After years of deliberation, the Polish Ministry of Environment released its long-awaited draft of the renewable energy sources (RES) act in April. The draft is thought to be passed into law later this year, four years after the EU's deadline for the bill. It is expected that FDI into Poland's renewables sector will rebound when the law is passed.
RES will introduce new regulation into the sector, adding support mechanisms for existing green energy projects as well as auction mechanisms. “[Thanks to RES], investors will be able to predict income flows for a long-term period, while banks will be able to provide loans within the risk profile they expect,” said Katarzyna Klimkiewicz-Deplano, managing partner at Advicero Tax, a company within Nexia International, a worldwide network of tax advisories. “Uncertainty is the sector's worst enemy, so common sense dictates that the market should respond positively to a final bill passed by the government."
The new regulation is expected to bring an increase in FDI, particularly in solar and wind farm-related projects, as it will lower costs and reduce the risks involved in such projects, said Ms Klimkiewicz-Deplano.
Between 2006 and 2013, Poland attracted 56 crossborder projects into renewables, with 75% of these connected to wind, according to greenfield investment monitor fDi Markets. Since a peak in 2007, when the country attracted 14 greenfield renewable energy projects, the number of FDI projects in the sector has been in decline, with 2013 representing the worst year since fDi Markets began tracking projects in 2006.
But, according to Ms Klimkiewicz-Deplano, while project numbers may be declining, the sector is still growing in terms of its output capacity. “Two-thousand and thirteen was an outstanding year in terms of total megawatts [MW] built, with about 900MW realised in the year, solely in the area of wind power,” said Ms Klimkiewicz-Deplano. “If Poland was able to do that in the midst of enormous uncertainty, then more should be built after the RES act is passed."