Finally: feed-in tariffs for Poland!

04.05.2015
Feed-in tariffs for wind power and photovoltaics in Poland (exchange rate: 1 € = approx. 4.2 PLN) (Source: Act of 20th February 2015 on renewable energy sources)
Feed-in tariffs for wind power and photovoltaics in Poland (exchange rate: 1 € = approx. 4.2 PLN) (Source: Act of 20th February 2015 on renewable energy sources)

While the EU countries are witnessing a retreat from feed-in tariffs, Poland is for the first time in history introducing feed-in tariffs to support its renewable energy sector. By virtue of the Renewable Energy Sources Act, which was adopted in February and signed into law by the President on 11 March 2015, this form of aid can be enjoyed by green energy micro-producers.

During an over three-year legislative work on the first Polish renewable energy law, the lawmakers tried twice to introduce the feed-in tariffs. Initially, this form of aid was supposed to apply to, among others, wind farms and PV-plants with a nominal output of up to 100 kW. The feed-in tariff amount was to depend on the size and type of the installation, with the envisaged support ranging from Polish złoty (PLN) 0.65 PLN/kWh (0.16 €/kWh) for wind farms with an output of over 10 kW to as much as 1.30 PLN/kWh (0.32 €/kWh) for roof-mounted PV installations with an output of up to 10 kW. This idea was abandoned and it was not until the last stage of the legislation process that the feed-in tariffs were introduced for renewable energy installations up to 10 kW. Pursuant to the final provisions of the act, the feed-in tariff system, just like the new auction system, will become effective as from 1 January, 2016.

FiT also for some biogas plants

The feed-in tariffs will apply for 15 years counting from the date of putting the installations into service, however no longer than until 31 December, 2035. The support is to be granted only to “newly-built installations”. This term is rather vague, but it seems to cover installations that will start operating after 1 January, 2016. The feed-in tariff amount will depend on the size and type of the installation. In the case of micro installations with an output of up to 3 kW, the feed-in tariff will only apply to wind power plants, PV and hydropower installations. The tariff will be equal for all installations types and will amount to 0.75 PLN/kWh (0.18 €/kWh). Within the group of installations with an output > 3 kW up to and including 10 kW, not only wind power plants, PV and hydropower installations, but also biogas installations will be eligible for financial aid. The feed-in tariff amount for wind and PV installations has been set at 0.65 PLN/kWh (0.16 €/kWh).

Future uncertain

The Polish lawmakers have introduced legislative mechanisms whose aim was, on the one hand, to prevent an uncontrolled increase in the number of electricity producers attracted by feed-in tariffs, which are relatively high considering the prices prevailing in the Polish electricity market, and on the other hand, to enable fast adjustment (that is, reduction) of the feed-in tariffs should, for example, the prices for PV modules decrease. The feed-in tariffs specified in the Renewable Energy Sources Act should apply until the total output from energy plants to be put into service reaches 300 MW (installations ≤ 3 kW) or 500 MW (installations from 3 to and including 10 kW). No information has been provided as to whether and what feed-in tariffs will apply after the aforementioned goals of micro-generation development are met. The Renewable Energy Sources Act also foresees the option to quickly change the amount of the feed-in tariffs by a regulation of the Minister of the Economy.

Legislative loopholes

A significant drawback of the freshly introduced provisions is their imprecision: they allow interpretation according to which the statutory feed-in tariffs, granted to those entities which have already started electricity production, can be reduced either due to achieving the goals of microgeneration development, or by virtue of a regulation of the Minister of Economy. This means that the fixed prices would apply not for 15 years but “until further notice”. Such interpretation is entirely at odds with the feed-in tariff concept because it deprives it of the element of guarantee and stability. So micro-producers are exposed to a risk of unfavourable interpretation. Fortunately, this problem has been noticed and the act will be probably amended in this respect before it is incorporated into the law.

Another controversial issue is the option to sell the entire electricity output at a favourable fixed unit price specified in the act. The lawmakers have clearly stipulated that natural persons not conducting business are allowed to apply the feed-in tariffs only to the sale of excessive green energy (energy not used for their own purposes). At the same time, other entities are exempt from such restriction. It seems questionable whether this was really intended by the lawmakers. And, indeed, also in this respect the Ministry of Economy is planning an amendment that is going to clarify the issue.

Piotr Mrowiec, LL.M. Attorney at Law (PL) Associate Partner Rödl & Partner

This article was originally published in issue 2/2015 of Sun & Wind Energy - The Solar Edition.

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