2 MARCH 2021
2 MARCH 2021
Author of the article
PARTNER
ASSOCIATE
The issue of building and connecting a new
renewable energy source (RES) is currently a source of disappointment for many
green energy producers. The actual construction of the source is of course
feasible on a theoretical level, but the problem arises if the potential
producer finds that he will not be able to connect it to the distribution
system. Since 2013, the regional distribution companies have taken the same
view that there is simply no capacity in the system to connect any new sources.
Not even to local distribution systems (LDS). Building a renewable energy
source with an output of more than 10 kW in Slovakia has been an almost
impossible task since 2013. Even if some lucky producer succeeds, it is more of
an exception to the rule.
The long-awaited (and highly demanded) change occurred in 2019, when a major amendment to the RES Support Act entered into force. In addition to other significant changes, it also brought a partial breaking of the stop state. We have already dealt with this amendment in our article Legislative "whirlwind" brings significant changes and new opportunities in the Slovak energetics, which was published in issue 1/2019.
The amendment tried to break the stop state in
several ways.
In the first place, it established that the
Ministry Economy of the Slovak Republic (hereinafter referred to as the
Ministry) annually by 30 June publishes on its website the installed capacity
of new plants for the production of electricity from RES and CHE (cogeneration
of heat and electricity) supported by a surcharge, that can be connected to the
system.
Secondly, a new type of support was added
to the support act - a supplement. It shall be provided to plants with a
total installed capacity of 10 kW to 50 MW. It is determined as the difference
between the offered price of electricity and the price of purchased
electricity, which is calculated by the Regulatory Office for Network
Industries (RONI). It is to be paid for a period of 15 years.
Despite these efforts, however, obstacles have arisen in practice, which make connecting new sources still a difficult task.
As we have mentioned, the first opportunity was
the possibility of connecting the new sources on surcharge, according to the
available capacities for the connection, published on an annual basis by the
Ministry.
Despite the fact that the Ministry does not idle
and since 2019 (including the capacity for the year 2021) it has “enabled” to
connect a total of 39 MW RES plants and 21 MW CHE plants within the whole of
Slovakia, the connection possibilities are still limited. Support in the
form of surcharge is provided under very limited circumstances and for
relatively small outputs. For example, you will only receive a surcharge for
RES for plants using hydropower, geothermal energy, biogas, landfill gas or
sewage treatment plant gas, while the total installed capacity of this source cannot
exceed 500 kW. CHE sources will receive a surcharge only if they have a total
installed capacity of up to 1 MW, use at least 60% of the heat produced to
supply heat to the central heat supply system and achieve at least 10% primary
energy savings.
At the same time, as the Ministry determines the
available capacity for the three regional distribution system operators, they
make no secret of the view that new sources for surcharge can only be connected
to regional distribution systems. Connecting sources for surcharge to the LDS
can be problematic at the very least.
Regarding the supplement, it is still awaiting
the first producer. The reason is simple - obtaining the right to support in
the form of a supplement is possible only on the basis of success in the
tender, the so-called auctions. These auctions are to be organized by
the Ministry.
At the beginning of the year, the Ministry
actually initiated such an auction. In February 2020, it published a
call on its website to submit bids for an auction, in which it planned to
"distribute" 30 MW of installed capacity. The auction was announced
for the following new sources:
The only criterion for success in the auction
was the bid price, with the call setting a maximum bid price of:
However, the initial enthusiasm of future
producers quickly passed, as the Ministry canceled the auction less than 2
months after it was announced. The reason was the epidemiological situation
associated with the spread of COVID-19.
Now, however, new information has emerged in the
energy market. The state secretary of the Ministry of Economy of the Slovak
Republic, Karol Galek, let it be heard at the autumn professional conferences
and discussions that the Ministry plans to restart the canceled auction by
the end of this year. The conditions of the new auction should copy the
conditions of the canceled one, but the installed capacity of the plants should
increase from the original 30 MW to 50 MW. However, this information is not
officially published at the time of publication of this article.
Of course, this statement stirred up the energy
waters again. It can thus be assumed that in the foreseeable future, many
producers will not only be able to build some of the renewable sources, but
this time (probably) even connect them.
Let's say that the investor will be successful
in the auction to build a new source. What processes does it have to go through
to put a plant for the production of energy from RES into commercial operation?
We start right literally "from the floor", in the area of construction. First of all, it is necessary to resolve the
question of where the source will be located.
If the manufacturer wants to build a source on
the land (that is, not on the roof of a building, for example), it is important
from the view of the whole process for the source to be located on the right
land. From a legal point of view, it is not possible to build such a construction
on any land, but only on land, on which it is permitted by law.
When choosing the right land, it is necessary to
examine two levels - the level of the character of the territory according to
the zoning plan of the municipality, in which the source is to be built, and
the level of the type of land on, which the source is to be built.
The zoning plan of the municipality addresses
the spatial arrangement and functional use of the area. Simply put, it is a
kind of "map," in which it is determined where what can be built.
From the point of view of the zoning plan of the
municipality, the location of the renewable energy source is possible only in
the areas, which are determined in the zoning plan of the relevant municipality
from the point of view of the functional area for production, that is, in the
production areas. However, if the producer already has the land purchased
or leased, and it is not registered in the given zoning plan of the
municipality as a production area, there is no need to despair. There is still
a possibility to change the zoning plan of the municipality. However, this is a
relatively complex process. In addition, not every area can simply be 'changed'
into a production area but must meet certain conditions. Moreover, this change
must be approved by the authority that approved the original zoning plan.
The second level is the correct choice of the
character of the soil of the land. The Building Act clearly stipulates that
construction can only be carried out on building land. Building land is
the area determined by the zoning plan of the municipality, the zoning plan of
the zone, or the zoning decision for construction and the land built-up by the
building. However, the Land Register does not recognize the designation
'building land'. Building plots are registered in the Land Register as a
"built-up area and courtyard", or as a "other area."
According to the Land Register, you can easily see, which land is suitable for construction.
In this context, it is important to note that it
is also possible to place a renewable source on agricultural or forest land.
These lands are registered in the Land Register as 'arable land', 'hops',
'vineyards', 'orchards', 'gardens', 'permanent grassland' or 'forest land'.
However, in order to be able to build on such land, it is necessary to
exclude it from the agricultural or forest land fund. From a legal point of
view, the exemption represents a change in the type of land. By excluding the
land, the type of land changes from for instance "arable land" to
"other area".
From the viewpoint of time, the exclusion can be
either permanent or only temporary. Agricultural land can be temporarily
excluded for a period of 10 years, while for solar power plants the law does
allow an extension of the maximum another 10 years. Forest land can be
temporarily excluded for a maximum of 20 years. The temporary or permanent
exclusion of agricultural and forest land, it is also subject to the obligation
to pay a one-time levy to the state. The amount of the levy depends on whether
the land is excluded temporarily or permanently, and the creditworthiness of
the land excluded is also assessed. The more creditworthy land is being
excluded, the more the producer pays. In the case of forest land, the amount of
the levy is also based on the locality (for instance for certain districts such
as Senec, Šaľa, Galanta, Komárno, the basic amount of the levy increases by up
to 50%).
At the end of the period of the temporary exclusion,
the producer is obliged to restore the land to its original condition before
its exclusion by reclamation measures.
In this context, it should be noted that the aim
of the state is to limit the construction of PVPP on agricultural land. This
trend is also evidenced by the above-mentioned auction of the Ministry, which
stated in the call that the supplement will be provided to PVPP plants with a
total installed capacity of 100 kW to 2 MW located on land that is not an
agricultural type of land as of the tender date – that is, it is not registered
in the Land Register as 'arable land', 'hops', 'vineyards', 'orchards',
'gardens' and 'permanent grassland.' This land thus had to be excluded from the
agricultural land fund when the auction was announced. It can be expected that
this condition will also be set in the new auction. It is therefore ideal for
the future producer of electricity from solar energy to "secure" a
suitable plot of land before the next auction is announced.
If the electricity producer has resolved the
issues related to the location of the land, it is possible to proceed to the permitting
process itself. In this case, it is necessary to go through a zoning proceeding,
the result of which is a zoning decision on the location of the construction.
Subsequently, the builder proceeds to the construction proceeding, the result
of which is the issuance of a building permit. The whole process is
completed by the issuance of a building approval decision in the building
approval proceeding.
We also draw attention to the possibility for producers
to place the PVPP plant not only on land, but also to install it on the roof
structure of the building or on its perimeter cladding. In this case, too, the
above permitting process must be completed. However, if the source will be used
primarily for the production of electricity for the supply to the distribution
system (the source will also have an outlet to the distribution system), then a
new operation of a production nature is being created here. In this case, it is
necessary to proceed with a change in the use of the building before the installation,
as the new operation changes and expands the purpose of use of the building
compared to the purpose, for which the original building was permitted and
subsequently approved.
The second important area that the future producer has to go through is the area of environmental impact assessment (EIA). For some projects, it can be a challenging or even insurmountable obstacle. This is because it is a complex, complicated and lengthy process often with an absolutely uncertain outcome.
The applicable law here is the Act on Environmental
Impact Assessment. The future producer will be particularly interested in the Annex
no. 8 of this Act, which stipulates, which activities are subject to
environmental impact assessment. In the case where the intended activity of the
producer is not specified in Annex no. 8, the environmental impact assessment of
the source does not have to be completed at all.
For some activities, the EIA must be performed
automatically. These are, for example, PVPP plants with an installed capacity
of 50 MW or more, hydropower plants of 0,1 MW or more and all wind power
plants, regardless of the size of the installed capacity. With these sources,
it is assumed that the environmental impact of their activities is so
significant that the implementation of an EIA is necessary from the beginning.
The whole procedure begins with the elaboration of the plan and ends with the
issuance of the final opinion. On average, it is necessary to prepare for a 1 -
2-year procedure.
However, for some other specific activities, the EIA may not have to be automatic. It may be necessary to assess the activity only in a separate procedure other than the EIA. It is an inquiry procedure, or the so-called screening. The purpose of the inquiry procedure is to assess whether or not an EIA is required for a given activity. Thus, it is either a kind of "intermediate step" to the EIA, or a conclusion that the EIA is not necessary. The Annex no. 8 of the Act precisely determines, which activities need to be assessed in that inquiry procedure. Here you will find, for example, PVPP plants with an installed capacity of 5 MW to 50 MW, or hydropower plants up to 0.1 MW. However, PVPP plants with an installed capacity of up to 5 MW are not affected by these processes.
The key document in the field of energy
legislation, which must be of interest to the future producer, is the
certificate for construction of a plant.
It is a document regulated by Act on Energy,
which confirms that the new plant for electricity production will be in compliance
with the energy policy of the Slovak Republic and meets the required criteria. For
the issuance of the certificate, it is necessary to apply in writing to the Ministry
of Economy of the Slovak Republic, and if such a plan is in accordance with the
energy policy, the Ministry will issue it within 60-90 days.
In this context, it is important to note that,
in addition to basic information such as identification data and the investment
plan, the producer must include in his application the opinion of the
distribution system operator, to which the plant will be connected. The opinion
of the transmission system operator is also required, and if the source has
a total installed capacity of more than 1 MW, the producer must also provide
the opinion of the RONI. At the same time, for CHE plants, the issuance of a
certificate is also carried out in accordance with the Act on Thermal Energy.
However, even in this case, the act specifies the
sources, for which the construction of the plant is not conditional on the
issuance of a certificate. It is a PVPP plant with a total installed capacity
of up to and including 500 kW and, if a different energy source is used than
solar energy, up to and including 1 MW.
The validity of the issued certificate is 3 years, while the producer is obliged to inform the Ministry once a year about the progress of the source construction.
In addition to the above stated processes, future producers will not avoid a lot of other "paperwork" and bureaucracy. This includes not only addressing the issues of project financing or the need to conclude the relevant contractual documentation, but also the final steps, such as obtaining an energy business permit, issuing a pricing decision, performing a functional test and other necessary steps. In this case, it is also necessary to follow the operational rules and other binding documents of individual operators of regional distribution systems, which describe these procedures in detail.
Regardless of all these processes, however, at the end of the day, it is necessary to connect the built source to the distribution system. Legislation stipulates that the distribution system operator shall connect a source to the system if it meets the technical and commercial conditions for the connection of the distribution system operator. However, as we mentioned in the introduction, this is the moment in the whole process, in which producers are currently struggling to succeed.
We can only hope that in the case of the construction and connection of new sources, better times are coming.
Nevertheless, by 2030, Slovakia has committed
itself to achieving a share of renewable energy sources in gross final energy
consumption of 19.2% (in the year of 2018 we were at 11.89%). This cannot be
achieved differently than by deviating from the run-in tracks.
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