The Polish Wind Energy Association (PWEA) is very satisfied with the Democratic Left Alliance Parliamentary Club’s initiative concerning the submission of a draft Renewable Energy Sources Act. The parliamentary draft addresses key remarks of the RES industry to the governmental draft. PWEA hopes that the new draft Act proposed by the Democratic Left Alliance will contribute to faster commencement of works on the new RES industry regulations by the Sejm and end the 2-year period of investment uncertainty.
The Democratic Left Alliance’s draft has been presented to industry organisations – renewable energy producers, including the Polish Wind Energy Association, for consultation. The consultations were summarised during a conference featuring Renewable Energy Issues held on 3 December 2012 in Gdynia. PWEA deems the Democratic Left Alliance’s approach to subject the governmental concept of the draft RES Act to necessary modifications to eliminate its crucial flaws that could completely halt further development of the energy sector in Poland rather than to fully transform it fully legitimate.
The RES Directive and the so-called Energy Directives shall be urgently implemented to the Polish legal system by way of parliamentary amendments. It seems that the best solution is to examine the parliamentary draft RES Act developed by the Democratic Left Alliance together with the parliamentary draft of the Energy Law developed by the Citizen’s Platform and the Polish Peasant Party Parliamentary Clubs. This would enable the commencement of urgent works on full implementation of the Directives.Fragmentary amendments to the law as well as delay in full implementation of the announced regulations will only increase the investment uncertainty to the detriment of the Polish economy and many local governments.
The insignificant number of modifications implemented by the Democratic Left Alliance’s club only pertain to the modification to the support scheme at a level making it possible to balance growth rates and repayment of credits and loans drawn to date to finance completed investments as well as to the unlocking of grid connections for the RES industry.
PWEA approves the following provisions included in the Democratic Left Alliance’s draft:
1) Maintenance of substitution fee indexation with inflation ratio
In accordance with PWEA the key issue that has to be guaranteed in the RES Act is the indexation of the unit substitution fee by inflation (for the fee de facto determines the price of green certificates). This is crucial for the protection of completed investments existing in the current Energy Law. Not only it ensures long-term stability of revenues, but also prevents encumbering energy producers with the risk of unpredictable inflation.
2) Implementation of protection of accrued rights for existing installations and advanced investments in progress
The governmental version of the Act provides for fragmentary provisions consisting in the application of the so-called correction factor of 1 for these investments, what only illusorily does not change the revenues from the sale of green certificates. The governmental draft deprives of the substitution fee indexation, what will result in real decrease of green certificates’ value in time. Hence, this is a concealed method to decrease support for completed investments and to encumber them with inflation risk. The lack of a transitory period in the governmental draft substantially changes investment environment for advanced projects, what will delay or bring implementation of a substantial part of the projects to a halt. The Democratic Left Alliance’s draft takes accrued rights into account by guaranteeing annual indexation of the substitution fee by inflation (as in regulations applicable to date).
3) Maintenance of the obligation to purchase electricity from RES
The Democratic Left Alliance’s parliamentary draft maintains the obligation to purchase electricity at a guaranteed price, i.e. it maintains the current system. It removes the provisions proposed by Ministry of Economy that are to prevent the sale of electricity at a market price.
4) Specification of time horizon for the obligation to purchase certificates of origin
In accordance with PWEA the time horizon for the obligation to purchase certificates cannot be defined as only 15 years from the effective date of the Act as defined in the governmental draft. The Democratic Left Alliance’s draft provides that the obligation to purchase green certificates applies for the entire period of their eligibility planned by Ministry of Economy, i.e. until 2035, with the exception of co-firing.
5) Introduction of an effective green certificate oversupply prevention scheme
The solution proposed by Ministry of Economy does not provide for a legal guarantee that a decrease in the certificates’ value will be prevented. The proposal presented in the Democratic Left Alliance’s draft enables the maintenance of the green certificates’ value in the long term at a level close to 90% of the substitution fee paid in the case of the failure to purchase a relevant number of green certificates.
6) Rationalisation of the terms and conditions for connecting renewable energy source installations to a network
The Democratic Left Alliance’s draft provides a solution to key barriers related to connection of RES to a network: it implements priority for the connection of RES installations before conventional installations and lays down network operators’ obligations facilitating the connection of renewable energy sources.