Cable pooling - a new opportunity for developing RES installations in Poland

Published Date
Aug 28, 2023
A key barrier to developing new RES installations in Poland is the limited power capacity of the Polish power grid, which results in many refusals to connect new installations to the grid. Cable pooling is regarded as a possible remedy to overcome this barrier by enabling (i) more efficient use of the existing RES installations, which often have unused power allocated to them, and (ii) fast construction of new RES installations without expanding or modifying the grid.

On 17 August 2023, the Polish Parliament adopted certain amendments to the Polish Energy Law (the Amendments) aimed at introducing new rules for connecting two or more renewable energy source (RES) installations, such as wind and PV farms, to the same interconnection point (the Cable Pooling).

Below, we present the main steps to implement the Cable Pooling under the Amendments at (i) the existing (single) RES installations, and (ii) new RES installations. The Amendments are subject to the approval of the President of the Republic of Poland before they enter into force.

Cooperation Agreement for ensuring the due functioning of the Cable Pooling structure

As a preliminary step, it will be essential to determine how the projects in the Cable Pooling will be developed – by one entity or several, with each one responsible for a separate project, and at the same time being jointly and severally responsible for the Cable Pooling as a whole?

If joint development is selected as the preferred option, the project companies will need to enter into a cooperation agreement setting out, among other things:

  • the principles of sharing the common facilities used for the delivery of electricity;
  • the principles of joint performance of the grid connection conditions (GCC), grid connection agreement (GCA) and distribution agreement (DA),
  • the principles of allocating the funds received as financial compensation in the event of the operator's use of re-dispatching; and
  • the party responsible for transacting with the DSO, including applying for the GCC and signing the GCA with the DSO.

A joint development option might be a good way to minimise the risk exposure associated with developing a new renewable energy source (RES) installation. This may be particularly relevant in the context of developing a new RES installation next to an existing RES installation for the Cable Pooling purposes. In this case, the company holding the existing RES installation would not face any development risks, including permitting risks, of the other company developing the new RES installation.

On the other hand, it may be challenging for various parties to agree on the terms of the cooperation agreement, especially if they are not part of the same group. The cooperation agreement will also be subject to detailed scrutiny by the DSO, and therefore in practice the joint development of the Cable Pooling may take more time.

Requirements vis-à-vis the grid operator

According to the Amendments, all RES installations participating in the Cable Pooling must obtain a single GCC and be subject to a single GCA and DA. This means that any existing GCC, GCA, or DA issued or entered into for the existing RES installations that wish to participate in the Cable Pooling will need to be amended or terminated and replaced by new ones.

The Amendments also set out detailed requirements for applying for the GCC, which must include, among other things:

  • the connection capacity for all installations to be connected to the same interconnection point with separate, dedicated measurement points for each of these installations;
  • a detailed description of the method for ensuring technical capabilities to not exceed the connection capacity if the connection capacity is lower than the sum of the total installed capacity of all installations to be interconnected under the same Cable Pooling structure;
  • the cooperation agreement for ensuring the due functioning of the Cable Pooling (if applicable);
  • documents evidencing legal title to the land on which the installations are or will be located;
  • statement of each electricity producer on assuming joint and several liability with other producers participating under the same Cable Pooling structure vis-à-vis the DSO for exceeding the connection capacity; and
  • an undertaking of each producer to install devices (at their own costs) aimed at preventing the connection capacity from being exceeded.

The GCC are valid for two years from their issue date; meaning that the GCA for the Cable Pooling should be signed in that period.

Based on the Amendments, the GCA should specify, among other things, the following:

  • the entity responsible for balancing trade;
  • the risk-based liability of the producer for breaching its obligations regarding power output or input and other requirements related to the use of one connection to the grid, caused by the action or omission of any of the producers participating in the same Cable Pooling structure; and
  • the obligation of the producer being a party to the GCA to accept and implement the instructions issued by the DSO, based on the applicable provisions of law.

All producers acting under the same Cable Pooling structure will bear joint and several liability towards the DSO, capped at the actual damage plus any energy discounts and compensation for damages resulting from the action or omission of the breaching producer due to third-party users connected to the same grid network.

Penalties for exceeding the agreed connection capacity

Under the Amendments, the DSO will have to monitor the devices installed at the RES installations to ensure that the connection capacity agreed under the GCA is not exceeded, which could otherwise result in the producers injecting more electricity into the grid than they are allowed to and potentially damaging the grid.

In particular, the DSO may:

  • impose a charge on the producer for exceeding the connection capacity, at a rate corresponding to the fee for illegal consumption of electricity with respect to the excess electricity that the breaching producer injected into the grid; and
  • curtail the breaching producer’s delivery of electricity to the grid or completely suspend the delivery of electricity to the grid, without paying compensation and without being liable for the consequences of these restrictions or disconnection.

Requirements vis-à-vis the CfD system

If a new RES installation is connected to the grid at the same interconnection point as an existing RES installation that was granted a CfD award, the producer that received the CfD award must, within 14 days from the date the new RES installation was connected to the grid, provide the President of the Energy Regulatory Office with a copy of the new GCA and the current scheme of all RES installations connected at that interconnection point, indicating the devices used for generating electricity and the devices used for outputting power.

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This content was originally published by Allen & Overy before the A&O Shearman merger