The Significance of the “Power Purchase Agreement” for the Development of Local Energy Markets in the Theoretical Perspective of Polish Legal Conditions

Abstract

Today’s geopolitical and economic situation (negative economic effects of COVID-19; war in Ukraine) adversely affects the energy market situation. These circumstances make it necessary to quickly adapt the previously adopted long-term strategies for transforming the energy market to maximise the country’s energy security through greater diversification and energy self-reliance. The legal systems of the Member States, including Poland, provide for various instruments to support the production of electricity from renewable sources. However, each Member State has a different potential for producing energy from renewable sources (later as RES), so the measures used to promote the use of energy from renewable sources in the broad sense are tailored to achieve the desired level of renewable energy production, particularly under EU law. For this reason, a variety of support models are used in the Member States, which are subdivided into direct (e.g., feed-in tariffs) and indirect (e.g., tax credits). However, state support schemes for renewable energy production do not always allow producers to have stable, long-term revenues and sources of additional income that guarantee the possibility to raise external financing for RES projects. However, irrespective of the support measures used in individual countries, European electricity markets (following the American system) have created a non-public instrument—the power purchase agreement (later PPA or PPAs). In 2021 alone, Europe saw record volumes of renewable energy contracted under PPAs—6.9 GWh. Despite the importance of PPAs for the development of renewable energy (most evident in the Danish, Finnish, British and Norwegian markets), Polish legal acts do not apply this contractual construct. Although Polish law creates the possibility for energy market participants to establish PPAs, these agreements will not be a key instrument for the development of renewable energy at the local level, as they are not a sufficient alternative to the current public forms that support renewable energy generation in Poland. This analysis proves that the existing status of regulations in Poland means that PPAs have limited significance and are rather dedicated to entities that will be able to face up to administrative, legal and technological barriers as an addition to the public support system. The analyses conducted are theoretical in nature. The research is based on the dogmatic approach (the analysis of the law in force) applied in the science of law, which is part of the social sciences.