The obstacles for wind in Poland

Poland this week welcomed US President Donald Trump for a state visit. Perhaps he was getting tips from its coal-loving leaders on how best to stymie the wind industry.

Over the last 21 months, the eastern European nation has pursued a set of anti-wind policies that would make the anti-wind Trump drool. In fact, the only way to make the laws look more attractive to Trump is if they were wearing high heels and a blonde wig.

The Law & Justice Party came to power in Poland in October 2015 with a pledge to prioritise growth in coal – sound familiar? – and curtail renewables. This resulted in its Act on Investment in Wind Farms, which came into force in July 2016 and introduced tough restrictions on where wind farms could be built and when.

This introduced a rule where wind farms have to be located more than ten times the height of the turbine from the nearest homes and protected natural sites. In practice, this means wind farms have to be built over 1.5km from those sites.

The law also changed a tax on owners to tax them based on the total value of the wind farm and not purely the construction elements of the project. This raised bills significantly.

If you don’t like wind farms, these policies have been a ‘success’. The setback rule contributed to a fall from 1.3GW of wind farms completed in 2015 to 682MW in 2016; and only 6MW in the first three months of 2017. The act also meant 70% of wind farms in Poland made a loss in 2016. For wind, they are a disaster.

And, to top it all, we now see a $325m lawsuit from an aggrieved developer. US firm Invenergy has this week filed a series of legal claims against Tauron Polska Energia, one of Poland’s four largest energy companies, related to a deal by Tauron and its subsidiary PE-PKH to buy electricity and green certificates from Invenergy.

Invenergy is not a new player in Poland. It has been active in the country since 2005 and has built 11 wind farms, in which it has invested an estimated $595m.

In 2010, it signed a long-term deal with Tauron and PE-PKH but, shortly after, it says that the pair tried to get out of these deals. This culminated in Tauron’s liquidation of PE-PKH in July 2014, which Invenergy says was done “with the intention of causing a de facto annulment of PE-PKH’s contractual obligations”. Tauron says it has not yet received a claim, but adds the claim focuses on PE-PKH, not the parent group.

There are two sides to every story, of course, and we cannot pre-judge the verdict of the Polish courts. But we can say that this case will give vital insights into how wind investors are treated in a country where politicians have been making life very tough.

However, that is not to say that Poland is a lost cause for investors. Its government is under pressure to hit a binding European Union target of gaining 15% of its energy from renewables by 2020; and the new taxes on wind farm owners have created an impression that investors in Poland cannot rely on stable rules. Poland’s leaders are now looking to reverse the tax on whole wind farms and put it back how it was.

They are also considering easing the tough deadlines in which developers have to use their permits. Both of these changes would help existing investors.

What Poland’s leaders have not done, though, is make any change to the punitive setback rule that has restricted wind development in large parts of the country, and done the most damage to developers and investors seeking to pursue new schemes. We welcome the positives where we see them – but they are nowhere near enough.

Poland this week welcomed US President Donald Trump for a state visit. Perhaps he was getting tips from its coal-loving leaders on how best to stymie the wind industry.

Over the last 21 months, the eastern European nation has pursued a set of anti-wind policies that would make the anti-wind Trump drool. In fact, the only way to make the laws look more attractive to Trump is if they were wearing high heels and a blonde wig.

The Law & Justice Party came to power in Poland in October 2015 with a pledge to prioritise growth in coal – sound familiar? – and curtail renewables. This resulted in its Act on Investment in Wind Farms, which came into force in July 2016 and introduced tough restrictions on where wind farms could be built and when.

This introduced a rule where wind farms have to be located more than ten times the height of the turbine from the nearest homes and protected natural sites. In practice, this means wind farms have to be built over 1.5km from those sites.

The law also changed a tax on owners to tax them based on the total value of the wind farm and not purely the construction elements of the project. This raised bills significantly.

If you don’t like wind farms, these policies have been a ‘success’. The setback rule contributed to a fall from 1.3GW of wind farms completed in 2015 to 682MW in 2016; and only 6MW in the first three months of 2017. The act also meant 70% of wind farms in Poland made a loss in 2016. For wind, they are a disaster.

And, to top it all, we now see a $325m lawsuit from an aggrieved developer. US firm Invenergy has this week filed a series of legal claims against Tauron Polska Energia, one of Poland’s four largest energy companies, related to a deal by Tauron and its subsidiary PE-PKH to buy electricity and green certificates from Invenergy.

Invenergy is not a new player in Poland. It has been active in the country since 2005 and has built 11 wind farms, in which it has invested an estimated $595m.

In 2010, it signed a long-term deal with Tauron and PE-PKH but, shortly after, it says that the pair tried to get out of these deals. This culminated in Tauron’s liquidation of PE-PKH in July 2014, which Invenergy says was done “with the intention of causing a de facto annulment of PE-PKH’s contractual obligations”. Tauron says it has not yet received a claim, but adds the claim focuses on PE-PKH, not the parent group.

There are two sides to every story, of course, and we cannot pre-judge the verdict of the Polish courts. But we can say that this case will give vital insights into how wind investors are treated in a country where politicians have been making life very tough.

However, that is not to say that Poland is a lost cause for investors. Its government is under pressure to hit a binding European Union target of gaining 15% of its energy from renewables by 2020; and the new taxes on wind farm owners have created an impression that investors in Poland cannot rely on stable rules. Poland’s leaders are now looking to reverse the tax on whole wind farms and put it back how it was.

They are also considering easing the tough deadlines in which developers have to use their permits. Both of these changes would help existing investors.

What Poland’s leaders have not done, though, is make any change to the punitive setback rule that has restricted wind development in large parts of the country, and done the most damage to developers and investors seeking to pursue new schemes. We welcome the positives where we see them – but they are nowhere near enough.

Poland this week welcomed US President Donald Trump for a state visit. Perhaps he was getting tips from its coal-loving leaders on how best to stymie the wind industry.

Over the last 21 months, the eastern European nation has pursued a set of anti-wind policies that would make the anti-wind Trump drool. In fact, the only way to make the laws look more attractive to Trump is if they were wearing high heels and a blonde wig.

The Law & Justice Party came to power in Poland in October 2015 with a pledge to prioritise growth in coal – sound familiar? – and curtail renewables. This resulted in its Act on Investment in Wind Farms, which came into force in July 2016 and introduced tough restrictions on where wind farms could be built and when.

This introduced a rule where wind farms have to be located more than ten times the height of the turbine from the nearest homes and protected natural sites. In practice, this means wind farms have to be built over 1.5km from those sites.

The law also changed a tax on owners to tax them based on the total value of the wind farm and not purely the construction elements of the project. This raised bills significantly.

If you don’t like wind farms, these policies have been a ‘success’. The setback rule contributed to a fall from 1.3GW of wind farms completed in 2015 to 682MW in 2016; and only 6MW in the first three months of 2017. The act also meant 70% of wind farms in Poland made a loss in 2016. For wind, they are a disaster.

And, to top it all, we now see a $325m lawsuit from an aggrieved developer. US firm Invenergy has this week filed a series of legal claims against Tauron Polska Energia, one of Poland’s four largest energy companies, related to a deal by Tauron and its subsidiary PE-PKH to buy electricity and green certificates from Invenergy.

Invenergy is not a new player in Poland. It has been active in the country since 2005 and has built 11 wind farms, in which it has invested an estimated $595m.

In 2010, it signed a long-term deal with Tauron and PE-PKH but, shortly after, it says that the pair tried to get out of these deals. This culminated in Tauron’s liquidation of PE-PKH in July 2014, which Invenergy says was done “with the intention of causing a de facto annulment of PE-PKH’s contractual obligations”. Tauron says it has not yet received a claim, but adds the claim focuses on PE-PKH, not the parent group.

There are two sides to every story, of course, and we cannot pre-judge the verdict of the Polish courts. But we can say that this case will give vital insights into how wind investors are treated in a country where politicians have been making life very tough.

However, that is not to say that Poland is a lost cause for investors. Its government is under pressure to hit a binding European Union target of gaining 15% of its energy from renewables by 2020; and the new taxes on wind farm owners have created an impression that investors in Poland cannot rely on stable rules. Poland’s leaders are now looking to reverse the tax on whole wind farms and put it back how it was.

They are also considering easing the tough deadlines in which developers have to use their permits. Both of these changes would help existing investors.

What Poland’s leaders have not done, though, is make any change to the punitive setback rule that has restricted wind development in large parts of the country, and done the most damage to developers and investors seeking to pursue new schemes. We welcome the positives where we see them – but they are nowhere near enough.