State Aid in the RES Act

by Piotr Mrowiec

21 February 2016

Almost a year has passed since the RES Act came into force and the interpretation of some of its provisions still remain a mystery. One important chapter in that statute deals with the state aid in support of the implementation of the national RES action plan. Regrettably, regulations concerning the mechanisms and instruments cause numerous interpretation doubts and, therefore, legal uncertainty.

Particularly disconcerting is Article 39 of the RES Act which deals with the maximum state aid for RES installations. The conclusion after reading that article is that it fails to address a lot of key aspects of calculating the state aid amount. This problem is hardly solved by the currently-consulted draft regulation of the Minister of the Economy concerning detailed rules of calculating the value of state aid available to producers of electricity from renewables in RES installations. Noteworthy, apart from translating the wording of Article 39(2) into a math formula, the draft regulation contains no provisions that would make the calculation of the total state aid any easier. Neither does it include any legal regulations that would say which of the existing mechanisms (including exemptions referred to in the Energy Act) should be considered a relief or an exemption or other aid pursuant to Article 39(2).

This means that a beneficiary under the existing regulations cannot know how to calculate the total state aid value. Neither the statute nor the draft regulation stipulates whether the provisions apply to the existing production units, which have so far benefited from aid in the form of green certificates and now want to switch to the auction system, or only to the units to be commissioned after the new aid systems goes live. The regulations also fail to address key concerns about:

• the calculation of the actually received state aid, e.g. in consecutive three-year reporting periods, which is required under Article 39(8) of the statute;
• how to calculate the income from sale of rights in rem attached to the green certificates for the purposes of calculating the total state aid value;
• the types of relieves and exemptions to be taken into account in the calculation of the total state aid value. The provisions do not explain what types of relieves and exemptions from taxes and fees should be taken into account in the calculation of the total state aid value. Particularly bewildering is the classification of excise duty exemptions provided for in the Excise Duty Act of 6 December 2008 (Journal of Laws of 2014, item 752);
• the interpretation of "other investment aid, regardless of its form, intended for construction or upgrade of a renewable energy installation" as described in Article 39(2)(4) of the RES Act, which adds to the total state aid value.

The inevitable conclusion is that the draft provisions concerning the total state aid value in their proposed language would cause legal uncertainty about the current, unclear and inaccurate legislation. This in turn may lead to far-reaching consequences for beneficiaries who may be obliged even to return the aid or be disqualified from the auction.

As you can see the RES Act has introduced a number of significant changes for taxpayers. Particularly noteworthy is the importance of the method of calculation of the maximum aid for RES installations. Therefore, a careful review and calculation to check your company's eligibility for state aid is a very good idea. It will help you to maximise the potential benefits and avoid disputes with the tax authorities. Our consultants are at your disposal for analysis and advice on the aid calculation and other aspects of the RES Act that affect your business.