Investments in renewable sources in Poland
VON ZANTHIER & DACHOWSKI
Investments in renewable sources
In response to the need to move away from fossil fuels, renewable energy sources (RES) as a substitute for CO2 energy production are a declaredly important part of Poland's future energy stability and sustainable economic development. With more than 20 years of experience in the renewable energy sector, we support both foreign and Polish investors. We advise clients on the strategic planning, construction and operation of wind, solar and geothermal energy plants as well as the sale of energy. We are recognised as one of Poland's leading law firms in the field of advising on commercial geothermal projects.
Who do we support?
We can help you in particular if you are dealing with the following challenges:
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You are unsure how to secure land for RE investments and need to analyse the lease and help negotiate the terms
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You are faced with the need to obtain the necessary administrative decisions, such as connection conditions, building permits or environmental decisions
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You are planning to buy or sell a renewable energy project and are looking for support in structuring the transaction appropriately from a legal and tax perspective
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You need help with contracts related to the sale of electricity and heat, including PPAs, cPPAs and Q&Ms
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You need help with contracts related to the sale of electricity and heat, including PPAs, cPPAs and Q&Ms
How can we help?
We support our clients primarily in the following areas:
Securing land for RE investments:
We offer a comprehensive analysis of lease agreements for wind, photovoltaic and geothermal projects. We negotiate the terms of the contract, analyse the legal status of the land and prepare the documents required to carry out the investment. We also help with issues relating to the payment of levies and claims, including property tax
Implementation of the investment process:
We assist in amending the local spatial development plan and obtaining the necessary administrative decisions (e.g. connection conditions, environmental decisions). We prepare and analyse EPC contracts, planning contracts and subcontracts. We handle VAT settlements for foreign entrepreneurs making RE investments in Poland and support them in establishing and locating a tax entity
Financing:
We offer legal and tax advice on project financing structures. We draft financial documents, analyse credit and security documents. We co-operate with partners in obtaining Polish and European RE subsidies, in particular through subsidised loans and grants
RE transactions:
We provide comprehensive legal and tax advice on the purchase and sale of RE investments (share deals and asset deals). We conduct legal and tax due diligence, prepare projects for sale and draft and negotiate transaction agreements
Administrative support:
We assist in obtaining the necessary licences and permits and advise on compliance with environmental regulations. We represent clients before administrative authorities and the President of the Energy Regulatory Authorit
Contracts and support programmes:
We advise on contracts for the sale of electricity and heat, including PPAs and cPPAs, and O&M contracts. We assist with the preparation and implementation of obligations under subsidy programmes
Other legal and tax advice:
We support our clients in day-to-day operational matters, from the formation of special purpose entities to labour law issues and ongoing tax advice.
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Why is it worth it?
It's worth making use of our services, because:
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Proven in the RE sector:
We have many years of experience in the implementation and operation of RE projects
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Straight to the point:
we simplify legal and tax issues by providing clear and effective support
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International expertise:
We offer support based on international practice and knowledge and are familiar with the special features of foreign investments
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Everything is clear:
We ensure clear and transparent communication at every stage of the project so that you always know what is happening
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We like relationships:
We build long-term relationships with our clients and provide support at every stage of the project lifecycle, from planning to operation
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Your experts in Poland: investments in renewable sources in Poland
FAQ
Which provisions are most frequently negotiated by tenants in lease agreements?
The conclusion of a lease agreement is an important safeguard for future investments. In practice, in addition to the actual rent, provisions on its valorisation, the method of settling public debts (property tax, agricultural tax, the possibility of receiving subsidies from the EU) and the regulation of transfer rights are also negotiated
How is the working time of RE project developers correctly invoiced?
Developers of EE projects are in principle mobile workers. In this case, it is of the utmost importance that the place of work (including the home office) is correctly defined and specified in the contract. In practice, it makes sense to draw up a business travel policy for the safety of the developers and to comply with labour law.
Can a foreign entrepreneur be obliged to pay CIT in Poland when building a wind farm, photovoltaic or geothermal power plant?
Yes, if the conditions of the relevant double taxation treaty are met, a foreign entrepreneur may be obliged to establish himself in Poland on the basis of a construction site (permanent establishment for tax purposes). For example, under the agreement between Poland and Germany, a permanent establishment for tax purposes is created if the construction site or the construction or installation work lasts longer than 12 months.
What are the advantages of the auction system in Poland?
The auction system, which is currently the basic support mechanism for electricity generation in Poland, is implemented in the form of separate auction costs for each type and size of plant. This system primarily offers a fixed (inflation-indexed) price for the sale of electricity. In addition, the subsidy period is set at a maximum of 15 years.
What options are there for connecting to the electricity grid in Poland?
In Poland, the possibility of connecting renewable energy systems to the electricity grid is a challenge. In 2022, more than 7,000 connection conditions (capacity over 51 GW) were rejected. The rejections concern both wind and photovoltaic systems. For the successful realisation of the investment, it is important to first obtain the connection conditions and then conclude the connection contract.
How can an RE investment project in Poland be sold/acquired?
An RE investment project can generally be sold as part of a share deal (sale of shares in an SPV) or an asset deal (sale of a series of assets without shares in an SPV). The options differ from a legal and tax perspective (e.g. in relation to the assumption of liabilities, VAT taxation of the transaction), so it is worth considering these differences from the outset.
What are the potential uses of geothermal energy in Poland?
According to geological studies, Poland has very good conditions for using geothermal energy to generate heat. This means that geothermal energy, especially at the local level, can be successfully utilised in district heating systems to replace coal and gas heating systems. The prospects for the use of geothermal energy in Poland are optimistic, assuming the implementation of programmes with EU and national funding. However, there are still concerns about the large-scale utilisation of geothermal energy, including the cost and implementation time for geothermal investments.
How is the price for heat sales in Poland determined?
The price for the sale of heat is set annually on the basis of a mandatory application by the heat producer as part of an administrative procedure by the President of the Energy Regulatory Office on the basis of the principles set out in the Energy Act and its implementing regulations. When setting the price, the heat companies and the President of the Energy Regulatory Office take into account the investment costs (capex), operating costs (opex) and the corresponding profit in accordance with the statutory formula.
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