At present, the sector of renewable energy sources in Poland does not have any separate act. The regulations on energy, spatial planning and other administrative and legal procedures may be found in many different acts and regulations.
On account of Directive 2001/77/EC which was in force until 23th April 2009, many regulatory issues (including support mechanisms) in Polish law are directed mainly at the green electricity sector. Taking into account the provisions of the new Directive 2009/28/EC on the promotion of the use of energy from renewable sources, which is based on a more comprehensive, supra sector approach to the promotion of renewable sources, it will be necessary to make further legislative amendments going beyond a quite extensive amendment to the Energy Law Act which was passed by the Sejm on 8th January 2010 and concerned the conditions for RES (and other sources) connection to the grid as well as support for biogas production and use. The government, in the strategic document entitled “National Renewable Energy Action Plan”, which was adopted on 7th December 2010, announced the implementation of the EU regulations on renewable energy sources through passing a separate act on renewable energy sources. Its adoption, along with executive acts, should have taken place by 5 December 2010. However, the works on the preparation of the draft Act are taking longer than previously anticipated. According to PIGEO, the implementation of the Directive will take place not earlier than in the second half of 2013. For this reason, the newly elected government will be obliged to develop good and proven legal solutions enabling the completion of a bigger number of investments in a shorter time, which will be rewarded with a stable and predictable support system.
According to the announced necessity of transposition of Directive 2009/28/EC, many regulations referring to the market of renewable energy sources will soon be amended. Nevertheless, we would like to present a summary of selected current legal documents referring to the RES sector in Poland. The regulations concerning the renewable energy in Poland are included mainly in two acts:
- The Energy Law Act of 10th April 1997 as amended.
The Act defines the principles of development of state energy policy, principles and terms of supply and use of fuels and energy, including heat, and operation of energy enterprises, as well as determines organs in charge of fuel and energy economy
The purpose of the Act is the creation of conditions for sustainable development of the country, energy security, efficient and rational use of fuels and energy, development of competition, counteracting negative consequences of natural monopolies, consideration of natural environment protection requirements and obligations stemming from international agreements and balancing the interests of energy enterprises and fuel and energy customers.
The executive regulation stipulates the requirements for classification of energy as energy produced from renewable sources for the purpose of support with so-called green certificates as well as the scope of responsibilities lying with the entities selling electricity to end users.
An executive regulation has been issued to the Act, namely Regulation of the Minister of Economy of 14th August 2008 on the detailed scope of obligations with respect to obtaining certificates of origin and submitting them for cancellation, payment of a substitution fee, purchase of electricity and heat from renewable energy sources, as well as the obligation to confirm the data on the amount of electricity produced from a renewable energy source. The regulation stipulates the scope of application of renewable sources for qualifying the energy for support as well as stipulates, in connection with the adopted support scheme, the responsibilities resting with entities selling electricity to end users.
- The Act of 25th August 2006 on Biocomponents and Liquid Biofuels as amended.
The Act stipulates, inter alia, the principles of carrying out business activity in the scope of producing biocomponents, including liquid biofuels, for private needs by farmers and in the scope of introducing biocomponents and liquid fuels for trading.
The Act was complemented by the Regulation of the Council of Ministers of 15th June 2007 on National Indicative Targets for the years 2008 – 2013. The national indicative targets present a minimum share of biocomponents and other renewable fuels in total amount of liquid fuels and liquid biofuels used during a calendar year in transport, calculated in terms of calorific value. A minimum share of biocomponents and other renewable fuels in the total amount of fuels used in transport in a given year, which amounts to: 6.2% (2011); 6.65% (2012); 7.10% (2013) respectively. The entities obliged to meet the National Indicative Targets according to the Act are entrepreneurs carrying out business activity in the scope of production, import or intra-community acquisition of liquid fuels or liquid biofuels, selling or disposing of them in another form at the territory of Poland or using them for private needs.
In Poland, within the framework of regulations on biofuels, there is no support for using biogas as a substitute of biodiesel and bioethanol or for “green” electricity in transport, as alternative possibilities of using RES fuels and energy.
Definition of renewable energy sources
Pursuant to the Energy Law Act, a renewable energy source (RES) means a source which uses wind power, solar power, geothermal energy, sea wave, sea current and tidal energy, or energy obtained from the fall of rivers and biomass energy, energy from landfill gas as well as biogas produced in the process of sewage disposal and treatment or decomposition of plant and animal remains.
The Energy Law Act defines a renewable energy source but the definition which energy is considered renewable energy for which an entity is entitled to support in the form of certificates of origin, so-called green certificates, may be found in the executive regulation only. According to the regulation, regardless of the capacity of the source, the following types of energy are considered to be energy produced from renewable sources:
electricity or heat from, in particular:
- hydroelectric power stations and wind power stations,
- sources generating energy from biomass and biogas,
- solar photovoltaic cells and collectors for heat production,
- geothermal sources
- part of energy reclaimed from thermal treatment of municipal waste.
In the case of energy produced by a generating unit in which biomass or biogas are combusted with other fuels, the part of electricity or heat corresponding to the share of chemical energy of biomass or biogas in the chemical energy of the fuel used for energy generation, which is calculated based on actual heat values of those fuels respectively, is classified as energy generated in renewable energy sources.
The energy generated by a given entity in RES may be used for private needs of the entity or introduced to the national power grid (in case of electricity) or to the heat distribution network (in the case of heat) and sold to the appropriate energy company dealing with trading in and/or selling energy to end users. The market of electricity and the market of heat produced in RES is regulated in a slightly different manner.
The rules of selling RES electricity and heat
The obligation to purchase electricity generated in RES rests with the so-called official seller in whose area of activity the RES unit has been connected to the grid. The obligation to purchase the RES-generated heat rests with the energy company which trades in heat. The guarantee of energy receipt/purchase is granted to a licensed producer of energy from renewable sources which is connected to the grid. In the case of electricity, the purchase is made at the average selling price of electricity on the competitive market from the previous calendar year. In the case of heat, the price of RES heat cannot cause an increase in heat prices or rates of charges for the heat supplied to end-users who are connected to the grid of a producer purchasing heat from RES. In the case of RES electricity, the whole amount of electricity offered for sale must be purchased, and in the case of RES heat, the amount of energy offered for sale should not exceed the total demand for heat of recipients of the company to which the purchase of RES heat is offered. The cost of RES energy purchase incurred in connection with this obligation is included in tariffs (presented to all recipients connected to the grid) of the official distributors/ energy companies which fulfil this obligation.
Access to the grid
In order for the indicated regulations concerning the energy receipt/purchase to have legal force, a unit has to be connected to the grid/network. It is worth stressing that the electricity generated in RES (also high-efficiency) unit connected to the grid, has a priority of transmission, but there is no guarantee of connection.
A refusal to connect issued by the operator can take place only if there are no technical or economic conditions for connection.
The main barriers to the development of RES, especially in the electricity sector, are the poor condition of the grid infrastructure in Poland and lack of its development plans, resulting in lack of access to information about the connection possibilities. Fees are charged for the connection to the grid. According to the regulations included in the amended Energy Law Act, in order to connect a RES (it applies to electricity generating entities), the entity applying for the connection has to pay a deposit (of PLN 30 per each kW) on account of the connection and submit a planning document describing the feasibility of locating the RES source in a given area.
However, there is no guarantee that the deposit will be returned if the applying entity does not accept the connection requirements imposed on the entity applying for the connection of a RES unit. This is a serious problem, as there is no clearly determined amount of the connection fee. The quality requirements for biomethane will be set out in a regulation prepared by the Ministry of Economy.
Support scheme - green certificates
As of today, Poland has only a support mechanism for electricity generated in a renewable energy source. It is based on certificates of origin (so-called green certificates) issued by the President of the Energy Regulatory Office (Urząd Regulacji Energetyki, URE) at the request of the generating entity, via the grid operator, which confirm that the electricity was generated in RES (it applies to electricity).
In the case of biomethane forced into the network (pursuant to the amended act, as of 1st January 2011), any amount forced into the network will be recalculated into an equivalent in electricity and then subject to the green certificate support mechanism (recalculation algorithm of biomethane into the electricity equivalent is not yet known)
The trade in property rights to certificates of origin on the internal (domestic) market allows RES producers to gain additional income from the generation of energy in RES (except for the income from the sale of electricity as a product). The purchase of a target amount of certificates of origin in a given year is obligatory for the entities selling electricity to end-users. Alternatively, the above-mentioned entities can pay a substitution fee (a unit fee per each MWh of electricity is published annually by the President of URE). Usually the value of the substitution fee is equal to the maximum price for a green certificate which may be obtained in a given year. The amount of the substitute (unit) fee in 2011 is PLN 274.92 per MWh, with the (guaranteed) price of energy amounting to PLN 195.21 per MWh. Energy companies that did not fulfil their obligation (to purchase certificates or pay a substitution fee in a given year) are subject to penalties. Substitution fees and penalties are paid to the bank account of the National Fund for Environmental Protection and Water Management (Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej, NFOŚiGW), and until the end of 2009 they were then spent on supporting the investments in RES only.
The obligation (to purchase certificates or pay a substitution fee) resting with a given company for any given year constitutes a required percentage share of electricity in the total amount of electricity supplied by this company to end users. Pursuant to the Regulation of the Minister of Economy of 14th August 2008 on RES certificates, this share amounts to:
- 10.4% for 2011
- 10.4% for 2012
- 10.9% for 2013
- 11.4% for 2014
- 11.9% for 2015
- 12.4% for 2016
- 12.9% for 2017
The support scheme outlined above is the same for all renewable energy sources and applies to electricity both introduced into the grid and used privately by the generating entity. In order to receive certificates, the entity must be licensed or registered, as in the case of agricultural biogas.
It is also worth stressing that energy companies dealing with the production of electricity in renewable energy sources with total electric capacity not exceeding 5 MW are exempted from:
- fees for the entry into the register of certificates of origin and for any changes in the register
- a stamp duty for issuing a certificate of origin
- a stamp duty for issuing a concession for electricity generation in renewable energy sources.
The electricity generated in renewable sources is also exempt from excise tax.
Administrative and legal procedures concerning investments
An investment in renewable energy is a quite complex and advanced undertaking, from the technical, logistic, economic and, first of all, legal point of view. Depending on the type of RES (technology, the type of energy generated) and amount as well as the region of location of the future investment, administrative and legal procedures may differ significantly. Each investment requires a number of permits, decisions and agreements with competent administrative authorities.
An investment process may be divided into three basic stages:
- developer stage
- construction of a RES unit
The developer state is the most advanced one in terms of formal and legal procedures. It consists mainly of:
- land acquisition – decision about location
- decision on environmental conditions of approval of a project
- building permit
which is followed by obtaining a concession or a registration for carrying out a business activity consisting in the generation of energy from renewable sources.
PIGEO provides more information about the conditions for development of renewable energy sources to member companies only. We encourage you to find out more about the actions taken for associated companies as well as the procedure of joining the Chamber.