Energy Environment 17 July, 2017 9:00 am   
COMMENTS: Mateusz Gibała

Wiliński: amendment of the Act on renewables – what will change for wind farms? (analysis)

“The Government Legislation Centre has recently published the project of the act to amend, among others, the Act on renewable energy sources. The project is in line with the assumptions published on 8 June 2017 by the Parliamentary Team for Mining and Energy for the act that amends the renewables act and other acts,” writes Michał Wiliński, lawyer at RKKW – KWAŚNICKI, WRÓBEL & Partnerzy law firm.

One of the most commented on and awaited changes that the amendment will introduce is the amendment of the Act on investments in wind farms (the so-called proximity act). The goal of the amendment is to respond to the criticism made by investors and to eliminate or clarify the existing doubts. This is because the last year’s proximity act introduced, among others, minimum distances between windmills and residential buildings. This caused two sets of problems. First, it made it impossible to locate new buildings in the area of impact of the wind installation (to a limited degree). Secondly, it does not allow for the expansion of wind farms constructed in the vicinity of residential buildings. The amendment on locating new residential buildings does not impose a strict proximity criterion and instead introduces a general minimal distance from the wind power plant. At the same time it ensures that the mandatory distance fulfills the requirements regarding the limit on noise level for this kind of buildings.

The changes are welcome in so far as the original proximity act already allowed to adopt local plans that located residential buildings closer to the wind farms than the mandatory distance as long as the plan was ratified within 36 months after the act had entered into force. The amendment, which made this rule more clear and removed the deadline for adopting local plans, seems to respond to the postulates made by owners of residential buildings located close to existing installations.

Another important issue was related to tax law. The proximity act levied property tax not only on the elements that were strictly part of the power plant’s construction, such as the tower, but on the entire wind power plant, which also includes technical elements of the wind turbine. Such turbines, whose value is usually very high, significantly increased the taxable amount making the investment in wind farms even less profitable. Additionally the above interpretation did not initially stem from the Act. The proximity act regulations were not entirely explicit in this case. They removed ‘wind power plants’ from the definition of a building in the Act on construction law and instead expanded one of the categories of construction works by ‘wind power plants’ in the annex to the Act.  This is why doubts emerged on whether it was the lawmaker’s intention to actually increase the taxable amount or not.

Even though initial comments, based on the proximity act, indicated that the above interpretation which was unfavorable to investors, was incorrect; the practice adopted by local authorities, who receive the tax revenue was not difficult to predict. And in reality the first rulings by administrative courts on tax cases did go against the expectations of wind power plants owners.

The amendment should clarify that a building, i.e. the property tax basis, includes only ‘the construction parts’ of the wind power plant. The Ministry of Energy’s decision to use the proximity act to mitigate the adverse impact of property tax on wind investments should be positively assessed.

The amendment will also introduce new regulations that oblige investors to conduct the investment in line with the environmental protection law. This pertains to using suitable technology for exploitation of the installation. Additionally, if the plot is rented or leased the land has to be cleaned up once the investment is over. If the investor does not fulfill this duty, they will be liable with their entire assets for not commencing the termination of the agreements. This regulation will be most definitely commented on by the sector because while its ratio legis is indisputable, returning the area in a ‘non-deteriorated’ state in case of a wind investment might be difficult to achieve.

To recapitulate, the amendment of the proximity act goes in the right direction, but at the same time it introduces additional duties for investors. Hopefully further work on the project will be smooth and the act will enter into force quickly.