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Detailed summary of the Bill on wind turbines investments

The Dentons Energy and Natural Resources Team has prepared a detailed summary of the Bill on wind turbines investments of which you were notified in the Client Alert of 19 February 2016.

Please note that as of date this is a preliminary stage of the parliamentary procedure, with no confirmed schedule of further works on the bill.

New definitions

The Act proposes a definition of a wind turbine, expressly including and identifying its technical elements (i.e. the foundations, tower, rotor with blades, complete drive train, power generator, control systems and gondolas along with attachment and rotation mechanism). Further, the wind turbine would be treated as a structure (Polish: budowla), extending the current application of this term beyond the foundations and the tower. This means that the provisions of the Construction Law on due maintenance and on construction disasters would apply to the whole wind turbine together with its technical elements.

Expected increase of real estate tax burden

The above amendments may impact the real estate tax obligations of investors. So far, the 2% real estate tax is imposed based on the value of foundations and tower (according to the prevailing tax practice only these elements qualified as the “structure” within the meaning of the Construction Law). Under the new regulations, the local authorities may require that the 2% real estate tax is paid also on the value of the rotor with blades, complete drive train, power generator, control systems and gondolas along with the attachment and rotation mechanism.

Therefore, the Act may result in increased tax costs of wind turbine investments (unless dedicated exemptions are introduced in the real estate tax law).

Minimum distance requirement

A new wind turbine may be located only in an area covered by the local zoning plan. New local zoning plans allowing the location of a wind turbine have to prescribe the maximum allowed height of a wind turbine and include the buffer area in which the wind turbines, households and building of mixed purpose shall not be built.

The buffer area, i.e. the minimum distance between a wind turbine and any household or building of mixed purpose shall be equal or higher than ten-times the total height of the wind turbine (tower plus blade).

The minimum distance requirement is defined in different ways, depending on the phase of the investment, as the shortest distance between:

  1. The horizontal footprint of a household or a building of mixed purpose.
  2. The border of the area covered by the zoning decision concerning a household or a building of mixed purpose.
  3. The demarcation line of the area where the location of a household or a building of mixed purpose is allowed under the local zoning plan.
  4. The circle with the radius of the wind turbine’s blade centered at the tower.
  5. The border of the area covered by the zoning decision concerning wind turbine.
  6. The demarcation line of the area where the location of wind turbine is allowed under the local zoning plan.

The minimum distance requirement also applies to certain forms of nature protection (i.e. national parks, nature reserves, landscape parks and Natura 2000 areas) and to promotional forest complexes. In this case the minimum distance requirement is defined as the shortest length connecting the border of the said areas and the circle, border or demarcation line indicated above.

The whole buffer area would have to be included in the area covered by the given local zoning plan. This means that unless the draft local zoning plan will cover the whole buffer zone area it could not be adopted. The aim of this provision is to preclude location of a wind turbine at the border of the area covered by the local zoning plan and, as may be the case, at the border of a given municipality.

New additional operation permit

A new type of operation permit is proposed. This permit would be issued by the Technical Supervision Authority (UDT). It would not substitute the current occupancy permit, but would be required in addition thereto and prior to commencement of the operation of the wind turbine. Literally, the operation permit would be issued for each wind turbine separately.

The application for an operation permit should include, among others, operational instruction of a wind turbine and a copy of the occupancy permit confirmed as final and binding.

Prior to issuing the operation permit the Technical Supervision Authority would have to, inter alia, identify a wind turbine, check its technical state and marking and participate in the operational tests. The Technical Supervision Authority would also be empowered to impose the technical conditions of operation of a wind turbine that would have to be respected by the wind turbine operator, unless such technical conditions become specified in a respective regulation to be issued by the Minister of Economy.

Also the Technical Supervision Authority would have to approve in advance every repair and modernization works of the technical elements of the wind turbine. The meaning of “repair and modernization works” has not been defined in the draft.

The operation permit would expire after two years or earlier on the day of commencement of repair of modernization works. This means that the operation permit has to be renewed at least every two years, as well as with each repair. It would be possible to apply for a renewal of the operation permit after 18 months from the issuing of the current permit.

Dangerous damage to the wind turbine or unfortunate accidents concerning the operation of the wind turbine would have to be reported to the Technical Supervision Authority.

The investor would have to pay a fee for engaging the Technical Supervision Authority. The value of the fee is proposed to reach the maximum level of 1% of the investment value per turbine and per each engagement of the Technical Supervision Authority. Until the respective regulation of the Minister of Economy is adopted, the fee would be charged in the maximum amount allowed. No deadline for adoption of the respective regulation was envisaged in the draft law.

Penalties

Operation of a wind turbine without the new operation permit or contrary to the decision on suspension of the wind turbine operation or anyhow modifying a wind turbine without the consent of the Technical Supervision Authority would be treated as a criminal offence (misdemeanor) for which the offender could be sentenced to a fine, restriction of liberty or 2-years imprisonment.

Moreover, a fine (minor criminal sanction, Polish: kara wykroczeniowa) could be imposed on the person who makes it impossible or hinders the activities of the Technical Supervision Authority required prior to issuing the operation permit or who does not notify the Technical Supervision Authority of dangerous damage to the wind turbine or unfortunate accident concerning the operation of the wind turbine.

Change of the permitting authorities

Draft law provides for change of the authorities issuing decisions for wind turbines in the following way:

RES

The new operation permit would be required for the purpose of confirming eligibility of already operating wind farms for the benefit of mandatory purchase of renewable electricity at the statutory price by obligated suppliers and for future and modernized wind farms the eligibility to benefit from the auction scheme. This condition would be checked against each and every turbine in a given RES installation (wind farm).

As of date it is proposed too, that the new operation permit would have to be identified already in the auction offer, while it remains unclear how this would match the subsequent requirement to start generating electricity from the successful installation within as long as 48 months following the closing of the auction.

Transitional provisions

The draft law contains many transitional provisions. Below we present their summary as per the stage of project development starting with the operating wind turbines to the least advanced projects.

Entry in force

It is proposed for the Act to enter in force after 14 days from the date of publication (apart from provisions concerning the RES Act, which would enter in force with the main regulation on auctions, currently on 1 July 2016 [while correct corresponding reference is missing we believe it to be a clerical mistake]).iled summary of the Bill on wind turbines investments