Promoting electricity generation from offshore wind farms

On December 17, 2020, the Polish Parliament adopted a law promoting electricity generation in offshore wind farms. It was signed by the President on January 21, 2021 and is currently awaiting promulgation and entry into force. The adopted law is a modification of the support for offshore wind energy provided by the Law of February 20, 2015 on Renewable Energy Sources.

The newly adopted law provides two systems of support for offshore wind energy: support by an administrative decision and support based on a competitive mechanism.

Support by administrative decision. Entities interested in obtaining support are required to submit an application for support to the President of the Energy Regulatory Office by March 31, 2021. On the basis of the submitted application, the President of the Energy Regulatory Office will issue a decision by June 30, 2021 specifying the amount of support. Due to the extensive catalogue of appendices to the application, this system of support is dedicated to the most advanced offshore projects. Support under this mechanism is to cover electricity sources with a total capacity of up to 5.9 GW. The condition for the payment of support is the issuance of a decision by the European Commission on the compatibility of the public aid with the internal market individually for each decision.

Support based on a competitive mechanism. Entities interested in obtaining support will be able to participate in electronic auctions organized in a manner similar to that currently carried out under the RES Act. The newly adopted law provides for auctions in 2025 and 2027, in each year for sources with an installed capacity of up to 2.5 GW.

Common features of support. Support for electricity generation at offshore wind farms is provided by granting the right to cover the negative balance. The negative balance is to cover the difference between the market price of energy and the price that allows generators to cover the costs of generating electricity offshore. As in the case of RES, the system is based on the concept of a bilateral contract for difference (CfD). The support costs will be borne by all electricity consumers through the RES levy. Support shall be granted for a period of 25 years. Support is granted for energy equal to the product of 100,000 hours and the capacity of the installed farm. Support is not available if the generator exercises its right to remuneration under the Power Market Act of December 8, 2017. The equipment constituting an offshore wind farm must have been manufactured within 72 months immediately preceding the date of generation of electricity in such equipment and may not be depreciated by another entity.

Supply chain plan. The supply chain plan constitutes an appendix to the generator's application for support by administrative decision as well as an appendix to the application for a certificate of admission to the auction. Both the supply chain plan and reports on its execution are subject to publication in the Public Information Bulletin of the President of the Energy Regulatory Office. The supply chain plan includes, in particular:

  • material and financial schedule of the construction of an offshore wind farm together with a set of devices used for power evacuation, 
  • planned deadlines of key procedures for the selection of material and service suppliers, with the indication of the planned procedure for the selection of contractors and the anticipated conditions of participation in the procedure, as well as the bid evaluation criteria,
  • description of actions, which the producer intends to undertake in order to ensure competition between suppliers of materials and services used for the construction or exploitation of an offshore wind farm,
  • description of the share of investment outlays, which are planned to be incurred for the benefit of entities having their registered offices or branches in the territory of the Republic of Poland in total outlays for the construction or exploitation of an offshore wind farm together with a set of devices used for power evacuation,
  • description of actions, which the manufacturer or suppliers of materials and services used for the construction or exploitation of an offshore wind farm intend to undertake in the territory of the Republic of Poland in order to develop human resources in terms of competences and professional qualifications necessary for the construction or exploitation of an offshore wind farm, 
  • description and estimated number of workplaces, which 
  • the manufacturer or business entities belonging to the capital group, to which the manufacturer belongs and
  • suppliers of material and services 

intend to create in the territory of the Republic of Poland for the purpose of and in connection with the construction or operation of an offshore wind farm together with a set of equipment for power evacuation.