New regulations may slow the growth of wind farms in Poland

A proposed Act on Wind Power Plant Projects presented in February 2016 is intended to specify the rules for siting of wind farms. But the current version of the proposal generates a huge risk for further growth of the wind power sector and for wind farms already in operation and even for persons interested in building housing near existing wind projects.

The issue of siting of wind farms near other construction has created a lot of confusion. Under the current law in Poland, there are no clear rules specifying the minimum distance wind turbines can be installed from other types of construction, in particular residential structures. Under these circumstances, the location of specific wind farms has been based on indications in local zoning plans, decisions on construction conditions, and guidelines arising out of environmental regulations governing noise protection. This manner of determining the location of wind projects has raised doubts among many people and has been regarded as too discretionary and arbitrary. Such objections have been raised even in the case of rulings where a broad range of entities exercised their right to challenge the decisions which in their view did not comply with the applicable law.

With the hope of avoiding objections of this type, on 19 February 2016 a group of MPs submitted a draft Act on Wind Power Plant Projects to the Sejm.

The bill defines a wind power plant as a structure comprising foundations, tower, and technical elements (such as the hub, blades, transmission, generator, steering system and gondola) with a capacity of greater than 40 kW. This would exclude micro-installations (with a capacity of up to 40 kW) from coverage by the act. Another provision excludes offshore wind farms. Nonetheless, if the act is adopted, the technical elements of a wind power plant (i.e. the turbine) will be treated as a structural element, which would result in an increase in the tax burdens for existing and new wind projects, at least through an increase in real estate tax.

New rules for location of wind farms

The promoters of the bill plan to introduce rigid new rules for determining the distance between wind farms and residential areas. Wind farms would have to be located at a distance of no less than 10 times their height (measured from the ground to their tallest element, which in practice would mean the blade of the turbine at its highest point) away from residential construction. This rule would operate in both directions, meaning that homes to be built near existing wind farms would also have to maintain this minimum distance. The minimum distance would also have to be maintained in relation to protected natural areas such as national parks, landscape parks, nature reserves, Natura 2000 areas, and recreational forest areas.

State and local authorities would have to reflect the minimum distance between wind farms and residential construction and other protected areas when drawing up their planning documents (such as local zoning plans) and when issuing individual decisions (e.g. building permits and decisions on construction conditions).

Mandatory local plan

Under the bill as proposed, the siting of a wind farm could be determined exclusively on the basis of a local zoning plan. This would exclude the option of obtaining an individual decision on construction conditions for the purpose of constructing a wind farm. A local zoning plan allowing the construction of wind power plants would have to specify their maximum total height. The zoning plan would also have to cover the entire area where the distance requirements in relation to residential buildings would operate.

The lack of an alternative to a local zoning plan could greatly limit the possibilities for location of new wind farms. Moreover, the heightened requirements for new plans and the resulting financial consequences (e.g. compensation for owners of real estate located in the increased zone of limited construction) could discourage local communes from working on plans meeting the needs of the wind power industry.

It also does not appear wise to regulate these issues in a separate act. It would be better to introduce such changes directly in the Planning and Zoning Act, which comprehensively regulates the procedures for adoption of zoning plans. Splitting this procedure across numerous acts could have a negative impact on the consistency and transparency of the regulations.

Effect on existing projects and projects under construction

The bill would also regulate the legal situation of wind farms put into operation prior to the effective date of the act. This would particularly apply to existing facilities that do not meet the new minimum distance requirements. Maintenance and renovations necessary to continue proper operation of these units at their current capacity would be allowed, but any modernisation that would increase their capacity or their environmental impact would be prohibited.

The act would also affect projects at the stage of assembling the administrative permits for implementation:

  • Decisions on construction conditions that do not meet the new distance requirements would lapse upon the effective date of the act. Decisions complying with the new requirements would remain valid only for one year, unless the investor obtained a building permit within that time. Any pending but uncompleted proceedings for issuance of new decisions on construction conditions for wind power plants would be discontinued.
  • Existing zoning plans and studies would remain in force, but it would not be permissible to rely on them to apply for a building permit (for a wind power plant or residential construction) not meeting the new requirements for minimum distance from existing structures.
  • Applications for building permits already filed but not yet decided would be reviewed for compliance with the distance requirements. Building permits issued prior to the effective date of the act or issued on the basis of a decision on construction conditions or a zoning plan meeting the new distance requirements would remain in force if the investor succeeded in obtaining an operating permit for the project within three years.

In practical terms, the act would impose the new distance requirements also on projects at an advanced stage of realisation, for example by extinguishing some existing building permits. In the case of a conflict with existing structures, the principle of “first come, first served” would apply equally to investors in wind projects and residential projects. The restriction on modernising existing wind facilities ignores technological progress and the possibility that newer wind turbines may appear on the market that can both increase generating capacity and reduce environmental impacts (e.g. by cutting noise levels).

Additional permits for operation of wind power plants

An investor planning to build a wind farm must obtain a large number of permits and approvals from a range of administrative authorities. The proposed new act would add to this list a new permit for “operation” of a wind power plant, to be issued by the Office of Technical Inspection (UDT). Wind power plants already in operation would also have to obtain such a permit within one year after the effective date of the act.

The application for an operating permit would have to contain detailed technical documentation of the project, including the instructions for operation of the wind power plant and a copy of the final “use” permit. Before issuing a decision, apart from verification of the documentation presented, UDT would have to verify the technical state of the facility and participate in operating tests.

Operating permits would remain in force for two years from issuance or commencement of repair or modernisation. After 18 months the investor could apply for an extension for a further two years, requiring the whole procedure to be conducted again.

Any planned repairs or modernisation of wind power plants would have to be agreed with UDT. After carrying them out, the investor would have to obtain a new permit for operation of the facility each time.

UDT’s activity under the act would be subject to a fee based on a regulation to be issued by the minister for economy. The bill provides only that the maximum fee each time could not exceed 1% of the value of the construction project.

Operating a wind power plant in violation of the requirements of the act, in terms of UDT permits and approvals, would be subject to a fine, probation, or imprisonment up to 2 years.

The new obligations that would be imposed on investors could raise serious concerns, affecting the budget and feasibility of wind projects. The new operating permit would overlap somewhat with the existing obligation to obtain a use permit. And the procedure itself does not seem to correlate with the procedures provided in other laws (e.g. the Construction Law and the Energy Law). To obtain a permit for use and connection to the grid for an already completed wind facility, the investor has to conduct a test start-up of the facility to confirm that all of the installations operate correctly. It is unclear how this would relate to the prohibition against operating a facility before obtaining a permit from UDT.

The bill also does not address wind projects that were put into operation previously on the basis of notification of completion of the works, i.e. without a separate use permit. Because holding a use permit would be a condition for obtaining an operating permit from UDT, it could be doubtful whether such projects could obtain a permit. The amount of the fees for activities of UDT also do not seem clear. Currently is may be assumed that the obligation to obtain and renew an operating permit over a 30-year period of operation would increase the costs of the project by 15%.

Major changes in other laws

The bill would also amend existing laws to adapt them to the new regulations for wind power plants:

  • The definition of a “structure” in the Construction Law would change. The entire wind power plant would be regarded as a structure, rather than, as now, only its structural elements such as the foundations and the mast. Following the changes, the structure would also include the turbine mounted on the mast. This would have tax consequences in terms of real estate tax and VAT.
  • Building permits for wind power plants would be issued by the province, not the county. This would also require use permits to be issued by province building inspectors rather than county building inspectors.
  • Wind power plants would be separately included in category 29 of structures. This would make it clear that a separate use permit is required before beginning to use such facilities.
  • A provision would be added to the Planning and Zoning Act under which, in areas where the local plant permits buildings to be sited, it would also be permissible to locate renewable energy sources using wind power with a capacity no greater than for micro-installations (up to 40 kV) also when the area is zoned non-commercial. Although this change would be necessary to avoid doubts, it could have a negative impact on other micro-installations (e.g. using solar energy), by suggesting that other micro-installations must be expressly permitted in the local plan.
  • The authority issuing environmental decisions for wind farms would change—it would be the regional director of environmental protection.
  • The bill also amends provisions of the Renewable Energy Sources Act, which entered into force only recently and only in part. Under this change, holding a permit from UDT to operate a wind power plant would be a condition for a generator of electricity in an RES installation to obtain support in the form of the obligation to buy out the power or purchase it after winning an auction.

The proposed new regulation, although expected for a long time, has taken a form that is particularly disadvantageous for investors wishing to build wind farms in Poland. It could result in limiting the areas where it is possible to carry out such projects, increasing the costs, and reducing the feasibility of wind energy. Over the entire period of operation of the project, investors would be exposed to uncertainty connected with the need to renew UDT permits periodically, which could also require additional downtime in the operational phasing of the facility. A consequence of the new act could be to put the brakes on investments in wind energy, and thus impact the overall green energy sector in Poland.

Radosław Wasiak, Energy Law Practice, Wardyński & Partners