Amendment to the Renewable Energy Sources Act

November 20, 2024

The amendment to the Renewable Energy Sources (RES) Act, initially enacted on February 20, 2015, proceeded under parliamentary paper (pl/druk sejmowy) no. 744, has just been adopted by the lower chamber of the Polish parliament (Sejm). The amendment has been forwarded to the Senate for consideration. The project introduces transformative changes to foster accelerated development within Poland's RES sector, aligning national regulations with European Union standards and requirements. The proposed legislation encompasses measures to recalibrate state aid for industrial and energy-intensive sectors, streamline the permitting process for some of the RES installations, refine regulations related to the Central Energy Market Information System (CSIRE), and modernise the framework for net-billing settlements. This will be a further step towards achieving the level of renewable energy in gross final energy consumption set out in the policy documents. Below is a detailed examination of the principal changes and their projected implications.

Alignment with EU Directives

A central objective of the amendment is the harmonisation of domestic regulations with EU standards, effectively mitigating the risk of the European Commission finding that public assistance to RES-related sectors and energy-intensive consumers contravenes EU law. Compliance must align with EU regulations such as the Guidelines on State Aid for Climate, Environmental Protection, and Energy (CEEAG) and the revised Commission Regulation (EU) 2023/1315 (June 23, 2023) amending Regulation (EU) No. 651/2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (GBER Regulation) and Regulation (EU) 2022/2473 which legitimises aid for businesses in the fisheries and aquaculture sectors under Articles 107 and 108.

In this context, the amendment updates the sectors eligible for energy-intensive consumer relief, as stipulated by the CEEAG, and introduces tiered relief based on "carbon leakage" risk: 85 percent for highly vulnerable sectors and 75 percent for others. This structured approach offers greater protections for enterprises facing competition from countries with lower environmental standards, thereby adhering to EU support principles.

Additionally, the amendment disqualifies support for RES-derived electricity from waste incineration and for cogeneration projects reliant on coal-based fuels, reinforcing a commitment to exclusively fostering clean technologies that avoid fossil fuel dependency.

Streamlined Permitting Procedures in the RES Sector

A key feature of the amendment is the simplification and acceleration of administrative procedures to fast-track investments in RES. Currently, the permitting process for RES installations is both lengthy and intricate, often impeding new project development. The amendment introduces measures to expedite approvals for photovoltaic installations mounted on buildings, energy storage, heat pumps, and other RES-related infrastructure.

Specific administrative procedure timeframes will be significantly reduced, including:

• Grid connection conditions for photovoltaics mounted on buildings with a total installed capacity of no more than 2 MW (from 120-150 days to 45 days, excluding connection groups IV, V, and VI);
• Heating network connection conditions for heat pumps with a total installed capacity of no more than 50 MW (from 120 days to 30 days);
• Building permits for photovoltaic installations mounted on buildings, with a capacity of more than 150 kW, and energy storage facilities with a capacity of more than 20 kWh (from 65 days to 30 days);
• Registration as an energy producer from photovoltaic installations mounted on buildings in small installations register (MIOZE) (from 21 days to 14 days);
• Licensing for photovoltaic installations mounted on buildings with a capacity exceeding 1 MW, energy storage installations with a total capacity exceeding 10 MW and heat generation by means of a heat pump with an installed capacity of not more than 50 MW (from 30-60 days to 30 days).

These streamlined regulations aim to condense the investment cycle regarding some technologies in the RES sector, potentially boosting new installations. The adjustments address the energy crisis catalyzed by the Ukraine conflict and underscore the urgency of Poland's energy transition.

Structural Adjustments to the Central Energy Market Information System

The introduction of the Central Energy Market Information System is pivotal to advancing the concept of the virtual prosumer, an entity capable of generating energy from RES and engaging in flexible market settlements. According to current regulations, the CSIRE system is slated for implementation by July 2025, necessitating pertinent amendments to the RES Act.

The amendment proposes deferring the effective date of virtual prosumer regulations to July 2025 to coincide with the CSIRE launch. These changes are intended to consolidate legal frameworks and ensure systemic coherence. Through CSIRE, virtual prosumers will benefit from enhanced energy production settlement options, encouraging the formation of localized energy communities.

Revised Net-Billing Settlement Mechanism

A critical reform within the amendment is the restructuring of the net-billing settlement system for RES prosumers, which, beginning from July 2024, is based on the hourly (not monthly, as it was before) market price of electricity. Under the new provisions, prosumers may choose between monthly and hourly settlement models, enabling more adaptive responses to market price variations.

This revised system also enhances compensation rates for surplus energy generation, incentivizing further prosumer investment in renewable energy. Prosumers may submit preferences to energy providers, choosing between monthly and hourly settlements. Surplus energy credits can reach up to 30 percent of the market value, representing a substantial financial benefit. Those opting for the current monthly system can access credits of up to 20 percent.

Conclusion

The amendment to the Renewable Energy Sources Act marks another milestone in Poland's energy transformation. By synchronizing regulations with EU directives, incorporating the CSIRE system, and implementing more flexible net-billing settlement framework, the proposed changes aim to accelerate the RES sector's development. The amendments also target reductions in mandated timelines for selected RES installations. Overall, the reduction in the investment process duration could achieve 65 percent (compared to existing regulations) expediting RES deployment and fortifying Poland's energy security while fulfilling EU obligations.