Development of wind farms in the Baltic may require a special law

– What we may lack in the coming years and what constitutes a bottleneck in the development of offshore wind energy are regulations that still do not sufficiently ensure that the development process will be carried out quickly enough – says Michał Piekarski, partner at Baker McKenzie.

In his opinion, implementation of such huge investments may require not cosmetic changes in acts or regulations, but a dedicated special law. What is needed is a decisive acceleration of the process of issuing administrative decisions and granting new location permits in the Baltic Sea. Otherwise, it will not be possible to meet ambitious investment schedules, according to which the installed capacity in the offshore sector could reach even 10 GW before 2030, much more than is assumed in the current Energy Policy of Poland until 2040.

The legal environment for the development of the offshore industry today undoubtedly looks better than it did only a few years ago, mainly due to the Act on the Promotion of Electricity Generation in Offshore Wind Farms, which came into force at the beginning of 2021 and created the basis for the development of such projects. Despite this, however, in regulatory terms, the situation of the offshore industry is still far from ideal.

– Projects in Poland are being developed in two phases. The first, which is now practically at the procurement stage, is the ordering of goods and services for the implementation of these projects. The second is at the crucial stage of granting new location permits in the Baltic Sea. This second phase is governed by what is known as the determining regulation. This is where problems arise with regard to interpretation of the regulation, and where emotions arise as to where this regulation will lead us, and who will receive location permits in the Baltic. There is therefore room for improvement in order to make this regulation unambiguous and not necessarily promoting certain groups of investors, and such a threat may indeed exist at the moment,” says Michał Piekarski, partner and head of the Energy and Infrastructure practice at Baker McKenzie, to Newseria Biznes.

A sectoral agreement for the development of offshore wind energy in Poland was concluded last autumn, whose signatories include, among others, government administration bodies and key ministries, entities from the education and science sector, investors and industry organisations – over 200 entities in total. The document, which was well received by the industry, is to provide a basis for cooperation and contribute to maximising the so-called local content, i.e. the participation of Polish entrepreneurs in the offshore wind energy supply chain.

The government has also announced simplifications in administrative proceedings related to the construction of wind farms in the Polish exclusive economic zone in the Baltic Sea. The expert believes, however, that this is still not enough to accelerate the development of such projects.

– Some amendments of regulations have been introduced, but they are still far from enough. With projects totaling almost 11 GW, and we are talking about 15-16 GW with the third phase included, there is no room for minor changes in the regulations. This is perhaps the place to design and implement a special law, which – following the example of other critical areas for the energy sector – would allow to give an impulse to development and to radically simplify the procedure of obtaining permits,’ Baker McKenzie’s expert assesses. – Unfortunately, I assess the chances as moderate, de facto this is not currently a subject of discussion.

WindEurope estimates, quoted in the PWEA report (“Vision for the Baltic. Vision for Poland”), that there is a potential to install 28 GW of power in Polish waters of the Baltic Sea. In the 2050 perspective, offshore wind farms could meet almost 60% of the domestic demand for electricity. However, this is a long-term, optimistic perspective, which would require a strong development impulse and big facilitations for the industry in implementing such projects. So far, the government’s strategy assumes that by the end of this decade the offshore installed capacity should reach about 5.9 GW, and in 2040 – 11 GW.

– There is still faith that these timetables – which are already extremely ambitious – can be achieved in the current legal environment. I would like to be of good cheer, but it seems to me that these goals and dates we are talking about are unimaginably optimistic. To be able to meet them, talks would have to start today – says Michał Piekarski. – We need to have a strong impulse from the government, the offshore wind energy development programme must be a programme that is strongly supported by the state, also through administrative facilitations, and to mobilise investors, supply chains and authorities responsible for issuing permits, so that the second and third phase of these projects develops as soon as possible. This impulse and joint action is absolutely key.

The interest of foreign investors in investments in Polish waters of the Baltic Sea is enormous, which is evident from the applications submitted in the second phase of offshore projects, i.e. for the issuance of location permits. The world’s biggest players are in the game.

– The existing regulations may, however, indirectly cause the balance between Polish state-owned entities versus foreign entities in the volume of location permits granted to be slightly unbalanced. However, this is not yet a foregone conclusion. The secret of foreign entities is what aces they have up their sleeves and what they will use in the adjudication procedure – says the head of the Energy and Infrastructure practice at Baker McKenzie. – The prospect of energy development is not months or years, but decades. I am sure that within the next decade offshore wind energy projects in Poland will be developed jointly by domestic entities, such as PKN Orlen or PGE, and foreign entities, both from the renewable sector and maybe from the oil and gas industry, which is undergoing an energy transformation at the moment.

In addition to regulatory issues, the creation of a local supply chain is necessary to accelerate offshore development in Poland.

– In order to implement projects worth PLN 10, 20 or 30 billion, not only the will and financing, but also hands to work are needed. It would be great if we could implement these projects with Polish personnel. We also need factories, installation ports and the whole supply chain, which we should already be building to be able to carry out offshore projects now and in a few years’ time – says Michał Piekarski.

source: PortalMorski.pl

 

 

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