Polish offshore wind legislation released

On 15 January 2019, the long-awaited draft of the Polish offshore wind legislation, “Offshore Wind Act”, was finally released for public consultation. While the main purpose of the Act is to set the framework for a dedicated subsidy scheme for offshore wind projects, it also addresses other important areas related to the development and operation of offshore projects.

Support scheme

• According to the draft Act, offshore projects will be entitled to settle the negative balance resulting from the difference between the fixed price and the average market price. The right to settle the negative balance will be awarded in two different ways:
  • for the most advanced projects - by way of an individual decision of the Regulator, in which case the fixed price will be set in a regulation of the Minister of Energy. This type of support may be granted until the end of 2022 for projects of an aggregate capacity not exceeding 4.6 GW. Specific requirements include a grid connection agreement and the final environmental decision for the wind farm; or
  • through a competitive auction (in which case the fixed price will be given in the auction bid). To participate in the auction, a project needs to have the grid connection terms, the final environmental decision, and the Offshore Location Licence (OLL). The maximum aggregate capacity of projects which may be awarded the right to settle the negative balance is: for 2023 – the difference between 4.6 GW and the aggregate capacity of projects, which obtained the individual decisions mentioned above, for 2025 – 2.5 GW, for 2027 – 2.5 GW, for 2028 – capacity not assigned based in the previous auctions. The government can also decide on auctions in the subsequent years.

• The beneficiaries will be obliged to generate electricity (after obtaining the generation licence) and feed it into the grid for the first time within 7 years of the date of the individual decision or closure of the auction respectively. The subsidy will be available for 25 years from the first electricity generation;
• The electricity generation and conversion devices need to have been manufactured not earlier that 72 months before the first electricity generation;
• If the balance between the fixed price and the average market price is positive and cannot be set off against the negative balance in future settlement periods (calendar months), it will be returned to the Settlement Operator after the end of the subsidy period.

Local content

• When applying for a subsidy the project must submit a plan of the participation of local equipment/devices and services, indicating the local content ratio, i.e. the ratio of the capital expenditures plans payable by the project owner (or other members of its capital group) towards Polish-based entities to the entire project CAPEX. There are no specific (e.g. in %) requirements as regards the local content ratio level.

Grid connection

• The project owner and the TSO may enter into agreement concerning the sale of the power output infrastructure of the offshore wind farm. However, the TSO is under no obligation to enter into such agreement. Moreover, the sale price paid by the TSO would be considered an investment aid and would be deducted from the fixed subsidy price.

Permits

• The key permits (environmental decision, building, use and water permits) will be immediately enforceable. It is planned to extend the validity period of the existing OLLs from 35 to 43 years. The existing OLLs will not expire should the project fail to obtain a building permit within 8 years of the issuance of the OLL.

Tax

• The offshore wind farm tax will be introduced at an annual rate of PLN 23,000 per each MW of installed electrical capacity (subject to annual indexation).