Last week the Ministry of Energy officially confirmed that it will work/is working on an amendment of the RES Act. The aim in general is to provide a more balanced RES energy mix, as onshore wind has dominated the new installed capacity in Poland since 2013.
In 2015, Poland installed more onshore wind farm capacity than both France or the UK. Nevertheless, this approach has not yet been officially confirmed in the Ministry's statement. However, the statement did confirm the policy approach to preferential support technologies which create additional value for Poland, i.e. promoting technologies which are produced in Poland and creating new jobs. This is a clear statement in favour of biomass firing and dedicated co-firing installations.
Further, the Ministry made a clear statement that private prosumers should not receive feed-in tariffs (“FiT”). So, the original support system proposed by the Ministry of Economy to support private prosumers with direct support and net-metering might be introduced in the amended RES Act. However, entrepreneurial prosumers should receive a FiT, as the Ministry indicates.
Additionally, the Ministry of Energy emphasis that energy cooperatives in rural areas should be promoted. So, the RES Act amendment will be implemented jointly with the so-called Smart Metering Act to provide a technical basis for energy cooperatives.
So far, so good it seems. At the end of last week several members of parliament from PiS parliamentarian group submitted a draft Wind Turbine Investment Act to Parliament. In 2012, PiS parliamentarian group filed a draft of an amendment act of building law and planning and zoning law to the Polish Parliament (Parliamentary printed paper 758), but this draft did not proceed further. It was expected that relevant changes to planning and zoning law, building law, technical supervision law, etc. to regulate wind farm investments would be proceeded jointly with the amendment of the RES Act and will change relevant existing acts. However, the aim of the Wind Turbine Investment Act (“WTI Act”) differs from printed paper 758, as it is not only changes relevant existing acts, inter alia, the RES Act, but also constitutes a special act.
Generally, the legislative quality of the WIT Act is questionable (e.g. regulations concerning technical supervision of wind farms refer to the “Ministry of Economy”, which does not exist anymore), and it will likely survive legislation proceedings in its current structure. Due to the fact that the WTI Act also implements changes to the RES Act, it may be proceeded jointly with the RES Act amendment under the leadership of the Ministry of Energy, however, the RES Act amendment will not enter Parliamentarian proceedings before end of May this year. Due to its quality, it seems that the WIT Act has been rushed to Parliament in a hurry by MPs related to the Ministry of Infrastructure, so its purpose might be to act as a “basis for negotiation” within the government, when the working group in the Ministry of Energy, which according to the Minster of Energy, Mr Tchorzewski, constitutes in the beginning of March this year, will start agreeing the RES Act amendment.
Under the WTI Act, the minimum distance between wind turbines between residential and protected landscape areas, etc. is 10H, i.e. 10 times tip height – the Bavarian approach. Presumably, during legislative proceedings this will result in tough negotiations to reach a compromise, as the 10H formula generally excludes new wind farm development in Poland.
The WTI Act also provides that wind turbines are to be located on the basis of a master plan, which also defines the maximum tip height. This approach has been promoted for several years now by the Polish Wind Energy Association, and should therefore not be seen as controversial. Existing master plans stay in force, however, if the location of the wind turbine does not comply with the minimum distance criteria, a building permit cannot be issued – this approach might not be in accordance with existing laws and the Polish Constitution. Building permits issued on the basis of a master plan before the WTI Act enters into force, which do not comply with the minimum distance criteria, have to receive use permit before the lapse of the three-year transition period - also this regulation might not be in accordance with existing laws and the Polish Constitution.
Furthermore, under the WTI Act, zoning decisions (so-called “WZ” decisions) as alternative planning title to locate wind turbines will become invalid for wind turbines which do not comply with the minimum distance criteria if the WTI Act enters into force, unless the building permit which basis on the zoning decision was issued before the WTI Act enters into force. In case the wind turbine location complies with the minimum distance criteria, a building permit based on a zoning decision has to be issued before the lapse of the one-year transition period. Building permits issued on the basis of a zoning decision before the WTI Act enters into force, even if not complying with the minimum distance criteria, have to receive use permit before the lapse of the three-year transition period - also this regulation might not be in accordance with existing laws and the Polish Constitution.
Operating wind turbines will not be shut down if they do not meet the minimum distance criteria (this was one of the requirements of printed paper 758), and re-powering is not permitted. Within a year operating turbines must be certified by the technical supervisory authorities – UDT. A certification obligation as such is also not controversial, as the import of used wind turbines during recent years provided to questionable investments, especially by small developers, has shown. To have the possibility to shut down a wind turbine the whole turbine including nacelle and blades, and not just the mast and the foundation shall be qualified as building. This approach may have an impact on real estate tax, which is generally paid based on the market value of buildings, but not of technical equipment.
A UDT certification is also required for new turbines, and not only for certain parts, such as lifts, but for the whole wind turbine. Every two years, or at the end of repair works, a new UDT certification will be required – a so-called “exploitation decision” (in parallel to the use permit according to construction law), and without such exploitation decision no premium shall be granted, and the RES generator shall not be able to take part at the auction (the WTI Act does not differentiate between operating and new project). It seems that a certification requirement for the whole turbine every two years is unreasonable. Additionally, under the WTI Act, UDT certification fees for one certification should not exceed 1 percent (sic!) of the construction costs (i.e. the CAPEX for wind turbine and related construction works), whereas the Ministry of Energy shall enact further specific regulation. This fee is unreasonable high and will rather not survive legislation proceedings.
We do not expect the WTI in its current wording to survive legislation procedure as its intention is to prohibit wind farm investments in general and to penalize existing wind farms. It is clearly against the interest not only of IPPs, but also state-owned utilities. Without wind power Poland will not be able to achieve the 2020 targets, so notification of the RES Act will be in question, and an ex-ante evaluation of the required implementation of European law would hinder the implementation of EU structure funds programmes.
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