POLAND | Grid Connection of a Hybrid RES Installation

Patrycja Wysocka - partner, co-leader of Energy & Natural Resources Practice, Kubas Kos Gałkowski, Poland

Joanna Kosiniak – junior associate, Energy & Natural Resources Practice, Kubas Kos Gałkowski, Poland

On 7 March 2024, the President of the Energy Regulatory Office granted the first concession for energy production in a hybrid RES installation. The pilot project of an installation using Agro-Hydro-Energy technology developed by the Wrocław University of Life Sciences and the Oława Energy Cluster was named Gaj Oławski 5 AHE. In turn, the first applications for the determination of connection conditions for hybrid RES installations are being submitted to the Electricity System Operators. While the connection process of an ordinary renewable energy source installation no longer raises major doubts, they may still arise against the background of the connection process of subsequent RES installations to a single connection point in the cable pooling system.

With the amendment to the RES Act, the legislator has regulated the issue of connection sharing since 1 October 2023. Pursuant to Article 7(1f) of the Energy Law, two or more renewable energy source installations belonging to one or more entities may be connected to the electricity grid with a rated voltage higher than 1 kV at a single connection point. When the grid connection point is an installation of an end user, this provision will not apply. First and foremost, it has to be interpreted from such a provision that the only limitations for the use of the connection in the cable pooling system are the necessary nominal voltage of the grid higher than 1kV and the intention to connect more than one energy source at the same connection point, where the source can only be a RES installation within the meaning of Article 2(13) of the RES Act, i.e. also equipped with an electricity storage facility, provided that the storage facility is part of the RES installation. The legislator has not limited the maximum number of installations to be connected, nor has it indicated that the RES installations connected in the cable pooling system have to differ in terms of the type and availability characteristics of the generated electricity. This means that two installations generating from the same type of source, e.g. PV, can be connected at one connection point under cable pooling.

However, the situation is different for hybrid RES installations. Pursuant to the definition contained in Article 2(11a) of the RES Act, a hybrid RES installation will be defined as a separate set of facilities described by technical and commercial data in which the degree of utilisation of the installed electric power during the year is the ratio of MWh of generated electric power per each MW of the connection capacity, connected to the power grid at a single connection point, generating electric power in these facilities exclusively from renewable energy sources differing in type and availability characteristics of the generated electric power, and meeting the following conditions:

a) none of the generating facilities has an installed electrical capacity greater than 80% of the total installed electrical capacity of that unit,

b) the power output of the generating equipment forming part of that unit to the electricity network shall be via a facility connecting that unit to the electricity network and serving to transform the energy to the conditions necessary for its entry into that network,

c)the unit shall include an energy storage facility for storing the electricity from the generating equipment forming part of the unit, whereby the share of the electricity from that equipment fed into the grid through the energy storage facility shall be no less than 5% per year of the total volume of electricity fed into the grid, not including electricity taken from the grid.

The legislator has prepared additional benefits for hybrid RES installations, one of the main objectives of which was to maximise the use of the connection capacity at a given connection point by using energy from different RES energy sources, optimising it in a synergic manner depending on the prevailing conditions, e.g. atmospheric conditions, which allow for the generation of a given type of energy. For producers who decide to produce energy in a hybrid RES installation, there is the possibility to propose a different auction price for the energy produced, corresponding to the reference price provided for hybrid RES installations, to compete in a larger number of auction baskets and, of course, there is a reduction in the energy input to operate the hybrid RES installation, resulting in a reduction in energy production costs.

Hybrid RES installations, therefore, simply pay off. However, from a simple cable pooling connection, to qualify an installation as a hybrid RES installation, it will first of all be necessary to have electricity storage and to generate electricity from at least two different types of renewable energy sources, and none of these types of sources in the assembly must have more installed capacity than 80% of the installed capacity of the entire assembly. Since, in order to qualify an assembly as a hybrid RES installation, it is necessary to connect the installation at a single connection point, the cable pooling provisions should be applied accordingly when determining the connection path of a hybrid RES installation.

Application for definition of the terms and conditions of connection for a hybrid res installation 

The first, initiating stage of the connection to the electricity grid is the submission of an application by the connected entity to determine the connection conditions. Pursuant to Article 7(1g) of the Energy Law, for all renewable energy source installations connected to the grid pursuant to section 1f [joint connection - author's note], one connection condition shall be issued, and one grid connection agreement shall be concluded. This wording of the provision may, however, raise doubts if a new RES installation is planned to be connected to an existing RES installation for which the producer has already obtained connection conditions, a connection has been completed, and a grid connection agreement has been concluded, at the same connection point. The answer to this question is contained in the Information of the President of the Energy Regulatory Office No. 15/2024 published on 23 March 2024 concerning the issues causing the most frequent doubts in the area of grid connection. According to its contents, the use of cable pooling, although in principle intended for newly connected RES installations sharing a connection, will also apply in the case of connecting a new installation at the same connection point as an existing and already connected RES installation. Connection sharing can thus be initiated by submitting an application for the determination of connection conditions in three variants:

1) when an application for the definition of connection conditions covers the first grid connection of two or more RES installations, or

2) when an application is submitted in a situation when connection conditions for the "first" RES installation have been previously issued and an agreement for connection has been concluded, and the entity being connected is applying for the connection of a second or subsequent RES installation, or

3) when an application is submitted in a situation where a RES installation is connected to the grid (existing installation and constructed connection) and the connected entity is applying for the connection of a second or subsequent RES installation.

Therefore, it should be assumed that in a situation where the applicant intends to connect two different types of RES installations at the same time under a shared connection, it should submit one joint application for the determination of the connection conditions for all RES installations. On the other hand, if a connection already exists at a given connection point to which the producer plans to connect further RES installations or at least a connection agreement has been concluded, the producer shall submit a new, single application for the determination of connection conditions for all newly connected RES installations. So far, only one of the five Distribution System Operators has prepared a dedicated template application for the determination of connection conditions for a D-type (above 75 MW) RES generation module in a cable pooling system. The other Operators are proceeding with the issuance of connection conditions for RES installations connected in a cable pooling system on the application templates for producers, suitably adapted to indicate further generation installations connected in the pool.

The application for the definition of the terms and conditions of connection in the event that the connection concerns a RES installation under a shared connection, apart from the classic elements specified in the Energy Law (Article 7(3b-3d) of the Energy Law) and the System Ordinance for a given type of RES installation (§6 of the System Ordinance), should also contain the following information (Article 7(3b-3d) of the Energy Law) and the System Ordinance for a given type of RES installation (§6 of the System Ordinance) should also include:

- information concerning the connection capacity, specified by the entity applying for connection, jointly for all renewable energy source installations planned to be connected to a single connection point, and indication of the connection point (whereby each installation, despite being connected to a single connection point, should have separate metering points),

- description of the manner of securing technical capacity not to exceed the connection capacity (if the connection capacity is lower than the sum of the installed electric capacity of the renewable energy source installation),

- documents confirming the admissibility of the location of a given source in the area covered by the planned investment, if they are required by law for each installation (extract and excerpt from the local spatial development plan, decision on land development conditions, decision on determining the location of an investment in the construction of a nuclear energy facility or permit for the erection and use of artificial islands, structures and equipment in Polish maritime areas),

- documents confirming the legal titles to the property on which all the renewable energy source installations specified in the application will be realised,

- and in the event that the RES installations to be connected at one connection point belong to different connected entities, it is also necessary to attach an agreement concluded between these entities to the application, specifying: the parties to the agreement, together with the data enabling their identification and the assignment of the installations to be connected to the parties to the agreement; the party to the agreement that concludes the grid connection agreement and the electricity transmission or distribution service agreement in its own name for all the installations connected and to be connected; the rules for the joint exercise of rights and obligations arising from the terms and conditions of connection, the grid connection agreement and the electricity transmission or distribution service agreement; the rules for the sharing of sets of equipment for power evacuation to the point of separation of ownership of the grid of the energy company and the installations of the connected entities; the principles of cooperation with the entity that is a party to the agreement for the provision of electricity transmission or distribution services in the performance of its obligations concerning system balancing and system congestion management as defined in the Act and other obligations resulting from the implementing acts to the Energy Law Act and documents; the principles of the distribution of funds received as financial compensation in the event of redispatching being applied by the operator and the determination of the location of measurement points appropriate for individual installations

- and if the conclusion of the above agreement is required by law, also the obligation of each of the parties to the agreement to install devices preventing the connection capacity from being exceeded (if the connection capacity is lower than the sum of the installed electrical capacity of the renewable energy source installation), the authorisation of all the parties to the agreement for one entity to represent in matters before the President of the Energy Regulatory Office or Power System Operator, declaration of joint and several liability of the parties to the agreement for exceeding the connection capacity, and submission of declarations of consent to verification by the electricity system operator of the technical parameters of the renewable energy source installation, of compliance with the instructions and other legal acts and documents indicated in Article 7(3.de.7) of the Energy Law and on agreeing to verify the statements made.

As can be seen, applications for the connection of RES installations within the framework of connection sharing are very extensive, particularly when the RES installations to be connected belong to different entities. If the application has been submitted completely, the next step is to pay the advance payment.

Advance payment of the connection fee

Although Article 7(8a) of the Energy Law indicates that the obligation to pay an advance payment applies to applications for the connection of a source or electricity storage facility to the electricity grid with a rated voltage higher than 1 kV, the obligation to pay such an advance payment in the case of hybrid RES installations connected through cable pooling should not be questioned. The notion of the source itself is not defined in the Act. However, looking at the indicated provision from a systemic perspective, it should be indisputable that the obligation to pay the advance payment is also covered by the connection of a RES installation within the meaning of Article 2(13) of the RES Act, which is also demonstrated by the applied practice. In the case of a hybrid RES installation, such an obligation should not raise any doubts either, as the definition of a hybrid RES installation refers to the definition of a RES installation and, in fact, constitutes a set of such installations. The amount of the advance payment to be made should be calculated by the applicant on its own, in accordance with the conversion factor of PLN 30 for each kilowatt of connection capacity specified in the application for the specification of the terms and conditions of connection. Still, the advance payment amount cannot be higher than the anticipated fee for connection to the grid and cannot exceed PLN 3,000,000.

However, a problem arises if the RES installation is to be connected to the place where an existing RES installation is already connected. An advance payment is made towards the connection fee, the value of which is determined based on the actual expenses incurred in relation to the connection. In the event that the connection is already completed, and due to the management of the planned RES installation in such a manner that the maximum connection capacity at the given connection point cannot be exceeded (which means that in order to connect another RES installation under a shared connection, it will not be necessary to change the connection capacity, which could imply the necessity to pay the connection change fee), the implementation of the connection of another installation will not generate significant expenses for connection to the grid. The legislator did not decide to regulate the above issue, nor did the President of the Energy Regulatory Office address this problem in the already mentioned Information No. 15/2024. For the time being, a certain solution, masking this gap in the law for some time, could be the use of the solution indicated in the second sentence of Article 7(8b) of the Energy Law, according to which, in the event that the amount of the advance payment exceeds the amount of the fee for connection to the grid, the difference between the amount of the advance payment made and the amount of the fee shall be returned with statutory interest calculated from the date of making the advance payment. In the case of a prepayment in the amount calculated in accordance with Article 7(8a) of the Energy Law, after connecting a new RES installation to an existing connection, the advance payment would be reimbursed to the entity in an amount reduced only by minor costs of connection implementation. Such a measure, however, seems to be an unnecessary burden for entities wishing to connect a RES installation under a shared connection. The issue of advance payment by entities applying for connection under cable pooling urgently requires a position to be worked out by the President of the ERO or system operators and, in the best scenario, the introduction of relevant amendments to the Energy Law in this respect.

Issuance of conditions for connection

In the case of submitting a complete application for the determination of connection conditions and payment of a advance payment, pursuant to Article 7, paragraph 1 of the Energy Law, the ESO issues connection conditions when technical and economic connection conditions exist. It seems that in a situation where the connection is already completed and the connection of a new installation to one connection point will take place within the connection capacity specified for that point, it should be deemed that both technical and economic connection conditions exist. However, to issue the connection conditions, it is necessary to verify the documents attached to the application, particularly regarding securing the technical capacity so as not to exceed the connection capacity. Pursuant to Article 7(3dh) of the Energy Law, in the terms and conditions for connection, the energy company engaged in electricity transmission or distribution shall specify the manner of securing the technical capacity not to exceed the connection capacity. An aspect preceding the issue of connection conditions for grid connections of voltage higher than 1 kV is the preparation of an expert report on the impact of the connected facilities, installations or grid on the power system in the case of, among others, a generating unit to be connected with a total installed capacity of more than 2 MW or a generating unit to be connected, part of which will be an electricity storage facility, provided that the total installed capacity of the storage facility and the generating unit is greater than 2 MW. The costs of preparing such an expert opinion by the Electricity System Operator shall be included in the expenditures constituting the basis for calculating the connection fee. The methods of preparing the expert report and the parameters used in it are still unclear to the connected entities, which is partly justified by the operator's need to protect data on critical infrastructure. Thus, the question remains open as to whether, in the opinion of the Operators, it will be necessary to draw up a new expert report for the same connection point with an already existing connection in the event of a desire to connect further RES installations, which is an important aspect for the applicants due to the increase in the connection fee by the cost of drawing up such an expert report. The obligation to draw up an expert report will remain unquestionable when connecting only two or more new installations at a single connection point, where their installed capacity exceeds 2 MW.

Connection agreement

The next and final stage before the actual connection is made is the conclusion of the connection agreement. Its basic elements, common to any connection agreement, are listed in Article 7, item 2 of the Energy Law, and include, among others, the date of the connection execution, the amount of the connection fee, the connection schedule and the scope of works necessary to execute the connection. Additionally, in the case of the connection of a RES generating unit, the agreement shall contain the date of the first delivery to the grid of electricity generated in that unit, and depending on the type of generating unit and whether the electricity storage facility shall be part of the installation, the agreement shall also contain the provisions referred to in Article 7(2b)(2d-f). However, in the case of a connection carried out under the cable pooling system, the legislator has reserved further requirements for the connection agreement. First of all, in line with the position of the President of the Energy Regulatory Office, it should be noted that 'the completion of the formal procedure for the connection of two or more RES installations under a shared connection infrastructure is ultimately the conclusion of a single grid connection agreement, followed by a single transmission or distribution agreement for all RES installations'. Pursuant to Article 7(2¹ and 2²) of the Energy Law, within the framework of connection sharing, the grid connection agreement should also contain the requirements concerning the location and technical parameters for metering and billing systems that enable the measurement of the amount of electricity supplied to the grid and drawn from the grid by each renewable energy source installation connected to a single connection point under that agreement, and in the event that the total electric capacity of the installed RES installation is higher than the connection capacity - a detailed description of the manner of securing the technical capacity not to exceed the connection capacity, whereby the cost of purchasing and installing equipment used to secure the technical capacity not to exceed the connection capacity shall be borne by the entities connected to the grid, and the supervision of the operation of equipment used to secure the technical capacity not to exceed the connection capacity shall be exercised by the energy company engaged in electricity transmission or distribution, which shall be responsible in particular for securing such equipment in a manner preventing its settings from being changed.

To sum up, the regulations on cable pooling are still incomplete and give rise to a number of doubts, particularly in the case of connecting another RES installation in the place of an existing connection, including the obligation to pay an advance payment, the possible need for an expert report to be drawn up by the Electricity System Operator, the cost of which would be borne by the connected entity, or the ambiguity surrounding the determination of the existence/non-existence of technical and economic connection conditions for the completed connection. Given the amount of legislative inconsistency, what will matter first will be the practice developed by the Electricity System Operators, to whom the legislator seems to have left a lot of leeway. The explanations published by the President of the Energy Regulatory Office dispel some of the doubts, but the industry, encouraged by the benefits envisaged for hybrid RES installations, needs more similar positions from the Authority.

(…)

For further information on this topic please contact Patrycja Wysocka or Joanna Kosiniak at Kubas Kos Gałkowski by telephone (+48 12 619 40 40) or email ([email protected] or [email protected]). The Kubas Kos Gałkowski website can be accessed at www.kkg.pl.