Informacje

DMS
  September 10, 2012

  Husum Wind Energy 2012
 

Between September 18 and September 21, 2012 DMS lawyers will be present at Husum WindEnergy fairs. If you will attend as well, please remember about a seminar about the Polish market on Tuesday at 12 am at the Congress facilities, room 3. On Tuesday at 4 pm we would like to invite you to a Get-Together with Polish drinks and snacks at stand 4f12 (joint stand of w4e and windhunter) as well. On this occasion the German-Polish Chamber of Commerce (AHK) is publishing a Wind Energy Investment Guide in the German, English and Polish languages. If you are interested in receiving this Investment Guide, please contact Christian Schnell.


  Summer 2012 DMS deals
 

During the last two months DMS closed three major transactions related to wind farms. First of all, DMS represented a company willing to sell a 50 MW commissioned wind farm to a leading Western European utility. Moreover, DMS represented the purchaser of a portfolio of wind farm projects with approx. 200 MW installed capacity at an advanced stage of the development. Finally, DMS represented a seller of a 650 MW portfolio of fully permitted wind farm projects and wind farm projects at an advanced stage of the development to be sold to a leading Western European utility.



  How to spend it?
 

The Ministry of Economics and the Ministry for Regional Development have already started to work on the new EU budget for years 2014 – 2020. These plans have a major impact on the RES development. According to the think tank IEO, around 23 billion Euros have to be spent to meet the 2020 targets providing for production of renewable from RES at a level of 15% of overall energy production. Poland as a major beneficiary of the EU funds will receive ten percent of this amount, i.e., 2.3 billion Euros. Final decisions on the EU level will be made in Q1 of 2013, and by the end of 2013 Poland will distribute these subsidies internally. A substantial change with respect to the previous support will be its level. Generally, no more than 30% of the relevant investment value is supposed to be financed from the EU funds, to avoid competition distortion. Larger investments in onshore wind farms which already pay off should not be subsidized. Quite to the contrary, micro-sources and small sources should be supported is a special way. According to the Employer Association ZP FEO (based on a special report prepared by IEO on behalf of the Ministry of Economics earlier this year), implementation of new financial instruments for SMEs as equity investments or bank guarantees is of importance – recently undertaken in Poland only by the EIB as a sponsor for larger EU-funded projects. The question of institution that would be capable of distribution of such an amount of subsidies to be divided into small portions is still open.


  Investments in photovoltaic power plants – is a master plan required?
 

The said planning permit needs to take into consideration the agricultural and forest regulations. Obtaining a planning permit for an agricultural land, where a change of type of use is necessary (organic soil and mineral soil up to class 3), depends on the size of the land to be developed. To avoid the requirement of obtaining a study, a limit of 0.5 hectares for change of use should not be exceeded. For wind farms the supreme administrative court has recently confirmed that only a single production unit has to be taken into account in the calculation of the threshold. Nevertheless, with solar farms even this unit may easily exceed the threshold of 0.5 hectare - depending on the location of the standalone devices and the installation of the tracking system. Thus, the use of agricultural land that needs to be reclassified for construction of larger solar farms is rather not recommended.


  How to calculate standalone photovoltaic projects?
 

As the production per square meter with a photovoltaic installation is far lower than with a wind turbine generator, the rent prices are supposed to be lower as well. Usually the prices should not exceed 6,000 to 8,000 PLN/ha. Turnover-based rent fees should not exceed 3%. With a recent panel price of approx. 55/Eurocent Watt/peak the costs for balance of plant amount up to EUR 1.2 million. The panel producer has to be chosen carefully not to hamper the project financing. Generally, only panels produced by Tier 1 and Tier 2+ producers are bankable. Due to recent economic problems with many panel producers the relevant lists of bankable producers are updated very regularly. PV installations are calculated for a lifetime-circle of 20 to 25 years, and project finance should be available for 15 years. As Poland still has no experience with PV projects, there is no estimated transaction price as in the case of wind farm projects. Relying on market prices on mature markets in the Western Europe, an operating PV farm can be expected to be sold at a price of approx. 1.5 million Euro per MW, and a fully permitted project might be sold at a price of approx. 100,000 Euro per MW. The costs of project development are generally substantially lower than with wind farm projects. Environmental aspects are less complicated in comparison to wind farms, and no costly additional measurements are required. Therefore, project development costs, including the advance payment for issuance of a technical grid connection, should generally amount to a maximum of one half in comparison to wind farm projects.


  Consequences of NGO’s participation in environmental studies
 

The complete administrative procedure regarding the issuance of an environmental permit usually takes at least 4 months. Firstly, at an investor’s request for issuance of an environmental decision, the competent authority – the head (mayor) of a municipality, upon the receipt of respective opinions of the Regional Director of Environmental Protection (RDOŚ) and Sanitary Inspector, issues a decision obliging the investor to conduct an environmental impact assessment (EIA) and to prepare an EIA report for the planned investment (the decision indicates the scope of information to be provided in the EIA report). The decision should be issued within 30 days from the day of filing of the investor’s request, however this deadline may be prolonged. Environmental proceedings are subsequently suspended until the moment of filing of the EIA report by the investor. After the EIA report is filed – the proceedings are resumed and the EIA report is thoroughly analyzed – especially by RDOŚ and at the request of RDOŚ or the municipality the investor may be asked to supplement the EIA report to a certain extent. The environmental permit should be issued within 30 days from the date of resuming the proceedings. In practice, it usually takes more time and the deadline is postponed accordingly. If an NGO as a party complains against the environmental report, RDOŚ or the municipality may ask the investor to improve the report. If the authorities issue an environmental permit then, due to the environmental law a NGO as a party to the administrative procedure is able to complain against the permit. The municipal supervisory court (SKO) decides about the complaint, which usually takes from 3 to 6 months. After its decision, the environmental permit is valid and the investor can proceed with the procedure for issuance of a building permit, although the NGO may appeal against the SKO’s decision in the regional administrative court (WSA). The WSA usually decides about the appeal within 6 months. Finally, an appeal against the WSA decision in the Supreme Administrative Court (NSA) is possible, but just in case of legal or formal mistakes.


  Power Prices down again
 

Last Thursday the power prices at the Power Exchange dropped again to PLN 189.75/MWh. The average power price in 2011 – guaranteed for RES power producers - amounted to PLN 198.90/MWh. Power for 2014 was traded at a level of PLN 197.75 in comparison to 199.50/MWh and thus dropped by approx. PLN 30/MWh within the last 12 months. The price has dropped due to several reasons. First of all, the prices for CO2-certificates have dropped by more than 50 percent. Moreover, the coal price coal at the European markets has dropped at the same time by a quarter. And finally the 858 MW new generating unit of Belchatow lignite power plant has recently gone to the grid.


 

For more information please contact:

 

       

dr Christian Schnell
coordination/transactions/
venture agreements
cschnell@dms.net.pl
 
C. David DeBenedetti J.D.
project finance
ddebenedetti@dms.net.pl
 
Joanna Świostek
project development/planning
and building law/commercial
jswiostek@dms.net.pl




DeBenedetti Majewski Szcześniak has been chosen
by Corporate Intl Magazine 2012 as the:

“Renewable Energy Law, Firm of the Year in Poland”

“Project Finance Law, Firm of the Year in Poland”

“Investment Funds Law, Firm of the Year in Poland”

 
 

 

 
 

The aim of this Newsletter is to provide a summary of the subject matter. No part of this Newsletter constitutes legal advice or can replace expert legal advice in specific circumstances. If you would like any further information, contact us.

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