- New Bill on Renewable Energy Sources
- July 2, 2014
- Law Firm: Dentons Canada LLP - Toronto Office
The Council of Ministers is to review again the draft bill on renewable energy sources (“New RES Act”). The Chairman of the Competition and Consumer Protection Office (“Chairman of the CCPO”) suggested that changes be made to the New RES Act to avoid having to make a formal notification to the European Commission. The Chairman of the CCPO stated that the extension of the current support system based on the green certificates does not constitute state aid, since it does not involve any public funds.
The New RES Act retains the auction mechanism in large part and the option to choose between the auction system and the system of certificates of origin for existing installations.
The main changes:
auction deadline in June 2021;
new effective date for the New RES Act;
new rules in the support system for plants with capacity between 500 kW and 1 MW.
I. Deadline for the last auction
An exact deadline is given for the support mechanism: energy producers can benefit from the support mechanism only in respect of auctions held on or before 30 June 2021. The support can last to an end date of 31 December 2035.
II. The new effective date of the regulations
The New RES Act will be enacted 30 days after promulgation, except for the provisions of chapter 4 concerning mechanisms and instruments supporting the production of electricity from renewable energy sources and the production of agricultural biogas in plants.
The above regulations will come into force on 1 January 2016. By 31 January 2015 the Council of Ministers shall issue regulations setting the maximum quantity and value of electricity from RES which may be sold in auctions in the new calendar year. By 15 February 2015 the Ministry of Economy shall issue regulations setting the quantity and value of electricity from RES to be sold in the next calendar year in the auction organized for plants with installed capacity of up to 1 MW.
III. New rules for sources up to 500 kW
Under the New RES Act auctions will be organized separately for power generating installations of up to 1 MW and for those of over 1 MW, assuming that at least 25% of the electricity from new sources sold by auction should come from sources of up to 1 MW capacity. The consequences of winning the auction organized for sources of over 1 MW remain unchanged. The winner shall obtain from Operator Rozliczen Energii Odnawialnej S.A. (“OREO” - a special purpose company of the State Treasury dedicated to settlement operations concerning electricity generated by installations under Auction System) the negative difference between the price at which the electricity could be sold on the power exchange and the price at which they won the auction.
In auctions for RES plants with installed capacity of up to 1 MW the results differ depending on capacity. Plants with capacity up to 500 kW must - as was planned previously - sell all the energy offered in the auction to a seller of last resort at the price determined in the auction. What is new that the larger plants shall obtain from OREO the negative difference between the price at which the electricity could be sold on the power exchange and the price at which they won the auction according to the rules provided for the winner of actions organized for RES installations with installed capacity of over 1 MW.
This will hopefully result in more electricity coming onto the competitive market (not sold to the seller of last resort), as a cap will be put on the number of producers selling all their energy at the price set in auction to the seller of last resort.