FIT / FIP support systems

12 November 2019

What are FIT / FIP systems

 

FIT / FIP, i.e. systems supporting the production of electricity from renewable energy sources were first introduced by the Act of 7 June 2018 amending the Act on renewable energy sources and certain other acts (Journal of Laws of 2018, item 1276).

The following installations can join the FIT / FIP systems:

  • Planned for commissioning, in which electricity has not been generated so far,

  • Implemented after July 1, 2016, which did not use the auction support system referred to in Art. 73 of the RES Act,

  • Launched and generating electricity, which use the system of support for certificates of origin referred to in art. 44 section 1 of the RES Act,

  • Which won auctions settled before the date of entry into force of the amendment to the RES Act of 7 June 2018 (Journal of Laws of 2018, item 1276),

  • On the principles set out in art. 9 of the amending act,

  • that have won auctions decided before January 1, 2019,

  • on the principles set out in art. 184a of the RES Act (high-efficiency cogeneration).

 

FIT / FIP systems are beneficial for biogas plants because they allow you to take advantage of the support of installations at any time, without having to wait for the auction. After the last amendment to the RES Act, biogas plants with a capacity of up to 2.5MW can use the FIP system, after obtaining notification, which should be granted soon.

 

The condition for participation in FIT / FIP systems is that the renewable energy installation has a separate set of devices used to output power exclusively from this installation to the distribution power network. An exemplary diagram of the installation of a renewable energy source is shown in the Information of the President of the Energy Regulatory Office No. 52/2018 of July 16, 2018.

Noteworthy is the record 69a of the RES Act, which specifies that electricity generated in a given renewable energy source installation may use only one support system provided for in this Act, while the detailed rules for the accumulation of public aid are set out in Art. 39a of the RES Act. Investment aid, granted for the implementation of investments in a given renewable energy source installation, reduces the fixed purchase price for electricity, referred to in Art. 70e RES Act.

In order to verify the value of the received public aid, together with the FIT / FIP application a declaration is made regarding the received aid (irrespective of ownership changes regarding the installation). Data on public aid are published in the Public Assistance Data Sharing System, i.e. in the SUDOP system, which is available at the electronic address: https://sudop.uokik.gov.pl/home.

Due to the fact that investment aid for a particular installation could have been granted within a few years before submitting the FIT / FIP declaration and could have been granted in various forms, the value of investment aid should be recalculated in such a way that it would be possible to determine the amount of money it would receive beneficiary if it would be granted in the form of a subsidy (Article 39a (3) of the RES Act). Its value should also be calculated on the day the declaration is submitted (Article 39a (4) of the RES Act).

When the value of investment aid has been calculated, the adjusted price, constituting the purchase price for electricity, should be calculated (Article 39a (5) of the RES Act).

 

The unquestionable advantage of the FIT and FIP system is - unlike in the case of renewable energy auctions - no obligation to generate the declared amount of electricity. The RES Act provides for penalties only for not producing electricity from RES within the time limit specified in the Act and not selling it. FIT and FIP systems are to be in force for 15 years, but not longer than until the end of 2035, although in art. 70f of the RES Act, it is mentioned that the support system may be valid for the next 15 years, not longer than until June 30, 2039.

 

 

Differences between the FIT and FIP systems

 

The manufacturer using the FIT system is obliged to conclude a contract with the obliged seller. In addition, manufacturers are required to sell electricity at various times specified in the Act, depending on whether they have a new installation or a previously used one, and whether they have used other support systems. The advantage of this support system is the option of changing the selection declaration the seller and the total amount of electricity declared. This gives undoubtedly great flexibility for generators in the event that electricity prices would exceed reference prices.

 

The FIP system is a form of additional payment to the market price, i.e. covering 90% of the value of the so-called negative balance being the difference between the reference price announced for a given installation and the average market value of electricity sales.

 

FIT (feed-in-tariff) is a system of guaranteed tariffs for prosumers with micro and small installations, i.e. renewable energy installations with a total capacity of not more than 500 kW, who decided to sell unused electricity to a designated energy trading company. The amount of support for installations using the FIT system is set at 90% of the reference price, announced for a given calendar year, by the Minister of Energy by way of an ordinance which sets maximum prices for 1MWh, for which electricity from renewable energy sources can be sold by producers, the period in which the obligation purchase referred to in art. 92 paragraph 1 of the Act on renewable energy sources and the period during which they are entitled to cover the negative balance referred to in art. 92 paragraph 5 of this Act - for energy producers. The fixed purchase price is indexed annually with the total consumer price index from the previous calendar year, which is specified in the announcement of the President of the Central Statistical Office in the Official Journal of the Republic of Poland "Monitor Polski".

 

FIP (feed-in premium) is a system of subsidies to the market price for RES electricity producers, with a total capacity of not less than 500kW and not more than 1 MW, who sell or will sell unused electricity to an entity of their choice. the obliged are selected annually by way of an administrative decision by the President of the Energy Regulatory Office. If a decision is made to use one of the abovementioned support methods, the prosumer is guaranteed to receive public aid for a period of 15 years.

 

 

How to use the support system

 

To use any support system, a declaration must be made of the intention to sell unused electricity at a fixed price, which starts the pre-qualification process. It is also necessary to submit a series of statements, min. regarding the substrates used in the process of electricity production and public aid received so far and in the case of new installations, it is worth to obtain "Incentive effect" from the President of the Energy Regulatory Office before starting work on the project.

 

Confirmation of the incentive effect protects the producer against any reimbursement of public aid obtained if the FIT / FIP system were found to be prohibited by the Commission.

It should be remembered that in both systems the value of support is reduced by the investment aid granted so far.

 

For installations planned for commissioning, the President of the Energy Regulatory Office should confirm that the manufacturer has submitted a written application for assistance before commencing work on the project or commencing operations. "Beginning of work" in accordance with art. 2 point 23 of the GBER, should be understood as the commencement of construction works related to the investment or the first legally binding commitment to order equipment or other commitment that makes the investment irreversible, whichever comes first. At the same time, the commencement of works is neither land purchase nor preparatory work, such as obtaining permits or conducting feasibility studies. If an investment is taken over during its lifetime, 'start of work' means the moment of acquisition of the assets of the plant being acquired.Also important are the requirements regarding the deadline set by the legislator to start selling electricity. For installations planned for commissioning, the deadline for generating electricity for the first time is indicated in art. 70b paragraph 4 point 1 lit. d of the RES Act and is 36 months from the date of issuing the certificate referred to in art. 70b paragraph 8 of this Act, whereas for installations previously launched, which were supported by green certificates or were launched after July 1, 2016, energy sales must start no later than on the first day of the month following the expiration of 3 months from the date of issue of the certificate. when a producer who has obtained a certificate of the possibility of selling unused electricity under FIT / FIP systems will not start generating electricity within the time limit referred to in art. 70b paragraph 4 point 1 lit. d of the RES Act ("new" installations, planned to be commissioned), or will not start selling energy within the time limit referred to in art. 70b paragraph 4 point 2 lit. of this Act (existing installations and those launched after July 1, 2016), may re-submit the FIT / FIP declaration after 3 years from the date on which the commitment became due (Article 70b (12) of the RES Act). 10.

 

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