Solivan, Enervis and Anemos present their 2016 market report on the new self-marketing and the contract for difference (CfD) support scheme at the PWEA Wind energy fairs in Warsaw on 8 March
The new self-marketing and contract for difference (CfD) support scheme in Poland forces investors and financial institutions to evaluate in depth the expected long-term electricity market revenues of wind farms. To succeed in a competitive market environment, detailed analyses will be necessary in terms of technology profile costs, i.e. losses against the new wholesale market index TGeBase, long-term development of balancing costs, wholesale revenue after achieving 15-year support, the long-term risk of negative wholesale prices, and last but not least, the risk of over performing without a premium, as well as the risk of underperforming below the penalty threshold.
In the self-marketing support system, detailed analyses of historic data and long-term forecasts are essential for financial modeling. Solivan, Enervis and Anemos have recently published a 80-page report providing market forecasts for Poland, including three exemplary case studies, to illustrate the financial modeling of long-term revenues for wind farms under the CfD support system and beyond.
Solivan, Enervis and Anemos will present their market report at 4 pm on Tuesday 8 March at the Speaker’s corner close to the catering area.
The draft Wind Turbine Investments Act (“WTI Act”) has received negative opinions not only from investors, but also from the Office of Research of the Chancellery of the Sejm (Biuro Analiz Sejmowych Kancelarii Sejmu, “BAS”), and the Office of the Union of Provinces of the Republic of Poland (Biuro Związku Województw Rzeczypospolitej Polskiej, “BZW”). BAS is an advisory board which supports the legislative process with academic advice, and conducts research related to the legislative process, which also includes checking the conformity of Polish legal acts with EU law. The Union of Provinces of the Republic of Poland is a self-government entity which represents the interests of Poland's regions both nationally and internationally. It is a forum for extensive discussions and consultations on the most important issues concerning the implementation of the regional development policy.
Both opinions of these bodies assess the draft WTI Act from different standpoints than investors. However, their conclusions are somewhat convergent with statements presented by investors and may help to soften the statutory requirements to be imposed on wind turbine investments. Both institutions indicate that the draft WTI Act is unreasonably strict, especially when it comes to the minimum distance between wind turbines and residential and forest protection areas, which may lead to factual exclusion of wind farm investments in Poland. BAS has based its opinion mainly on the Treaty on the Functioning of the European Union (the “EU Treaty”) and respective directives, whereas BZW has emphasised planning and zoning law aspects.
According to BAS' opinion, the draft WTI Act does not contain any provisions which might be explicitly contrary to Directive 2009/28/WE concerning the 15% share of renewable energy sources in Poland by 2020. However, as a result it may hinder the fulfilment of this threshold, as the electricity produced from onshore wind has been indicated as the most important factor in the “National Action Plan” adopted by the Council of Ministers on 7 December 2010 and agreed with the EU Commission. Hence, BAS has stated that the draft WTI Act may negatively affect Poland’s obligations towards the EU, therefore additional analysis should be conducted.
BAS also considers whether the WTI Act does not breach the non-discrimination clause regulated in Article 49 of the EU Treaty in the aspect of discriminative restriction of freedom of establishment. Generally, Member States may introduce provisions restricting freedom of establishment, however, under certain conditions, including the principal of proportionality, namely whether any other less restrictive measures may be used in order to achieve the purposes of the draft WTI Act.
BAS has stated that such assessment is outside its legal analysis, and concluded that during the legislative proceedings it should be considered whether wind turbine investments have not been treated too rigorously.
Finally, BAS has explicitly stated the nonconformity with EU law, regarding public procurement law with respect to the exclusion of the Public Procurement Act for sub-commissioning conducting technical inspections of wind turbines by the technical supervisory authorities (“UDT”).
According to BZW, due to scattered residential development in Poland, the draft WTI Act will lead to a lack of wind turbine project development, including the possibilities of repowering. Introducing a minimum distance between wind turbines between residential and protected landscape areas, etc. 10H, i.e. 10 times tip height, will almost completely exclude new installations. Furthermore, BZW has pointed out that as to currently on-going but not yet finished projects damage claims towards the authorities preparing local master plans may be expected. Further, the obligation to include the future locations of wind turbines in zoning plans prepared at the regional level is not coherent as such plans are not sources of local law, and do not determine the aspects of land development.
Therefore, the local authorities should retain the competence to individually determine the content of the local master plans. BZW also refers to the specific arguments pointed out in the justification of the draft WTI ACT. Primarily, the justification based on out-dated opinions which referred to certain specific cases where before 2005 investors installed used wind turbines, e.g. the phenomenon of icing, should not occur with new installations. However, BZW has reacted positively to the intention to embrace wind turbine generators through proposal that wind turbine generators would be subject to the supervision of UDT. It does not comment on the frequency of inspections and the planned level of costs for an inspection.
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