Act on Renewables

By Maciej Szambelańczyk, Legal Counsel at WKB Wierciński, Kwieciński, BAEHR A few weeks ago, after a very long legislative process that was initiated more than three years ago, the Polish Parliament eventually passed the new Act on Renewables. Will the new law boost investments in the green energy sector in Poland? At this stage, it’s too early to draw such far-reaching conclusions. Right now, we know that protracted governmental and parliamentary work on the Act has been delayed. A delay that has undermined development of renewable energy sources in Poland in the last few years. In such a strictly regulated sector as energy, fear of legislative change is among the most significant deterrents for sponsors of new ventures, as well as financiers, including banks. From this perspective, the enactment of a long-awaited law gives hope for some degree of stability in the foreseeable future. On the other hand, the new support scheme for renewable energy, which will enter into force on January 1, 2016, also raises many new doubts and queries. In particular, the new support scheme – an auction system (with only very small energy generators benefiting from feed-in tariffs) – may also create some risks for investors. First of all, it seems clear that the Polish government prioritized the reduction of the costs of the support scheme over the diversification of technologies in the green energy sector. As a consequence, separate auctions for different renewable energy sources will not be implemented. Different technologies (e.g. offshore wind, onshore wind, photovoltaic or biomass) will all have to compete in the same auction for support. In light of this, we can expect that more sophisticated (and more expensive) green technologies will not be developed in Poland in the near future, as the cheaper sources will have much greater chances to win an auction. The scope of the auctions and the way they will be organized also raises many questions. Past experience with auctions for white certificates (which are part of the support scheme for energy efficiency) do not give too many reasons for optimism. In addition, the Act does not consider the situation of projects that are already significantly developed (i.e. the investment process is in progress and development will end around the turn of 2015 and 2016). The scope of support for such projects remains – to some extent – unclear. In practice, such projects will be subject to high risk and uncertainty as to whether they will be included in the group of plants covered by the old support system or the new auction system.