 July 2016, or as a result of proceedings initiated before that date but completed after that date, remain in force at least until 16 July 2024. This means that a building permit for a wind power plant expires only if construction has not begun before 16 July 2024.”
In our view, considering the relevant application of this interpretation of Art. 37(1) of the Construction Law, the conclusion stated by the ministry may be overly optimistic, and a real risk exists for projects that are not completed by 16 July 2024 or do not obtain an operating permit by that date. In this regard, the ministry’s position completely ignores Art. 13(2) of the Distance Act, whose obvious intention was to set a time limit for implementation of wind power plants which, although approved via issuance of a building permit, mostly failed to meet the requirements imposed by the law. In this context, the provision is justified insofar as it removes restrictions on other real estate near planned but unbuilt power plants, which in the meantime cannot be developed for example for residential purposes.
And in addition to the issue of the validity period of building permits for wind power plants issued under the law in force prior to the Distance Act, it appears debatable to apply to them separately Art. 37(1) of the Construction Law, i.e. expiration of the decision in the event of failure to commence construction on a power plant within three years after the decision becomes final, or interruption of the construction work for more than three years. Nothing in the Distance Act excludes the application of Art. 37(1) of the Construction Law directly in relation to wind farms. Art. 13(2a) of the Distance Act refers only to the case of failure to obtain an operating permit by 16 July 2021, and as indicated above, this can be inferred through relevant application. This means that for individual building permits, it should also be verified whether the requirement for timely commencement of the project and continuation for a period longer than three years was met during the validity of the permit. But even in this regard, the provision can be interpreted differently, as indicated in the judgment of the Province Administrative Court in Gdańsk of 12 July 2023 (case no. II SA/Gd 1107/22), which points to the actual possibility of suspending work in the period between the entry into force of the Distance Act and 16 July 2024.
These problems were not solved by the latest amendment to the Distance Act, dated March 2023, which in place of the rigidly set minimum distance introduced the possibility of setting a different distance for wind power plants in local development plans, but not less than 700 metres from residential construction. But in general, development of renewable energy in Poland needs to accelerate, including through construction of new wind power capacity. Thus the potential contained in building permits already issued should not be lost, and amending the provisions to clarify that these permits also remain valid after 16 July 2024 should be considered. Otherwise, it cannot be ruled out that applications to confirm the expiration of building permits will begin to be filed after that date, and then the fate of these existing permits will depend on how these provisions are interpreted by the authorities issuing building permits and by the administrative courts.
Radosław Wasiak, adwokat, Rafał Pytko, Energy practice, Wardyński & Partners
