Tretyn: Green energy in Poland – a prisoner of its own success

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Wind turbines in Austria
Wind turbines in Austria

Renewable energy in Poland is a hostage to its own success. Despite many regulatory inconveniences, the RES industry in Poland is constantly developing. However, the development of new investments is not correlated with legal regulations as they do not follow the needs of investors – writes Aleksander Tretyn from the association „Z energią o prawie” for BiznesAlert.pl.

Renewable energy is facing never-ending challenges in Poland. Not so long ago, the 10h Act was amended, and while it somewhat loosened the regulations for wind energy, it did not really respond to the expectations of the industry. About a year ago, legislation was introduced to change the billing system for prosumers, which somewhat hampered the development of distributed energy, which at over 70 percent is based on photovoltaic (PV) generation sources installed at households.

In mid-2023, the total installed capacity in RES is close to 24 GW, of which more than 8.5 GW is installed in wind power, 13GW in PV installations, and prosumers are responsible for more than 9.3 GW in PV, and they have been and continue to be the main engine driving the Polish transformation. With a good support system such as the „Mój prąd”  program, individual households provided more than 9 GW of power, which is quite an important piece of the entire energy „puzzle” in Poland.

These proportions would probably have been different had it not been for the introduced 10h regulation, which had significantly limited the development of new onshore wind projects. It is true that for eight years the installed capacity in wind energy has increased by about 3 GW, but this increase is mainly based on projects that were drafted even before the introduction of the Distance Act, and were only implemented in the new regulatory regime. In addition, about 3 GW of capacity increase in wind power is not a reason to be satisfied, since during the year (2022-2023) the capacity increase in photovoltaics amounted to about 4 GW.

The introduction of the Distance Act was caused by several reasons. The main ones were social issues, and the wind turbines being located too close to buildings. Another aspect affecting the slowdown in the development of wind energy in Poland, which usually stood in the shadow of social issues, was the state of the power grid, which is and continues to be the barrier that undermines the connection of new projects.

The grid aspect, despite 8 years of slowdown in the wind industry has not, however, been regulated, no significant investment has been made in network development and connection refusals for new installations still sit on top of the mountain of problems affecting RES.

According to a report by the Energy Regulatory Office (URE), in 2022, energy companies reported more than 7 thousand refusals to issue conditions for connection to the network, for a total capacity of more than 51 GW. Nearly half of the refusals were due to lack of technical conditions (more than 25 GW), 72 refusals were due to economic reasons, and nearly 3,500 refusals were dictated by both technical and economic conditions.

The URE report shows that the number of refusals is increasing every year, but 2022 broke the record in this regard, as during the year the number of refusals practically doubled from 3,700 (in 2021) to more than 7,000 (in 2023). When introducing regulations to change the billing system for prosumers, the narrative that the lawmakers followed were the EU regulations resulting from the RED II directive. Indeed, the EU directive requires member states to introduce net billing, but the deadline for the introduction of the new system was mid-2024. However, Poland decided to introduce this change much faster, because once again one of the reasons for such an action was the state of the electricity network.

Other amendments on renewable energy, including those on energy communities, biogas plants or direct line, have been put on the back burner by the Sejm for several months, and the government still does not find them significant enough to speed up their introduction. And it is precisely such regulations as facilitating the direct line or enabling the establishment of energy cooperatives that make a positive impact on the growing renewables.

Behind the proverbial corner, there are already other legal changes that will affect the development of large PV installations this time. The planned changes to the Planning and Land Use Act will impact installations above 1MW, which in the new legal framework will require an appropriate land use plan, in addition, class IV land will be excluded from the possibility of building new PV farms on it.

If these restrictions come into force, they will be the equivalent of the 10h law for PV. It should be noted that in the case of PV projects, investors are not faced with social protests, which, on the legislative side, does not affect the need to limit the development of new projects.

Once again, one of the factors that determines such legal changes is the state of the electricity networks, which in many places no longer allows the connection of new capacities. Despite the attempt to limit the development of RES installations, the industry is still on its feet, despite the many jabs coming from every side, investors are able to find themselves in the thick of new legal challenges that the legislator serves.

The dynamic development of RES, despite constant inconveniences and purposeful slow-down, is doing quite well, but regulatory issues should finally begin to keep up with the needs of investors instead of adding new challenges for them. Any problems related to the connection infrastructure should be solved at the level of network expansion so as to connect new capacities, and not at the level of regulations being introduced, which are aimed at inhibiting the development of photovoltaic installations and onshore wind energy.

It can be said that zero-emission energy sources in Poland have been held hostage to their own success, since any possibility of development from the technical side is quickly limited to some extent by legislative issues.