POLISH DRAFT ACT AMENDING THE POLISH ACT ON RENEWABLE ENERGY SOURCES AND CERTAIN OTHER ACTS

The current Polish regulations contained in the Act of February 20, 2015 on renewable energy sources (Journal of Laws 2020, item 261, as amended) (hereinafter: the “RES Act”) do not ensure the effective development of renewable energy sources (hereinafter: “RES”), in areas covered by the draft regulations.

In particular, the prepared draft Act aims to transpose Directive (EU) 2018/2001 of the European Parliament and of the Council of December 11, 2018 on the promotion of the use of energy from renewable sources (Journal of Laws EU No. L 328, of December 21, 2018), hereinafter referred to as “RED II”, “RED II” or Directive 2018/2001.

The regulations that will be included in the amendment concern the following areas:

I. Biomethane

II. Energy clusters

III. Transposition of RED II in the following areas:

1. District heating and cooling (art. 23-24 RED II)

2. Guarantees of origin (Art. 19 RED II)

3. National Contact Point for RES (Art. 16 RED II)

4. Administrative procedures (Articles 15-16 RED II)

5. Partner energy trade – peer-to-peer (Art. 21 RED II)

6. Other RED II provisions to be implemented

IV. Modernization of renewable energy installations (hereinafter referred to as “RES”)

V. Continuation support for RES installations which are expiring from the 15-year support system

VI. Hybrid RES installations

VII. Offshore wind energy (supplementary regulations)

I. Biomethane

Achieving climate goals, which Poland is obliged to do as part of its membership in the EU, requires taking decisive actions in domestic conditions, including use of the domestic potential of biomethane, the development of which can significantly help in achieving the above-mentioned climate goals.

The aim of the actions taken is to adopt regulations supporting the development of biomethane production. The proposed regulations will effectively encourage investors to make decisions regarding the construction of installations for the production and purification of biogas or agricultural biogas, the production of biomethane and the expansion or reconstruction of the existing gas networks in terms of enabling biomethane injection. As indicated above, the creation of optimal legal regulations that will allow to stimulate the stable development of this renewable energy sector is extremely important for the implementation of international obligations in the field of renewable energy in the long term.

The existing legal regulations in the field of RES support do not meet the actual needs in the field of biomethane production installations, therefore in practice they do not stimulate the development of this type of initiatives. As a result, despite the fact that, in accordance with the applicable legal regulations, it has been possible to introduce purified agricultural biogas to gas distribution networks for several years, so far no installation of this type has started operating in the country. The conducted analyses indicate a number of legal and technical barriers which are the cause of such a situation and which the proposed act tries to eliminate.

The lack of detailed solutions for the development of the biomethane sector currently prevents the use of the potential of biogas / biomethane production based on domestic raw materials. At the same time, estimates indicate a relatively high energy potential of the agri-food sector itself in terms of the production of agricultural biogas, which is estimated at over 7.8 billion m3 per year (“National Energy and Climate Plan for 2021-2030”). In turn, according to the estimates of PGNiG S.A., the domestic biomethane production potential amounts to approx. 7 bcm in total. Opportunities to effectively reduce CO2 emissions in sectors of the economy such as transport, heating or power engineering, to which biomethane can be addressed as a renewable replacement for currently used fuels, also remain unused.

It should also be borne in mind that the ongoing increase in natural gas consumption in the country, which is due to, inter alia, the increasing use of this raw material for the needs of the electricity system and the growing demand from the transport sector will require increasing the availability of natural gas in gas networks. In this context, it should be taken into account that, in accordance with the assumptions of the National Energy Policy until 2040, domestic consumption of gaseous fuels will systematically increase, exceeding 18 billion m3, and at the same time only 22% will be covered by domestic natural gas production estimated at approx. 4 billion m3. Considering the above, an important element for the future and the energy security of the state is the optimal use of the local potential of biomethane production. In the near future, biomethane produced from raw materials obtained in the vicinity and introduced into the gas network may be an important element in the diversification of gas fuel supplies to the domestic market in the near future, reducing the domestic dependence on the import of energy carriers. The development of the biomethane production sector also means the need to build numerous and territorially dispersed plants which, with the appropriate design of support instruments, will be one of the important elements of the reconstruction of the Polish economy after the slowdown caused by the COVID-19 pandemic.

II. Energy clusters

Another problem that will be addressed in the draft act is the insufficient dynamics of the development of energy clusters. In the current legal status, a number of barriers have been diagnosed in this respect, the most important of which are interpretative doubts regarding the definition of an energy cluster as well as the subjective and objective scope of energy clusters’ operation, no regulations regarding registration of energy clusters or proposals for support instruments that would promote use of RES as part of the self-consumption of energy cluster members, at the same time providing incentives for their local formation.

It should be noted that the proposed act, in addition to solving the above-mentioned problems, will contribute to the achievement of the goals indicated in the country’s strategic documents, such as the Strategy for Responsible Development (SOR), the National Renewable Energy Action Plan (NREAP) and Poland’s Energy Policy until 2040 (PEP 2040).

III.1. Increasing the role of renewable energy in heating and cooling

Assumptions related to the implementation of RED II

There are no solutions in the national law that would fully enable the correct and effective implementation of Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (Journal of Laws of the EU No. L 328, with 21/12/2018), hereinafter referred to as “RED II” or Directive 2018/2001 with regard to the regulation of district heating in the following scope:

1) the functioning of the mechanisms allowing for the implementation of the tasks set out in Art. 23 sec. 1 of Directive 2018/2001 as a target of increasing the share of renewable energy in the heating and cooling sector;

2) the possibility of disconnection of the final customer from the heating system (Article 24 (2), (3) and (7) of Directive 2018/2001);

3) the obligation to connect a renewable energy source installation and the obligation to purchase heat from renewable energy sources (Article 24 (4) (b), paragraph 5 and sec. 6 of Directive 2018/2001);

4) the obligation to inform end users about the energy efficiency of the heating system and the share of renewable energy in a given heating system (Article 24 (1) of Directive 2018/2001);

5) the obligation to determine the potential of district heating systems in terms of providing a balancing service and other system services (Article 24 (8) of Directive 2018/2001);

6) the possibility of publishing a list of obliged funds / entities pursuing the objective referred to in art. 23 sec. 1 of Directive 2018/2001 (Article 23 (3) and (6), Annex VII of Directive 2018/2001);

7) the obligation to introduce a system of guarantee of the origin of heat from RES (Article 19 of Directive 2018/2001);

8) the definition of waste heat (Article 2 of Directive 2018/2001).

III.2 Extending the application of the guarantee of origin

The guarantee of origin is a document certifying the end user of the environmental values resulting from the avoided greenhouse gas emissions and that the amount of electricity specified in this document introduced into the distribution grid or transmission grid was generated from RES in renewable energy installations.

The implementation of RED II requires the adaptation of the regulations and the mechanism already operating on the Polish market, which are evolutionary from the point of view of the functioning of this system. Guarantees of origin remain one of the key elements of corporate energy sales contracts, which constitute a method of financing the development of renewable energy sources, without the need to involve public funds, and thus, with appropriate proportions, a kind of alternative to the existing support systems. The use of a guarantee of origin in this respect is a condition for confirming the occurrence of the environmental effect resulting from the use of energy covered by such a contract.

III.3. National Contact Point for RES (NCP RES)

The regulations contained in the RES Act, in its current wording, do not provide the possibility of full information support, which should be provided to the future producer of renewable energy sources. The interested producer of RES takes part in numerous proceedings that are carried out by various administrative bodies. Nevertheless, it is not possible for the applicant to obtain in one place information that relates to the entirety of the process carried out. Article 16 of RED II provides that Member States shall establish or designate one or more contact points, therefore it is necessary to establish the legal framework for the necessary RES NCPs.

III.4. Simplification of administrative procedures

In terms of administrative procedures in the investment process in RES, the RED II Directive sets out requirements that must be met by the Member States of the European Union. The regulatory environment has a measurable impact on the conditions for implementing investments in renewable energy sources. One of the most important elements of an efficient investment process, apart from the clarity and predictability of administrative decisions, is the length of administrative procedures, which in extreme cases may even result in the withdrawal of the decision to implement the project. In Poland, several types of administrative procedures are identified that have the greatest impact on the duration of investment projects, and thus also affect the development of renewable energy sources. In particular, please indicate here:

 environmental requirements,

 zoning requirements,

 time for obtaining connection conditions,

 time of obtaining a license,

 time of issuing the decision on development conditions.

The proposed changes to the procedural regulations will be aimed at shortening them or adapting them in another way – so as to meet the requirements imposed by the RED II directive and improve the conditions for conducting the investment process by investors.

III.5. Affiliate energy trading (peer-to-peer) by prosumer

The project will provide for the implementation of Art. 21 point 2 letter a) of RED II, which states that Member States are required to ensure that renewable energy prosumers:

 acting alone or

 through concentrators

 have the right to produce renewable energy, also for their own needs, store and sell their surplus production of renewable electricity, including, inter alia, through peer-to-peer trading arrangements.

Pursuant to Art. 2 section 18 of RED II, peer-to-peer trading of renewable energy means its sale between market participants:

Under a contract with predefined terms for the automated execution and payment of a transaction directly between market participants, or

indirectly, through a certified third party market participant, such as a concentrator.

IV. Support system enabling the modernization of renewable energy installations

There are currently solutions dedicated to the modernization of renewable energy installations in the form of a definition of “modernization”, understood as the performance of works consisting in restoring the original state or changing the operational or technical parameters of RES installations. However, if the modernization covers a RES installation that no longer receives any support (in the form of certificates of origin, in the auction system or feed-in tariff), it is possible to put such an installation up for auction after meeting certain conditions.

V. Follow-up support systems to cover reasonable operating costs for RES installations after the 15-year support period

In parallel to the RES installation modernization system, there is a need to implement a continuing support system, but limiting the expenditure on carrying out the necessary investments to the level necessary to maintain the current operation of RES installations.

This system would cover reasonable operating costs for RES installations after the end of the 15-year support period. Without obtaining the planned aid, the energy producers in the above-mentioned installations would not be able to maintain the production capacity of RES installations after the end of the support period. The support should relate to justified operating costs ensuring the profitability of energy production by covering the difference between the operating costs and revenues from the sale of energy at the market price.

VI. Hybrid RES installations

In connection with Poland’s increasingly ambitious goals regarding the share of renewable energy sources in gross final energy consumption, as well as the development of energy storage technologies that allow for extending the possibility of disposing of the installation capacity also beyond the time of direct energy production in this installation, e.g. in no wind or after dark conditions, there is the need to adapt the regulations on hybrid RES installations.