Three independent legal analyses commissioned by the Polish Wind Energy Association demonstrate that the new draft RES Act is contradictory to the European law, the competition and consumers protection law and provisions of the Constitution of the Republic of Poland. Adoption of the Act in its current design will bring green energy development in our country to a halt and force many investors to withdraw from the Polish market.

On 26 July 2012, after 2,5 years of works and 2 500 remarks filed during public consultations, Ministry of Economy published the final draft of the RES Act, now submitted to interdepartmental consultations.

Unfortunately, the draft features substantial shortcomings. The industry is most surprised with Article 41(3) of the draft, which stipulates that who sells energy produced from RES at a price higher than guaranteed shall be deprived of the right to a certificate of origin (green certificate). This provision drastically changes terms and conditions for operation of existing installations and will have a substantial future impact on the entire green energy market.

A negative impact, alas.

Adoption of the RES Act in its current design without correcting a number of important elements will entail far-reaching adverse consequences for renewable sources, including wind energy. ‘Article 41, excluding green energy prices from competitiveness and free market while transferring all risks to investors, may be the nail in the coffin’, said PWEA President, Krzysztof Prasałek.

The new provision was not included in the previous version of the draft Act dated December 2011; it was not presented during the Ministry of Economy conference in July 2012 or consulted with the public and the RES industry. In accordance with Baker&McKenzie law firm Article 41 will be destructive for the Polish renewable energy sector.  A formal specification of the maximum price of energy from RES precludes trading on a competitive market, trading platforms and exchange market, where by definition the prices are variable.

In these circumstances even a slight increase above the price for designated vendors will result in the loss of the crucial revenue source determining a project’s profitability, i.e. proprietary interest from certificates of origin.

The provision in such a wording does not comply with the assumptions for green certificates support scheme laid down in the EU Directive 2009/28/EC. Moreover, by distorting market prices and discriminating power utilities, it also contradicts the principles applicable to the internal electricity market laid down in Directive 2009/72/EC. Furthermore, it contradicts the principle of free movement of goods laid down in the Treaty on the Functioning of the European Union.

The abovementioned legal defects may result in improper implementation of Directive 2009/28/EC, with all the consequences being well known.

The lawyers also stress non-compliance of Article 41 with competition and consumer protection principles by limiting the number of market participants and the scope of actions that could be taken by them.

Implementation of the analysed regulation may result in the decrease in the number of entrepreneurs trading in electricity (or the scope of their activity) on the national electricity market. The less subjects on the market, the lower incentive to decrease prices and increase quality of one’s services. This may obviously adversely affect the consumers’ situation – reads the Baker&McKenzie legal analysis.

The new draft, not including relevant transitory provisions that would protect accrued rights and investments in progress also violates the principle of the citizen’s trust in the state and in the law established by it. It overly interferes with economic freedom and violates the proportionality principle. It is imprecise, hence contradictory to the fundamental lawmaking principles.

Furthermore, PWEA also commissioned PwC to develop a report concerning the other problematic issues related to the new draft RES Act, including substitution fee indexation or transitory period for investments in progress. The report will be published at the end of September.