THE QUESTION OF THE INSTALLATION OF A LOCAL SOURCE IN A LOCAL DISTRIBUTION NETWORK

Regarding the installation of a local source into the network, there have been numerous controversies and uncertainties in the legal practice. Recently, the most resonant has been the question whether it is possible to connect a new local source only to the regional distribution network or also to the local distribution network (LDN). On our part, we became aware of said question in October 2019, during the then ongoing ENERGOFORUM conference. During the conference, one of the regional distributors objected against the possibility of connecting the local source into the LDN, which was presented in the panel discussion by our colleague, Juraj Ondrejka. The opinion of the regional distributor was, surprisingly, supported also by the representative of the Ministry of Economy of the Slovak Republic.

Before closely explaining the above-mentioned question, we consider it to be necessary to state the legal definition of a legal source. That is defined in the Act on Support of Renewable Energy Sources as follows: “a local source is a unit for production of electricity from a renewable source of energy, which produces electricity for the coverage of the consumption of the supply point identical to the delivery point of this unit for the production of electricity, and the total installed capacity of which is to 500 kW including, but no more than the amount of maximum reserved capacity of such supply point.

The „Blanket stop state” applies

As it is generally known, the regional distribution companies have since the end of the year 2013 factually stopped the receipt of new applications for the connection of a unit for the production of electricity to the distribution network (the so-called blanket stop state).

The above-mentioned “stop state”, however, according to the notices of the regional distribution companies (referring to the provision of Sec. 3 (1) (c) of the Act on Energy) does not apply to the applications for the connection regarding the local sources, which are not obliged to pay the tariff for the operation of the system. According to the notice of the Ministry of Economy of the Slovak Republic, the disponible installed capacity determined for the connection of new local sources for the year 2020 was 19 MW. According to the opinion of the regional distributor, presented at the conference, the disponible capacities for the connection of new sources only apply to the units connected to the regional distribution network.

However, we are of the opinion that it is not possible to agree with this opinion. The competence of the Ministry of Economy of the Slovak Republic to determine the disponible capacities is provided in the provision of Sec. 14 (1) (e) of the Act on Support of Renewable Energy Sources. Said legal provision, however, does not differentiate between the types of the distribution networks to which the new source for the production of electricity can be connected. In this provision, the act only uses the general word “network” without differentiating whether it is a local distribution network or a regional distribution network.

The refusal to connect the sources is unacceptable

Regarding the legislation, we are of the opinion that the refusal to connect the local sources to the LDN is unacceptable. Said objection applies even more due to the fact that the individual operational rules subordinate the installation of any sources into the LDN to the approval of the regional distributors. If we went to the extreme, according to the opinion of the regional distributor, it would not be possible to install anything whatsoever into the LDN.

From our point of view, this interpretation of the regional distributor would cause an undesirable state, in which within the development projects in the LDN, it would not be possible to connect any source into the subordinate network. To the LDN, the established stop state, which the legislation on the local sources sought to bypass, would still apply in its entirety.

Further, we are of the opinion that such allotment of the capacity, exclusively for the benefit of the regional distribution network would clearly be inconsistent with Sec. 3 (1) of the Act on Regulation, according to which the “aim of the regulation is to ensure the availability of the commodities and relating regulated activities in a transparent and nondiscriminatory way (…).”

From the cited provision, it is clear that within the legal regulation, there are certain quality requirements of a fair and transparent ensuring of the availability of the commodities and relating regulated activities, that is, the prohibition of discrimination is also emphasized.

What is our opinion?

Therefore, we think that the notice of the disponible installed capacities for the new sources must be interpreted in a way that the Ministry of Economy of the Slovak Republic determined the installed capacity for the regional distribution networks, including the subordinate networks connected to them. A different interpretation would be, from our point of view, discriminatory at the least to the potential producers, who are connected to the local distribution networks.

The question is how the regional distributors will deal with the potential objections against the breach of the prohibition of discrimination, which they are likely to face from the part of the applicants for the connection of the local sources into the LDN.

We assume that if the regional distributors do not change their opinion, it is possible that some of the refused applicants will protect their rights through a court action.