Poland creates legal framework for offshore wind development in the Baltic Sea

Out-Law News | 30 Oct 2020 | 3:38 pm | 2 min. read

Poland has signed an agreement with six other countries with access to the Baltic Sea that it hopes will accelerate the development of offshore wind generation.

The Baltic Sea Offshore Wind Declaration was signed by the European Commission and ministers from Poland, Denmark, Estonia, Finland, Lithuania, Latvia, Germany and Sweden. It aims to strengthen cooperation between those countries.

 

Poland does not have any offshore wind farms as yet, but aims to install 28 gigawatts (GW) of offshore wind energy by 2050. New agreements and the planned Offshore Wind Act could improve the conditions for developers, contractors, investors and lenders, an expert said.

The countries agreed to cooperate in grid development, spatial planning for maritime areas, planning of capacity and support mechanisms. "All of these components will be of key importance for the development of a well-functioning internal energy market and cross-border infrastructure, in order to use the full energy and economic of the Baltic Sea," the Polish Wind Energy Association (PWEA) said.

"Poland is ambitious where the development of offshore wind farms is concerned," said Alice Boldis, an energy projects expert at Pinsent Masons, the law firm behind Out-Law. "Thanks to the legal framework the Polish government seeks to create, Poland will become a very interesting growth market for key players in the offshore wind sector."

The development of offshore wind is part of the Polish National Energy and Climate Plan for 2021-2030 and also enshrined in the Polish Energy Policy until 2040. Poland believes that offshore wind is "one of the key technologies for achieving the EU's renewable energy target for 2030".

If Poland met its 28GW target it would be the largest operator of offshore turbines in the Baltic Sea. "Poland generates most of its energy from coal - in 2017 its share of electricity produced from coal and lignite were almost 80%," said Christian Lütkehaus, energy projects expert at Pinsent Masons. "The Polish government's focus on offshore wind energy is very reasonable given the country's commitment to increase its share of renewable energy to 21% by 2030, from 10.9% in 2017."

In July, representatives of the Polish government and members of the offshore wind energy sector agreed to take joint action to develop the offshore energy market in Poland. The cooperation is set out to develop, sign and implement the so-called Polish Offshore Sector Deal. The declaration will be similar in character to the British sector deal for offshore wind energy, the Polish Ministry of Climate and Environment said, but it will "take into account Polish reality and conditions".

According to the Polish climate minister Michał Kurtyka, offshore wind energy "will be a strong stimulus for the Polish economy. Thanks to cooperation between public administration and business, Poland can become an offshore leader on the Baltic Sea and a net exporter of cheap and clean energy."

In July the Polish government published a new draft of the so-called Offshore Wind Act. The draft law outlines a new subsidy scheme. According to PWEA, offshore wind farms in the Baltic Sea with an overall capacity of 5.9 GW are set to "receive support under a two-sided contract for difference between the investor and the regulator. Awarding support under this formula will be time-limited until the end of June 2021." In a second phase, contracts are planned to be awarded by auctions. The first is to take place in 2025, 2027 the second. The PWE said that support will be available for projects with a total capacity of 2.5 GW in each of the auctions.

"Providing a stable regulatory framework is a very positive trend and once the Offshore Wind Act enters into force we expect Polish offshore wind to provide many interesting business opportunities for international developers, contractors, investors and lenders, as well as Polish businesses" Boldis said.