Renewable energy in Poland

One of the most important goals for the Polish renewable energy market is to invest in the offshore wind farms located in the Baltic Sea. In the strategic documents, such as Polish Energy Policy until 2040, the Polish government envisages that offshore wind farms will help to achieve a renewable energy target on the European Union level, meaning the target according to which the EU gross final consumption of energy should amount to at least 32 per cent until 2030. The Polish government decided to contribute to this target by achieving a 21–23 per cent share of renewable energy in the gross final consumption. 

The Act on the Promotion of Generation of Electricity in Offshore Wind Farms (the Offshore Wind Act) was adopted in December 2020, and it regulates the most vital issues for the development of offshore wind farms, namely dedicated support system, grid connection, investment process and local supply chain. 

With respect to a subsidy scheme for the generation of electricity from offshore wind farms, the generators will be entitled to contracts for difference to settle the negative balance resulting from the difference between the fixed price and the average market price. The subsidy scheme is envisaged for 25 years from the first day that electricity from an offshore wind farm is generated and fed into the grid after obtaining a licence for electricity generation. The right to cover the negative balance applies to power in the amount not exceeding the product of 100,000 hours and the installed electrical capacity of the offshore wind farm, or part thereof, resulting from the licence for electricity generation.   

The Offshore Wind Act envisages two phases of support for electric energy generated in offshore wind farms. For the most advanced projects, offshore wind investors may obtain support in the form of an individual decision issued by the President of the Energy Regulatory Authority (ERA). The President of the ERA has already issued these decisions for the offshore wind farms with the total installed capacity of 5.9 GW. The maximum price was set in a regulation issued by the Minister of Climate at 319.6 zlotys per MWh. 

In the second phase, the offshore wind farms may compete in the auctions designed solely for this technology. The auctions are announced, organised and held by the President of the ERA. The competitive auctions ought to be held by the President of the ERA in 2025 (2.5 GW) and 2027 (2.5 GW), and, possibly, also in 2028 and beyond. However, the plan is to increase the support in the second phase up to 12 GW. 

As regards the grid connection, the Offshore Wind Act sets forth specific requirements for the connection of the offshore wind farms to the grid. The Offshore Wind Act also introduced several simplifications of the development process, setting forth a strict timeline for issuing key decisions for offshore wind farms, namely decisions on environmental conditions, water permits, building permits and use permits. 

To increase the involvement of the Polish companies in creating the offshore wind energy market in Poland, the Offshore Wind Act also regulates the issue concerning a local supply chain. The generators are obliged to prepare a local supply chain plan in which they shall describe the main planned activities that will help incentivise the Polish market.  

With respect to the onshore renewable energy sources, the support for in Poland has been stimulated by two major support mechanisms: certificates of origin and the auction system. Certificates of origin (green certificates), issued by the President of the ERA, confirm the generation of electricity by a renewable energy source. The property rights resulting from green certificates can be traded on the Polish Power Exchange and OTC. However, the green certificate system is being gradually phased out and replaced by the auction system. 

Under the auction system, the support is envisaged as a contract for difference and is paid out by Zarządca Rozliczeń S.A., a state-owned entity responsible for the financial issues concerning the support system. In the period of support, which is envisaged for 15 years, the winner of the auction obtains the right to settle the negative balance resulting from the difference between the fixed price and the average market price. The auctions are announced, organised and held by the President of the ERA. The auctions are organised separately within five technology baskets, separately for installations with an installed capacity of up to 1MW and above 1MW. Onshore wind farms and PV installations are in the same technology basket. 

It is worth noting that there is a growing interest in the corporate power purchase agreements (cPPAs). In particular, two types of cPPAs are visible on the Polish market. The first type is the physical cPPA in which the producer sells electric energy to the corporate buyer and that electric energy is physically delivered from the producer to the corporate buyer, whereas the second type is the virtual cPPA, under which there is no physical delivery of power, and therefore it is regarded as a financial instrument. 

It is also worth mentioning that in 2022 an act on emergency measures to limit the number of electricity prices and support certain consumers in 2023 entered into force and had a huge impact on the market. Pursuant to this act, electricity generators are obliged to transfer parts of their revenue generated from the sale of power to the price difference payment fund. The act introduced some exemptions from this obligation, among others, there is an exemption for the generator in installation which uses the auction support system with respect to the power sold under this system.  

The onshore wind farms and PV farms are the most popular renewable energy sources in Poland. However, both onshore wind and PV farms face some challenges from a regulatory perspective. 

The biggest obstacle for onshore wind farms was the introduction of the strict rules in the Act on the Investment in Wind Turbines. Pursuant to this act, the onshore wind farms shall comply with a requirement pertaining to a minimum distance from residential buildings and nature protection areas that equals 10 times the height of the wind turbine with rotor blades (the so called 10h rule). This 10h rule has limited the development of the new wind farms over the past few years. 

The government decided, however, to amend this act and the restrictions set forth therein. After a couple of years of consultations, the amendment to the act entered into force in 2023 and, most importantly, it sets forth the new rule regarding a minimum distance between a wind turbine and residential buildings. Pursuant to the new provisions, the wind turbines shall be located under local zoning plan which shall determine the distance between the wind turbines and residential buildings. The distance, however, shall not be less than 700 metres. 

Although currently the PV sector is the most fast-growing sector in the renewable energy market in Poland, the new legislation may limit its development. In light of the new provisions, the renewable energy installations (as specified therein) will be located solely based on the local plan, i.e. municipal council resolution. This means that investments in most renewable energy installations will not be possible until a local plan has been adopted. However, it will be possible to issue zoning permits (i.e. individual decisions on land development conditions) on the basis of the current regulations by the end of 2025 at the latest.  

Finally, the legislator decided to introduce the provisions regarding cable pooling, i.e. integration of multiple renewable energy installations at a single connection point. Introduction of this tool may benefit the generators who may optimise energy generation profiles in their respective installations.