Analysis of the special legislative act for offshore wind farms in Poland. Update.

Below, we present key amendments introduced in the revised version of the draft Promotion of the Electricity Generation in the Offshore Wind Farms Act (the “Draft Act”), published by the Polish Government on 7 July 2020.

The main regulations proposed in the Draft Act are set out in our legal alert of 20 January 2020: “Analysis of the special legislative act for the offshore winds farms in Poland”. 

Changes in the support scheme phases

The capacity of installations to be covered by the first phase of the support scheme (which is based on the individual decisions granting the support) was increased from 4,600 MW to 5,900 MW.

Moreover, the term of this phase will be shorter than initially assumed – a decision granting support may be issued on 30 June 2021 at the latest, upon the producer’s request, which may be submitted no later than 31 March 2021. The original deadline for issuing a decision was 31 December 2022 and for submitting a request - 30 September 2022. 

Due to the reduction of time limits, the procedure for obtaining an individual decision has been simplified (compared to the previous version of the Draft Act) in such a way that: 

  • the existence of the incentive effect will be checked in the main proceedings concerning the individual decision (and not in separate proceedings) and
  • holding the environmental decision will not be a condition for obtaining an individual decision.

The second phase of the support scheme will start later than originally indicated as there will be no auction in 2023. The timeline of the other auctions and their main principles remains unchanged.

New rules regarding the settlement of negative/positive balance

The Draft Act changes the rules concerning the settlement of the negative balance (where the market value of the electricity sold is higher than its value calculated on the basis of the price indicated in the auction bid or in the individual decision) and the positive balance (where the market value is lower).

As a rule, the negative balance is paid by the settlement agency (the state-owned company) to the producer on a monthly basis, whereas the positive balance is netted against the future negative balances for subsequent periods and – if there is a remaining positive balance after the end of the 15-year support period, the relevant payment must be made by the producer to the settlement agency in six equal monthly instalments. Based on the Draft Act, the period of support will be 25 years (following the first power generation) and the positive balance shall be paid by the producer on an annual basis (by 30 June of the year following the calendar year for which the payment is due).

Transfer of the seabed permit

In contrast to the first version of the Draft Act, its revision does not contain provisions stating that rights and obligations under the seabed permit:

  • are transferred by virtue of law in case of the merger/division/transformation of the company holding such permit; and
  • may be transferred – on the basis of a separate administrative decision - to another entity if such entity approves all conditions set out in the permit.

Under currently binding regulations, the seabed permit may be transferred in case of the merger/division/transformation of the company on the basis of a separate decision, if the new entity approves all conditions set out in the permit (i.e. it is not an automatic procedure). Transfer of the seabed permit in other cases is possible only if the permit was granted in a competitive procedure (i.e. more than one application concerning the same location was submitted) and the entity to which the permit is to be transferred meets the criteria determining the selection to the extent it is not lesser than for the original holder.