Offshore Act unanimously adopted by the Polish parliamentary committee -
Offshore Act unanimously adopted by the Polish parliamentary committee
Date of publication: 29.12.2020

The parliamentary energy, climate and assets commission introduced only minor amendments to the Polish government's bill on promoting electricity generation in offshore wind farms. On Wednesday, the draft will go to the second reading.

The amendments are primarily editorial in nature and do not substantially change the project. During the first reading of the draft, they received a positive recommendation from the committee, as well as the entire draft, supported without any objection.

The new regulations predict that in the first phase of the support system operation, for offshore farms with a total installed capacity of 5.9 GW, support will be granted by way of an administrative decision by the President of the ERO. The possibility of entering this system ends on June 30, 2021, which results, among others, from from the upcoming new RED II directive, stipulating that the support systems for RES are to be competitive. The relevant applications must be submitted to the President of ERO before March 31. Additionally, such a mechanism will require the approval of the European Commission. Therefore, it is assumed that this system will include the most advanced offshore projects in the Polish Baltic Sea.

The price, which is the basis for the settlement of the negative balance in the first phase of the support system, will be specified in the regulation issued by the minister responsible for energy, based on macroeconomic indicators. The negative balance is the difference between the revenue from the sale of energy on the market and the investor's costs, which is covered by the government. This mechanism works when market prices are lower than production costs.

In the following years, support will be granted in the formula of competitive auctions. The draft specifies that the first auction will take place in 2025, and the second - as it is assumed - in 2027. Both will lead to the construction of another 5 GW of capacity.

Due to the amount of investment, unlike other RES technologies, the maximum period of support for offshore wind farms will be 25 years. This corresponds to the average life cycle of an offshore wind farm.

Due to the different construction process at sea, the possibility of putting into use and entering the support system for offshore wind farms in stages was introduced. However, the maximum support period is counted from the date of generating the first energy from the farm, and not from its individual stages.

The draft stipulates that the support system will not allow electricity generation and processing devices manufactured earlier than 72 months before the date of first generation of energy, or those that were previously depreciated within the meaning of accounting regulations by any entity.

A special tax on offshore wind farms is to be included in the act, as they are not subject to real estate tax. The taxable amount will be the installed capacity of a given farm, the tax rate will be the product of this capacity in MW and the amount of 23,000 PLN.

Passing the prequalification will be obligatory for all producers who intend to participate in the tender. In this way, only those producers for which the actual construction of the installation and the production of electricity from offshore wind energy are sufficiently probable and technically feasible will be allowed to participate in the auction.