Significant changes in electricity settlement for energy producers from photovoltaic farms were set to come into effect on July 1, 2024. These changes will specifically impact so-called prosumers. However, the changes do not apply to other energy producers. For a long time, businesses generating energy from PV installations over 50 kW have been selling surplus energy produced as part of their business activities under two contracts with the power company: one for distribution services and another for the sale of surplus energy generated from the photovoltaic installation. We will discuss the rules for energy producers’ settlement with the power company in a separate article.

First, let’s differentiate between a prosumer and an energy producer.

The term “prosumer” is a combination of “producer” and “consumer.” The Renewable Energy Sources Act of February 20, 2015, defines prosumers as individuals or entities that both produce and consume electricity. Prosumers can generate energy for their own needs and inject any surplus into the power grid. A prosumer can be an individual or a business, provided that energy production from renewable sources is not the main part of their business activities and the installation’s capacity does not exceed 50 kWp.

It’s also worth noting that the current net-billing system means that energy produced and fed into the grid is settled at market prices. This means the prosumer pays for the energy they consume from the grid and is compensated for the energy they inject into it.

Changes in the Settlement System for Prosumers

According to the new regulations, prosumers generating energy from photovoltaics will face changes in how surplus energy injected into the grid is settled. The main difference is that after July 1, 2024, under the existing Article 4b(1) of the Renewable Energy Sources Act, the value of electricity fed into the grid until June 30, 2024, will be calculated based on the monthly market price of electricity (RCEm). However, after July 1, 2024, this value will be calculated based on the hourly market price of electricity (RCE). This will allow, through a statement made to the seller, the option to switch to energy settlement based on the market price of electricity applicable during imbalance settlement periods. Simultaneously, prosumers will have the option to continue settling photovoltaics in the net-billing system based on the monthly market price of electricity. To encourage prosumers to switch to the new settlement method, lawmakers have introduced incentives and benefits. For instance, there will be an option to increase the refund value of unused funds for electricity fed into the grid over the next 12 months (so-called overpayments) to 30%. It’s important to remember that, according to Article 4(6)(6) of the Renewable Energy Sources Act, unused funds in the prosumer deposit expire after 12 months.

“Those who switch to more market-based, hourly settlements will receive a bonus from us – instead of the current 20%, they will receive a 30% refund of unused funds for electricity fed into the grid,” emphasized Climate Minister Paulina Hennig-Kloska.

Addition of VAT to the Price of Electricity Injected into the Grid

The Minister also highlighted another important change. Specifically, the proposed regulations foresee adding VAT to the price of energy that prosumers inject into the grid under net-billing, which applies to all who installed photovoltaics after April 1, 2022. Currently, they inject energy at a net price but pay a gross price, including VAT, for the energy they consume from the grid. As explained by Paulina Hennig-Kloska, “After the law is passed, the price for electricity fed into the grid that the prosumer will receive will be approximately 1/4 higher. The prosumer deposit for electricity fed into the grid will be recalculated using a factor of 1.23 (23% VAT – PAP) to correct the existing imbalance in the system.”

When Will the New Regulations Take Effect?

Initially, the new regulations were planned to take effect by July 1, 2024, but in practice, they can be expected after the summer. According to available information, the changes are to be enforced 14 days after their announcement. Since the amendment was not implemented before July 1, 2024, Climate Minister Paulina Hennig-Kloska announced on July 11, 2024, at a press conference that the consultation process for this project had been completed. She added that the project garnered significant interest from both prosumers and larger market participants. “It will now return to the Standing Committee of the Council of Ministers, and I believe we will work on it in Parliament in a post-vacation mode,” said Minister Paulina Hennig-Kloska.

Shortening the Deadlines Related to Procedures Concerning Renewable Energy Installations

A positive development is the shortening of deadlines for issuing decisions on renewable energy installations. The Ministry of Climate and Environment has proposed several additional changes to facilitate administrative processes:

1. Shortening of Procedures for Renewable Energy Installations:

The amendment proposes shortening the duration of procedures for installations and projects for selected renewable energy sources, with particular emphasis on photovoltaic panels installed on building roofs and energy storage systems located on the same premises, heat pumps, devices, and installations necessary for connecting the renewable energy installation to the grid, as well as the renovation, reconstruction, expansion, or development of renewable energy installations.

2. Changes in Building Law:

Introduction of a 30-day deadline for issuing a construction permit for renewable energy installations mounted on buildings and energy storage systems with a nominal capacity exceeding 20 kWh.

Summary

The new regulations bring both benefits and challenges related to energy settlement and enable a switch to energy settlement based on the hourly market price of electricity (RCE), allowing customers to gain: Benefits:

• Increased profitability: The ability to sell surplus energy at market prices may bring higher revenues for producers.
• Flexibility: The new system provides producers with greater flexibility in managing energy production and consumption, allowing for revenue optimization.

As a result, customer interest in expanding their installations with energy storage systems equipped with EMS (Energy Management System), which maximizes profits in the net-billing settlement system, is growing. These are the exact solutions offered by Ennovation Technology.

Challenges:

• Price volatility: Market prices for energy can be variable, which may introduce some uncertainty for producers, especially during periods of low prices.
• Increased bureaucracy: The new system may require more complex administration and monitoring of settlements, which could be challenging for smaller producers.

Prosumers should, therefore, monitor market prices regularly and adjust their sales strategy to maximize revenue and update accounting and settlement systems to meet new administrative requirements. It’s also important to stay informed about regulatory changes and adapt to new regulations.

Source: Draft (from May 27, 2024) of the Act on amending the Act on Renewable Energy Sources and certain other acts (No. UD 41) – published on June 4, 2024 r.