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The Warsaw Voice » Other » September 2, 2009
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Energy Efficiency Act: An Investment Incentive
September 2, 2009   
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Over the last ten years the Polish economy's energy consumption rate dropped by almost 30 percent, but this is still twice the European average. The reason is the lack of internal regulations which would help achieve the target set by Directive 2006/32/EC (The Energy End-Use Efficiency and Energy Services Directive); at least 9 percent energy savings must be made by 2016 to hit the Directive's target. The solutions proposed by the Polish Ministry of the Economy are to change this situation. It is anticipated that the Energy Efficiency Act will come into force in January 2010. Its adoption is necessary because the existing market mechanisms driving energy efficiency growth levels, as required by the EU, have proved insufficiently effective.

The system of white certificates
A key element of the new arrangements will be the system of white certificates; these certificates confirm the energy savings made and are transferable. Modeled on Italian solutions, the system seeks to promote support mechanisms for renewable and cogenerative sources of energy which, in fact, already exist in Poland.

The draft act proposes to oblige energy companies selling electricity, heat and natural gas to end users already connected to the grid to obtain energy efficiency certificates or to pay the replacement fee to the regulatory authority within a specific time. Suppliers providing heat capacity of up to 5 MW will be released from this obligation.

White certificates will be issued both to natural and legal persons in return for completed undertakings that improve energy efficiency. Energy audits will constitute the basis for issuing the white certificates which will be allocated proportionally to energy savings. The selection of undertakings qualifying for white certificates will occur by way of free tenders held separately for three areas of action:
- the increase in energy efficiency by end-users;
- the increase of efficiency in generating electricity and heat,
- the reduction of losses incurred in the transmission and distribution of electricity, heat and gas.

These initiatives will involve upgrading standards in lighting and the thermal insulation of buildings, energy recovery in industrial processes and the modernization of manufacturing. All rights arising from the white certificates system will be transferable and treated as stock goods. The transfer of rights will take place following the registration of a corresponding entry in the register of energy efficiency certificates.

The supervision of the system of issuing and redeeming certificates, the organization of tenders, the imposition of penalties, will all come under the authority of the President of Energy Regulatory Office.

Responsibilities of the public sector
Further to Directive 2006/32/EC, the project offers a role model for cost-effective energy management in the public sector. The target set for each participant public sector unit is to make savings of no less than 1 percent in its average energy consumption within a year. They are also obliged to conduct periodic energy efficiency audits and to inform the public about the results. They are also charged with developing and implementing energy efficiency action plans at the local level.

The penalties and the cost of the system
The system carries stringent fines for the failure to comply with the obligations to obtain and redeem energy efficiency certificates or for not paying replacement fees. Penalties may be imposed on both the energy company and the individuals involved in its management. Money coming from replacement fees and penalties will be allotted to support investments that improve energy efficiency. This solution has already proved its worth by investing in renewable energy sources.

The cost of the system will depend largely on the amount of the fee and the required volume of replacement remission. It is assumed that initially, i.e. in the period 2010-2012, the system will induce an energy price increase of around 3 percent per year, but henceforth it will help stabilize prices. It is estimated that, by 2020, the new solution will bring savings of at least 1 billion euros.

Arek Krasnodêbski, partner, head of Salans Warsaw Energy & Natural Resources Practice Team
Piotr Czembor, associate at Salans Warsaw Energy & Natural Resources Practice Team
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