Proposed Amendments to the Act of May 20, 2016 on Wind Farm Investments

On September 25, 2024, a draft amendment to the Act of May 20, 2016 on investments in wind farms was introduced (Wind Farm Investment Act). The proposal also includes changes to other laws, including the Act of February 20, 2015 on Renewable Energy Sources. This newsletter outlines the key changes relevant to on-shore wind energy projects.

The amendment proposes mechanisms aimed at easing current regulations regarding the location of wind farms, the process of passing local planning laws, and settlements of the negative balance under the auction subsidy scheme. If adopted, the law will come into force on the first day of the month following one month from its publication.

The Ministry of Climate and Environment has set a deadline for submitting comments on the proposal by October 16, 2024.

Liberalization of Onshore Wind Farm Location Rules

The proposed provisions move away from the so-called "10H rule" and set a new minimum distance between wind farms and residential buildings at 500 meters, representing a further liberalization from the current 700-meter minimum distance. This 500-meter minimum distance will also be taken into account by authorities issuing environmental permits for wind farms.

Additionally, changes are proposed for the minimum distances from national parks (1,500 meters) and Natura 2000 areas (500 meters), which cover special bird protection areas and habitat protection areas. The existing minimum distances from high-voltage power grids and the methods of determining distances will remain unchanged.

Simplification of Wind Farm Location Procedures in Municipalities

The amendment aims to standardize the planning process in municipalities where wind farms are to be located, stipulating that planning should be conducted according to one law: the Act on Spatial Planning and Development.

The requirements for adopting a resolution on the commencement of a local plan for wind farms and for the local plan itself will be transferred from the Wind Farm Investments Act to the Spatial Planning and Development Act. A positive change is that at the stage of the initial resolution, only the projected maximum height of the wind farm, rotor diameter with blades, and the number of turbines will be defined. This will allow to introduce modifications of these parameters at later stages of proceeding the local zoning plan.

The amendment also explicitly allows for the location of wind farms based on an Integrated Investment Plan (ZPI), which is a specific form of comprehensive local zoning plans. The municipality will be required to hold an open meeting with the local community within 30 days of the municipal council’s approval to begin preparing the ZPI, as well as during the public consultation phase.

Furthermore, the amendment expands the scope of supplementary investments under the ZPI to include other projects, such as those serving the municipality’s tasks, which allows for a broader application of the ZPI for locating wind farms and other renewable energy projects.

Another significant change is the possibility of covering an area larger than the main and complementary investment areas within the ZPI.

Expanding Benefits for Local Communities

The amendment introduces changes regarding access to wind farm-installed capacity benefitting municipal residents acting as virtual prosumers. These provisions, set to take effect on July 2, 2025, are outlined in the Act of March 9, 2023, on amending the Wind Farm Investments Act and other laws. If the current amendment is adopted, the entry into force date will remain unchanged. The new regulations aim to clarify existing provisions and provide greater benefits to local communities.

Key changes include excluding wind farms with a capacity of up to 1 MW from the requirement to share capacity with residents, while the minimum threshold for other wind farms remains at 10% of installed capacity. The regulations will also apply to wind farms connected to the transmission grid.

Residents of neighboring municipalities will also be entitled to use the allocated capacity to cover own, local consumption. The amendment will modify the rules for determining the costs of resident participation, granting the Minister of Climate authority to set the participation cost coefficient.

Correct notification of local authorities regarding the final permit for the operation of the wind farm and the key parameters affecting residents' rights will become a formal requirement for obtaining a power generation license.

If residents do not use the entire available capacity, the investor must participate in a tender for the purchase of electricity announced by the municipality where the investment is located. If the municipality announces a tender within 12 months of signing agreements with local residents, the investor is obliged to submit an offer in that tender. The unused volume must be offered at a price not higher than the auction system's reference electricity price as of the day the offer is made. We find this proposal, in its current form, to be inconsistent with the auction support system and the rules governing the sale of electricity and licensing of generators, especially with the internal electricity market reform (EMD) in effect from July 16, 2024.

The amendment reduces the application period for residents to 60 days and introduces the requirement for the investor to provide a contract template, regulates the minimum contract scope, and requires notifying the relevant network operators about resident participation.

To clarify financial settlements, the amendment refers to the Renewable Energy Sources Act of February 20, 2015 for rules on settlements with residents who participate in the shared wind farm capacity.

Transitional Provisions

Potential investors should pay special attention to the transitional provisions included in the amendment.

Existing local plans will remain in force upon the law’s entry into force. The proceedings on adoption of the draft local zoning plans or their amendments that has been made public will be subject to previous regulations. The new rules will not apply to ongoing building permit proceedings and environmental permit proceedings initiated and unresolved before the amendment’s entry into force.

If a local plan in force at the time of the amendment’s entry into effect defines or does not define the minimum distance between a wind farm and residential buildings, wind farms meeting the 500-meter minimum distance requirement may be located or granted building or environmental permits based on the plan.  Such distance requirements will be calculated on the basis of the existing rules set forth in  the Wind Farm Investments Act.

Building permit proceedings initiated under the transitional provisions set forth under the March 23, 2023 amendment to the Wind Farm Investments Act will continue to be processed under previous regulations, requiring adherence to the 700-meter rule.

For proceedings initiated after the proposed amendment comes into force, the statutory minimum distance of 500 meters will apply.