Ministry of Energy to streamline the legislative procedure related to the act regulating offshore wind investments

“We may streamline the procedure, because offshore wind development is included in the draft 2040 Energy Policy of Poland. Therefore, Ministry of Energy may already commence works on provisions of the offshore wind act instead of first publishing assumptions thereto. On the other hand, we will commence the notification with the European Commission already at the assumptions stage, which will be subject to the Commission’s assessment,” explained Maciej Kapalski, representative of Ministry of Energy during the second day of the Pomeranian Offshore Wind Conference, organised on 16-17 May by the Polish Wind Energy Association and Business Club Szczecin.

Referring to an analogy with the approval of the auction support scheme in the Polish Renewable Energy Sources Act, Ministry of Energy representative stressed their notification in 2017, two years after adoption.

Questions preoccupying investors today not only pertained to the design of the support, but also the commencement of the legislative process. When could that happen? During the European Economic Congress in Katowice Deputy Minister for Energy, Grzegorz Tobiszowski declared that he will recommend its adoption by the Parliament in this term, i.e. before autumn. “This will be difficult, but is far from impossible,” Kapalski commented during the conference in Szczecin.

Ministry of Energy declares that the next auctions, enabling the construction of 3.5 GW of new renewable capacity (of which 2.5 GW in onshore wind and approximately 750 MW in PV) will contribute to the 2020 RES targets; offshore wind is to contribute in the 2030 perspective.

“2040 Energy Policy of Poland provides for a noticeable offshore share in our energy mix in 2027. This means that first mature projects should appear as soon as in 2024. In the 2040 perspective the strategic document sets a potential of 10.3 GW,” Kapalski added. At the same time he stressed that the dates are only used to statistically include offshore share, which is to stabilise the operation of other renewable sources in the Polish system.

They are not to discriminate any projects.

Ministry of Energy seems to understand that the current regulations are insufficient to develop the new industry in Poland and to create added value in the form of the local offshore wind supply chain.

“In theory, the offshore wind energy sector could participate in the 2019 and 2020 auctions. However, there are insufficient projects to have an auction settled — the RES Act requires three projects to be submitted,” Kapalski noted.

Another issue is the applicable RES auction scheme competitiveness principle, requiring rejecting 20 percent of the least cost-effective projects. The industry proposes to abandon the principle for offshore wind — one such “cut” could eliminate as much as 1 GW.

In the case of offshore wind farms it is furthermore necessary to regulate the investment process itself and to streamline particular procedures within that process as well as to ensure predictability of contracted volumes in a perspective longer than one year ahead.

In accordance with attorney-in-law Maciej Szambelańczyk, a partner in WKB, the dedicated offshore wind act is awaited not only be developers, but also suppliers of the sector. They see it as a specific political decision of the Polish authorities, who too care about the growth of the supply value chain around the sector.

“Offshore wind regulations are currently distributed among a number of acts and several dozen regulations that do not share a common line of thought,” Szambelańczyk explained.

He stressed that in the first period investors in offshore wind farms in the Baltic Sea will primarily rely on predictability and stability of the support scheme. The selection of a specific model, ensuring a certain rate of return on invested equity, is of secondary importance.

The industry votes for the introduction of a contract for difference scheme, which would apply longer than the maximum 15-year support scheme for onshore installations. “This will drive production costs of 1 MWh in an offshore wind farm down, which will be advantageous in terms of bills paid by final customers,” Szambelańczyk argued. “Furthermore, introduction of a solution where the subject of an auction will be the support itself rather than a site seems legitimate. Germany is heading in the latter direction,” Szambelańczyk added.

The industry also recommends to guarantee offshore wind investors certain flexibility to modify the project with respect to the established environmental conditions. Such regulations should guarantee the state the completion of the project while providing the investors with a sense of security when construction of some capacity will not be possible for reasons not attributable to them.

However, due to pending works on the third version of the spatial development plan for maritime areas, Ministry of Energy did not publish specific assumptions to the support for the emerging offshore wind sector.

“We were happy to see the changes related to the establishment of bird migration corridors at the earliest possible stage of the draft and the increase in flexibility in establishment of transmission infrastructure corridors. However, we recommend increasing the areas allocated for future investments, for instance by allowing the production of electricity from RES on areas with other primary functions, such as extraction or defense. It is also legitimate to further stress the protection of accrued rights of investors holding issued and valid location permits,” enumerated Janusz Gajowicki, President of Polish Wind Energy Association (PWEA).