Offshore Law adopted by lower chamber of Polish Parliament

Today, the lower chamber of the Polish Parliament (Sejm) adopted the Offshore Law, which provides a new support scheme for the offshore wind industry. 

The Offshore Law will now be processed through the upper chamber, which, since the legislation was almost unanimously adopted by the Sejm, should be a mere formality. After counter signature by the President, the Offshore Law should enter into force in January or February 2021.

The key elements of the Offshore Law are: 

1. The support scheme under the Offshore Law is based on the contract for difference (CfD) mechanism, where the beneficiary sells energy on the market and any negative balance between the market price and the CfD price is compensated by a State-owned settlement agency on a monthly basis. Conversely, any positive balance is paid to the settlement agency on an annual basis by 30 June of the next calendar year.
2. CfD support will be granted in two phases. In the first phase, CfD support will be awarded by way of individual decisions by the Polish Regulator (Urząd Regulacji Energetyki); in the second phase, the CfD support awards will be awarded through auctions.
3. The capacity of installations to be awarded with CfD in the first phase of the support scheme is limited to 5,900 MW. Until 31 March 2021, producers may apply for decisions granting the CfD support. CfD decisions will be issued by 30 June. To qualify, a project needs to benefit from: (i) a seabed permit and (ii) a grid connection agreement or grid connection conditions. Therefore, this phase will be limited to quite advanced offshore projects.
4. Once first-phase CfD support is awarded, it will require individual State-aid clearance from the European Commission.
5. The second phase of the support scheme will be auction-based. Upon approval of the European Commission, the auctions will take place in 2025 (for capacity covering 2,500 MW); 2027 (again, 2,500 MW); 2028 (but only if the capacity of offshore wind farms for which the auction award was granted in 2027 is below 2,500 MW – in that case, the auction will cover any difference over 500 MW); and in the years thereafter depending on Government decision.
6. The maximum (reference) bid price (PLN/MWh) and the prices indicated in the individual decisions will be set out in the governmental by-laws.
7. The value of the support – regardless of the support scheme phase – is decreased by the value of any investment aid granted for the development of the investment (according to a formula laid down in the Offshore Law) and is subject to annual indexation, by reference to the consumer price index. 
8. In addition, the Offshore Law introduces an annual fee for offshore power generation which is the product of (i) the capacity of the offshore wind farm (MW) indicated in the generation licence and (ii) the amount set out in the governmental by-laws (up to PLN 23,000, approx. EUR 5,110).