Advicero Nexia
Home / Blog / The parliamentary draft versus the original Draft Amendment to the Renewable Energy Sources Act – controversies and mutual exclusions

The parliamentary draft versus the original Draft Amendment to the Renewable Energy Sources Act – controversies and mutual exclusions

Original project assumptions

Assumptions of the original draft on 2 June 2021, the Government Legislation Centre published a draft amendment to the Energy Law and the Act on Renewable Energy Sources (hereinafter: Amendment) appeared on the website of the Government Legislation Centre. The draft assumed many additional obligations, including changes to the existing settlements of RES installations, which undoubtedly were to affect the existing settlements of market participants. It is worth noting that the changes were supposed to improve the current operation of energy and gas in Poland and, what is important, were supposed to strengthen the position of energy consumers. Can the planned assumptions actually contribute to the effective implementation of the proposed changes? In assessing this issue, it is first necessary to look at the proposal of the amended act.

Importantly, the modifications are explained by the need for mandatory implementation of the EU Directive 2019/944 on common rules for the internal market in electricity. The Amendment focuses on the establishment of uniform rules with regard to generation, transmission, distribution, supply and storage of electricity. At the same time, attention is paid to the potential strengthening of consumer protection, including the establishment of transparent, clear and fair rules so far encountered in the energy sector against the EU background. The amendment also includes a key change, i.e. the abolition of the system of discounts as of 1 January 2022. It should be noted that until the date electricity may be settled through the system of discounts, but from 2022 the generated electricity will be subject to sale. It will be obligatory to use the sales model to the grid at wholesale market prices. Let’s pay attention to the profitability of installing photovoltaics in case of implementation of new legal regulations. In principle, the prosumer will have the right to sell the surplus energy produced for the previous quarter to the power utility, but will buy energy at the current price. However, it cannot be ignored that these prices will certainly vary, so the prosumer will potentially lose out.

In such a situation, the main advantage of installing photovoltaics, namely its resistance to electricity price increases, will disappear. It should be noted that previously the equivalent of this method was a fixed charge for electricity, which can now rise correspondingly systematically with the increase in the market price. It is worth recalling that, for some time now, the price of electricity has been rising steadily… such a change may therefore cause consumers to lose out instead of gaining. If the was balancing, even only 70%-80% of energy with energy taken from the power company, then in the scope of the settled surplus energy did not lose on the increase of the electricity price. He felt them only to the extent, in which the balance was unfavorable, due to higher consumption in relation to the possessed installation.

The main change was undoubtedly to be the establishment of a new settlement model, including produced in excess. The sale of surplus energy is to be a new system, which is to refer to 100% of the average competitive price in the market. An important issue, which is also worth mentioning with regard to the amendment, is the addition of Article 14 (22) and (23), according to which a prosumer will be entitled to exemption from PIT, CIT and excise duty on the income generated by the sale of the energy produced in the micro-installation.

Moreover, as indicated in the justification of the draft: ‘Regarding the risk of electricity price increase as a result of the abolition of the exchange obligation, it should be pointed out that, as a rule, the exchange price of electricity is determined as a marginal price, i.e. the highest of the accepted price offers. This means that there are bids with a lower price among electricity sales offers. This created the potential to sell electricity at individual prices below the marginal price, for example in the implementation of long-term market strategies, while at the same time maintaining competitive pressure to rationalize the size of the market margin, the increase of which would result in an increase in electricity’.

One cannot disagree with the above that currently in the energy market one encounters various forms of manipulation, which results from the so-called ‘market forces’ and the possibility for large entities to break through. However, can the proposed solutions in the Amendment prevent abuses and attempt abuses in the electricity market.

A parliamentary motion that excludes the original intentions?

It is an interesting and at the same time controversial observation that on 2 July 2021, a parliamentary draft on amendments to the Law on Renewable Energy Sources and certain other laws (hereinafter: the Parliamentary Draft) was published on the Government Legislation Centre, which assumes a slightly different concept from the original one.

There is no provision in the parliamentary draft that eliminates the system of discounts. However, several changes can be observed here, which are referred to as the target model of the classic prosumer. According to the explanatory memorandum, it is proposed to change the current discount model of 1:0,8 (for installation up to 10 kW) or 1:0,7 (for installations over 10 kW) to a model with a discount of 1:1 for the amount of energy produced of 1:1 for the amount of energy produced by a given source. It follows from these proposals that the prosumer will have the right to settle (balance) all the energy fed into the grid.

Another proposal is to amend the distribution charges applicable to trading companies, ensuring full neutrality in terms of charges. In addition, according to the explanatory memorandum, it is also proposed to implement a rebate on distribution charges of 15%, which will be calculated only on the energy produced from the source. This change may seem unfavorable to prosumers, but they are likely to lose less than the billing system under the original draft.

The above changes are only an example of the solutions proposed in the parliamentary Project. It should not be overlooked, however, that the two documents are some what mutually exclusive and such publications a month after the original draft cause considerable confusion in the energy market.

If you want to find out more about the original bill and the tax implications in this regard, you are welcome to read our article written for ‘Gram w zielone’:

This post is also available in: pl - The parliamentary draft versus the original Draft Amendment to the Renewable Energy Sources Act – controversies and mutual exclusionsPL