An analysis of wording of the RES Act raises serious doubts as to how certain mechanisms should work. We highlight some of those concerns below (our comments are based on the views presented by key representatives of the ERO).
Eligibility for green certificates
In accordance with the RES Act, projects which start generating electricity before Chapter 4 of the RES Act comes into force will be eligible for green certificates under the current support system. The support period for the existing projects will be restricted to 15 years from the initial date an installation feeds electricity to the grid for which the installation was awarded green certificates. However existing projects which undergo modernisation after Chapter 4 of the RES Act comes into force will be eligible for green certificates only until 30 June 2016 regardless of when the installation commenced electricity production. In other words, modernising an existing RES installation would effectively exclude it from the green certificates support system.
First, consideration must be given to the definition of “RES installation” in the RES Act. A “RES installation” is defined as:
- a separate set of equipment used for the generation and output of power that is connected at one grid connection point and at which electricity or heat is generated from a renewable energy source, along with an electricity storage facility (if any) that stores generated electricity and is connected to the relevant set of equipment.
Therefore, in determining how many wind turbines comprising a given project constitute a RES installation, the fundamental criterion is that they have one grid connection point. According to one representative of the ERO, it could be argued that a connection point means a transformer station to which a given RES installation has been connected. However, the ERO and the Ministry of Economy are currently preparing an official statement confirming that a connection point should be defined as a single point within the transformer station to which a specific cable line of an RES installation is connected. This means that potentially a transformer station may contain several connection points of separate RES installations.
There are several possible interpretations of the degree to which a RES project must be completed prior to 1 January 2016 in order for a wind farm to be eligible for certificates of origin for electricity generated after 2015. This issue primarily concerns wind farm projects with wind turbines that may not be ready to generate electricity by the end of 2015. The President of the ERO has not officially expressed his position on this issue, however, based on opinions presented by key representatives of the ERO during conferences, it is likely that the President of the ERO may adopt the following interpretation:
- Green certificates will be issued only for electricity generated by turbines actually commissioned prior to 1 January 2016. The commissioning of any wind turbine after 31 December 2015 would be considered a modernisation of the wind farm, which would be eligible for green certificates only until 30 June 2016.
In light of this interpretation, the commissioning of any wind turbine after 31 December 2015 and its connection to the connection point of a wind farm that started production before 31 December 2015 would effectively result in the already operating wind farm being deprived of the full 15-year long support period under the green certificates mechanism. This interpretation means that in order to secure the full 15-year entitlement to green certificates, the construction of a RES plant should not continue after 31 December 2015 or the remaining part of a RES project which is to be commissioned after 31 December 2015 should be technically separated from the existing RES project so as to be considered a separate RES installation (i.e. connected at its own grid connection point).
The auction mechanism
In accordance with the RES Act the auction mechanism will be available for:
- existing projects producing energy before 1 January 2016
- new installations that start to generate electricity after the auction is closed.
Installations which start generating electricity after 31 December 2015 but before an auction in which that installation would take part is closed will be excluded from the green certificates mechanism and will not be eligible for auctions.
Commercial balancing costs
Under the RES Act the mandatory purchase of electricity from existing projects will be maintained. The obligation will be imposed on the so-called “obliged suppliers”. The supplier which had the biggest sales of electricity by volume in the previous calendar year within the area serviced by the given Distribution System Operator (DSO) will be appointed as the “obliged supplier” by the ERO for one year. The obligation to purchase electricity from an existing RES installation will last for 15 years from the time the installation fed electricity into the system for the first time during the commissioning. The mandatory purchase will be performed at the average competitive market price from the previous calendar quarter (calculated and published by the President of the ERO).
In accordance with the RES Act, the purchase price for electricity generated in existing RES projects with total installed capacity lower than 500 kW does not include fees for commercial balancing. The wording of that provision raises doubts as to who is actually obliged to cover the costs of commercial balancing in relation to existing RES projects. The President of the ERO has not officially expressed his position on this issue. However, taking into account opinions presented by key representatives of the ERO during conferences, the most likely approach seems to be that in relation to the existing RES projects with total installed capacity lower than 500 kW the obliged supplier will be required not only to purchase all electricity offered by the RES operator but also cover the costs of commercial balancing. This means that in larger RES plants (with total installed capacity exceeding 500 kW) the costs of commercial balancing should be borne by the RES operators. That approach is also in line with EU Commission Regulation No 651/2014 of 17 June 2014, which declares certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, which provide that state aid should be granted to installations with an installed capacity of less than 500 kW for the production of energy from all renewable sources.
The situation is clear in the case of RES plants eligible to participate in auctions. The RES Act explicitly states that the costs of commercial balancing for RES plants with total installed capacity lower than 500 kW will be covered by the obliged suppliers.
Eligibility to take part in auctions
Installations which start producing electricity after 1 January 2016 will be admitted to auctions only if they undergo a pre-qualification procedure conducted by the President of the ERO and obtain a certificate (valid for 12 months). Eligibility criteria for new projects are as follows:
- confirmation that the project is allowed under the local zoning plan or, if no local zoning plan exists, a planning permit obtained for the project (or, in the case of off-shore wind farms, a fully legally binding (Polish: prawomocne) permit to construct and operate off-shore installations)
- grid connection conditions have been issued by, or a grid connection agreement has been executed with, the relevant grid operator
- a fully legally binding (Polish: prawomocne) construction permit, if required under construction law, has been issued for the project
- in the case of off-shore wind farms, a fully legally binding (Polish: prawomocna) environmental decision will have to be issued for the project; and
- the schedule for implementing the project is provided.
With respect to the validity of certain categories of decisions (permits to construct and operate off-shore installations, construction permits and environmental decisions), the RES Act requirements refer to the term “prawomocne” (Polish for “fully legally binding”), which is not used by the Code of Administrative Procedure, but is known in civil court and criminal procedures. As explained by the representatives of the ERO on several occasions, they interpret the relevant provision of the RES Act in such a way that the permits concerned should not only be final from the perspective of regular administrative proceedings (i.e. decisions cannot be further challenged before an administrative authority) but they should also be precluded from ordinary challenge in administrative courts (i.e. no appeal may be filed with voivodeship administrative courts or the supreme administrative court). As a result, the above-mentioned decisions will become eligible for the pre-qualification procedure only after both the time limit for filing the appeal with the second instance administrative authority and also a further period for filing an appeal with the administrative court have expired. An appeal may be filed with the voivodeship administrative court for up to 30 days from the delivery of a decision issued by the second instance authority.
As mentioned above, one of the prerequisites necessary to complete the pre-qualification procedure is the confirmation that the project is allowed under the local zoning plan. Representatives of the ERO stress that the local zoning plan should explicitly provide for the location of a RES installation (it does not need to specify the technology) or at least the location of electricity generation plants. According to representatives of the ERO, the broad wording of a local zoning plan (e.g. if the plan gives permission for the location of “technical infrastructure”) means that the President of the ERO might not accept that local zoning plan and could refuse to issue a pre-qualification certificate.