Review: Renewable Energy Policy and Regulation in Poland
An excerpt from The Renewable Energy Law Review, 5th Edition
The policy and regulatory framework
i The political context
Renewable energy policy has been a key part of the most essential policy documents in Poland. One of them, Poland’s energy policy until 2040, stipulates the government’s plans for the development of the energy market. As regards renewable energies in 2030, the share of renewable energies in gross final energy consumption must be at least 23% and at least 32% in the electricity sector (mainly wind and photovoltaic). ); 28% heat; and 14% 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 would achieve a 21-23% share of renewables in gross final energy consumption. To achieve these goals, grant programs have been put in place for investors in renewable energy.
Over the years, Poland has supported renewable energy sources through a system of tradable certificates of origin (green certificates). Green certificates are transferable property rights that can be received by a producer of electricity from a renewable energy source in which the energy was first produced before July 1, 2016. The aid may be granted for a maximum period of 15 years but not more than until December 31, 2035.
The system of green certificates is gradually being replaced by the new support regime in the form of auctions. Auction winners get 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 request submitted by a producer of renewable energy source to the settlement operator (Zarządca Rozliczeń). Auctions for renewable energies are carried out separately within five technological baskets, separately for installations with an installed capacity less than or equal to 1 MW and greater than 1 MW, and separately for electricity produced in:
- renewable energy installations commissioned before July 1, 2016;
- modernized renewable energy sources installations; and
- new renewable energy source installations (i.e. planned installations, which will produce electricity for the first time after the close of the auction session).
In auctions held to date, the majority of support has gone to onshore wind farm projects generating more than 1 MW and PV projects generating up to 1 MW.
According to information from the President of ERA, due to the auctions held in 2020, more than 1.56 GW of photovoltaic installations, nearly 0.93 GW of new wind farms and more than 4 MW of new capacity in other renewable energy technologies could be developed.5 In 2020, almost 75.3 TWh of electricity from renewable energy sources was put up for sale in all auctions, with a total value of more than 27.4 billion zlotys. However, only four out of eight auctions were resolved (the other four were not resolved because a sufficient number of bids were not submitted). Consequently, 54.5 TWh of electricity were sold, for a total value of almost 12.9 billion zlotys.6
As for the auctions in 2021, it should be noted that they took place twice – during the months of May and June, and in December. In May-June, a total of almost 37 TWh of electricity was contracted, worth more than 8.5 billion zlotys.seven In December, a total of almost 14 TWh of electricity was contracted, worth more than 3.2 billion zlotys.8
An alternative to the auction system has been considered for small capacity installations which can be supported by two other systems, namely the feed-in tariff (FiT) and feed-in premium (FiP) systems. The FiP and FiT are dedicated to installations using only the following sources for the production of electricity:
- agricultural biogas;
- biogas obtained from landfills;
- biogas from a wastewater treatment plant;
- another biogas other than those specified above;
- hydroelectricity; Where
Producers of agricultural biogas can also benefit from the support mechanism in the form of certificates of origin of agricultural biogas attesting to its production and its introduction into the gas distribution network, which are issued by the president of ERA. The certificate is granted for 15 years from the date of the first production of agricultural biogas or electricity from agricultural biogas but at the latest until December 31, 2035.
ii The regulatory and consensual framework
The main acts governing specific areas in Poland are laws, which are acts passed by the parliament (i.e. the Sejm and the Senate, which is the upper house of parliament) and signed by the president. As far as the energy sector in Poland is concerned, the general rules are provided for in the Energy Law. The Energy Law defines the rights and obligations of market participants as well as the powers and obligations of administrative authorities (such as the President of ERA). Most importantly, the Energy Law stipulates the rules for conducting business activities in the energy market in Poland by regulating the conditions of connection to the transmission and distribution network as well as regulating the requirements for obtaining the energy licenses necessary for the exercise of a commercial activity (for example, in the production of electricity).
In the case of the renewable energy sector, the main law regulating the rights and obligations of renewable energy investors is the Renewable Energy Sources Act, which describes the previously mentioned subsidy schemes (i.e. green certificates, the auction system and the FiT and FiP systems). Another important law for the renewable energy sector is the recently adopted Wind Farms Act, which defines the framework regulations for offshore wind farms.
Acts of Parliament are not the only source of law governing the energy market in Poland. Technical information is generally governed by secondary legislation, such as regulations, which are issued by government agencies. In the case of renewable energies, the issuing body is generally the Ministry of Climate and Environment or the Minister of Infrastructure.
The energy market in Poland is regulated. Although the President of ERA, as the Polish regulator, does not have the competence to issue binding acts at national level such as statutes or regulations, he shapes the framework for business activities in the energy market. , among other things, by issuing rulings for specific market participants. In these decisions, the President of the ERA is empowered, among other things, to impose financial penalties for violations of the provisions of the energy laws and, above all, to grant licenses to energy companies. In the case of renewable energy sources, the President of ERA is empowered to issue licenses for the production of electrical energy from renewable energy installations, which are issued at the end of the development process of renewable projects. This obligation does not apply to micro and small installations.
During the development of a renewable energy project but before obtaining the production license from the president of ERA, the investor must also obtain many permits necessary for the construction and operation of such a project. . Polish law requires the holding of several permits, the most important decisions of which are as follows:
- A local zoning plan or zoning permit, which provides a legal basis for the location of renewable energy projects. With regard to the local zoning plan, the municipal council adopts it in the form of a resolution which covers a set of parcels not necessarily belonging to the same owner and which are not issued for the benefit of a single party. , while zoning permits are issued by the competent authority for the particular recipient. In practice, when there is no local urban plan, investors must obtain zoning permits in order to be able to proceed with the development of the project.
- An Environmental Conditions Decision, which determines the environmental conditions of a renewable energy project and approves its Environmental Impact Assessment (EIA). It must be obtained before the zoning permit (if, in the specific case, it is necessary as indicated above) and the building permit.
- A building permit, which is a decision authorizing the start of construction work. However, in some cases, the mere notification of construction work is sufficient.
- A license of use, which is a decision allowing the use and operation of a renewable energy project. However, in some cases, the mere notification of the end of the construction work is sufficient.
Obtaining the environmental decision is one of the critical steps in the permitting process for renewable energy projects. The environmental decision is issued by the head of the municipality, or the mayor or the 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 planning to carry out the project (ie the investor). At the very beginning of the procedure, the competent authority examines the request for the issuance of the environmental decision to assess in which category the project must be qualified (ie with a mandatory EIA or an optional EIA). According to Polish law, there are two groups of projects for which an environmental decision must be obtained:
- projects that can still significantly affect the environment (for which it is mandatory to carry out an EIA before making the environmental decision); and
- projects likely to affect the environment (for which an EIA is not mandatory but may be required by the authority responsible for issuing the environmental decision).