Proposal for Renewable Energy Sources Act | In Principle

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Proposal for Renewable Energy Sources Act

The proposed new Renewable Energy Sources Act would significantly change the system of support for electricity produced in Poland from renewable resources.

If the bill is enacted, companies in the power industry in Poland will have to make major revisions to their business plans. While the system of certificates of origin of energy from renewable sources (known as “green certificates”) will be maintained, the formula for calculating the “substitute fee” would change. The fee would be set at PLN 470 per MWh minus the average sale price per MWh of electricity in the previous calendar year. The inevitable increase in electricity prices would thus result in a decrease in the substitute fee and a decrease accordingly in the prices of green certificates. Certificates of origin would also be issued with an indication of the adjustment factor, depending on the type of renewables installation. The adjustment factors would run from about 0.7 for large wind farms and co-combustion units to 2.0 for photovoltaic units. The factors for electricity from micro-installations would be increased by 0.5. There would also be an entitlement to certificates of origin for only 15 years after a plant is put into service. For plants launched prior to 1997, it would be possible to obtain certificates for electricity produced in the modernised sections of the plants, but only for 15 years after the modernised section is put into service. This significantly limits the ability to obtain certificates of energy for electricity generated at the largest hydroelectric plants in Poland.

The obligation to purchase electricity generated from renewables would disappear, which means that electricity in this form would have to compete with other forms offered on the market. There would, however, continue to be an obligation to purchase electricity generated at micro renewable installations. There is also great simplification for owners operating micro-installations for their own use, selling up to 30% of their electrical output to external customers. Such operations would not be treated as commercial activity and would not require entry in any register. Meanwhile, an electricity trading company would be required to purchase electricity generated in such non-commercial micro-installations for about twice the average price of electricity. Micro-installations selling a greater percentage of their output to external customers would be conducting commercial operations and would thus be subject to entry in the register of producers of electricity at micro-installations, maintained by the Energy Regulatory Office. Production of electricity at a micro-installation, as well as biogas, would not require a licence.

The bills included in the package of proposed new energy legislation provide that they will go into effect from 1 July 2012. Public consultations are currently underway. Given the importance of the new provisions for the renewables industry in Poland, there is expected to be much debate over the modified support mechanism, including the tentatively defined factors and the procedure for adjusting the factors in the future. Then the final versions of the bills will have to be approved by the Government, passed by both houses of Parliament, signed by the President, and published. Because the proposed legislation would have a major impact on the interests of all companies in the power industry, comments and discussions should be anticipated at each stage in the process. This means that the package of new laws will probably not go into effect until the beginning of 2013 at the earliest.

Weronika Pelc, Energy Law practice, Wardyński & Partners