Pydo i Wspólnicy Partners has been active in the Polish market for more than 15 years now. The Law Firm offers comprehensive legal services to entities operating in the energy sector, advising on both traditional and renewable energy sources. They expertize extends also to energy projects in the ESCO industry.
Your areas of practice extend across numerous business sectors - can you start off by explaining how relevant the energy sector is to your portfolio?
It plays an increasingly important role actually. We rendered numerous services to this industry in the past, but we are observing meaningful growth taking place presently. Predominantly we advise on the creation of new wind and PV farms, but we have a particular interest in projects related to new technologies. In this sense as Partners we are engaged in a joint venture with an American company, and we are working to expand the use of gasification technologies in Poland.
Why do you think gasification technologies are a good bet for Poland?
This technology allows us to make responsible use of our coal resources. In brief, it is able to process a different types of coal and coal wastes found in Poland, without toxic emissions and expensive ash removal steps. Even more, it can economically convert other waste materials, such as biomass and refuse-derived fuels (RDF) which are widely spread across Poland. The gas that comes from this process is an equivalent of natural gas and can be used to generate energy and heat or to produce many desirable chemical products. Another related advantage is helping to improve Polish air quality.
Last year the state released a new act to support energy coming from highly effective co-generation. The Polish heating system is outdated so this is a promising step towards modernization.
The act introduces a new kind of incentives in the shape of direct subsidies for medium (up to 50 MW) and even small heating plants (below 1 MW), that are using co-generation technology.
It is worth noting any real change would require direct government involvement, with clear direction offered to local authorities. For instance, the government could introduce concrete policies to support new technologies in the heating sector, including government guaranties and financing.
In January 2020, the much awaited Offshore Law has been submitted for public consultation. How well does this draft respond to the needs of the sector?
The proposed offshore act undertakes many key issues regarding offshore wind farms. Firstly, the definition of an offshore wind farm and an offshore wind turbine is introduced into the Polish legal order for the first time. In addition, numerous administrative procedures have been improved and rules for participation in the auction for offshore wind farms have been regulated.
For instance, solutions were advanced regarding the procedure for obtaining the necessary permits and deadlines for their issue. The timeframe was set to 90 days from the application submission date, with immediate enforceability. In case of appeals, they need to be considered within 14 days (with the exception of building permits, against which appeal is to be considered within 60 days of receipt). These measures are aimed at disciplining the authorities to efficiently carry out the procedure of issuing documents necessary for the investor.
What other essential legislative changes have affected the energy sector in Poland over the past 12 months?
I will point out that the RES Act has been amended, and in general these changes should be assessed positively. The main areas amended are auctions, prosumers and energy cooperatives.
One change that deserves to be highlighted is the one regarding the indication of which entities can be treated as energy cooperatives and the possibility of cooperatives to use rebates, which allow for a partial "storage" of the surplus energy introduced. No such cooperatives have been created so far in Poland - by comparison, Germany has hundreds.
I hope the added support will encourage people to collaborate under this model, especially now with the appearance of prosumers. Cooperatives can for instance develop wind or PV farms, as well as manage waste from local areas and develop clean heating through gasification and cogeneration.
In your experience, what are the biggest hurdles investors face when entering the energy sector in Poland?
The investment process in the field of energy is complex, investors have to prepare for many restrictions resulting not only from Polish but also EU regulations. Most often challenges are related to the need to obtain a large number of documents, problems with connecting investments to existing infrastructure and even reluctance of local communities.
Society is often distrustful of new technologies - the expression of such fears in Poland was the adoption of the Act of May 20, 2016 (commonly known as the “distance rule”). The arguments for its introduction were the fact that wind mills emit infrasound, vibration, flickering of light, and pose life or health hazard in the event of a breakdown.
How do you advise they approach these challenges?
Referring to the distance rule, it seems crucial to educate the authorities and the public about the advantages, including financial ones, of developing renewable energy sources. What investors can do is start a dialogue with communities operating near planned investments - providing comprehensive information will prevent confusion, prejudices and gossip that cause opposition.
More broadly, I advise investors to conduct thorough investment analysis already at the preparatory stage. It is crucial to carry out a thorough risk analysis, and be aware of the documents required and the procedures for obtaining them.
