The Implementation of EU Legislation on Energy Communities into Polish Law

European Union (EU) legislation increasingly emphasises the division of energy sector entities into two categories. On the one hand, these are ‘traditional energy undertakings prioritising profit-making’, as defined in the provisions of Directive 2019/944 of 5 June 2019 on common rules for the internal market in electricity (‘Directive 2019/944’)

See recital 43 of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity and amending Directive 2012/27/EU (OJ EU L 158, p. 125).

In the second of these energy areas, in turn, it is possible to identify ‘renewables self-consumers’, as defined in the provisions of Directive 2018/2001 of 11 December 2018 on the promotion of the use of energy from renewable sources (‘Directive 2018/2001’)

See Article 2(14) of Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ EU L No. 328 82). According to this provision, the term ‘renewables self-consumer’ means a final customer operating within its premises located within confined boundaries or, where permitted by a member state, within other premises, who generates renewable electricity for its own consumption, and who may store or sell self-generated renewable electricity, provided that, for a non-household renewables self-consumer, those activities do not constitute its primary commercial or professional activity.

The rules for the establishment and operation of CECs are set out in Directive 2019/944. A CEC is a legal entity in which participation is voluntary and open to all categories of entities. Its organisational and legal form is to be determined by national law. It may, for example, take the form of a cooperative, an association, a partnership, a non-profit organisation or a small or medium-sized enterprise. However, the entity must be able to act, exercise rights, and be subject to obligations (recital 44 of Directive 2019/944) in its own name. A CEC must be effectively controlled by members or shareholders who are natural persons, local authorities (including municipalities), or small enterprises. A CEC is also characterised by the specific objectives to be served by its activities. Its main objective is not financial gain, but environmental benefits as well as economic or social benefits for its members or for the local areas in which it operates. These activities may include the generation of energy (both from renewable and traditional sources), as well as its distribution, supply, consumption, aggregation, and storage. A CEC may also provide energy efficiency services, electric vehicle charging, and other energy services to its members or shareholders (Article 2(11) of Directive 2019/944). Detailed rules on membership in a CEC and performance of its activities, including cooperation with energy (distribution or transmission) system operators and the management of its own distribution networks, are regulated by Article 16 of Directive 2019/944

For more about CECs, see Tomasz Długosz, ‘Społeczności energetyczne z pakietu dyrektyw: Czysta energia dla wszystkich Europejczyków’ (2022) 1(69) Forum Prawnicze 40 et seq.

The EU legislator has separately defined rules for the creation and operation of RECs. These are regulated in the provisions of Directive 2018/2001. An REC is a legal entity whose organisational form is to be determined by national law. Participation in this entity is to be, similarly to CECs, voluntary and open to all categories of entities. An REC is to act in its own name, exercise its own rights, and be subject to obligations. Its shareholders or members may only be natural persons, local authorities (including municipalities) and small and medium-sized enterprises (‘SMEs’). A CEC must be independent of its individual members or shareholders and, in particular, of the traditional market participants who participate in it or who collaborate with it through joint investments (recital 71 of Directive 2018/2001). Effective control of an REC can only be exercised by those shareholders or members who are located in close proximity to the renewable energy projects owned and developed by it. The aim of RECs’ activities is not so much to seek financial gain, but to bring environmental, economic, or social benefits to its shareholders, members, or the local areas in which it operates. These activities are to be focused around ‘‘renewable energy projects’. Article 22(2) of Directive 2018/2001 clarifies that this refers to the production, consumption, storage, sale, and also distribution, within a given REC, of renewable energy produced by the generating units it owns. The wording of Article 22(4)(e) of the said Directive (in its final part) makes it possible to consider that the scope of REC’s activities may also include energy distribution.

In the situation where the provisions of EU law, contained in two separate directives, distinguish two types of energy communities, the question arises as to how these provisions should be implemented (transposed) into national law. It can be said that there is a structural similarity between the acts of EU and Polish energy law. In the system of EU law, there is a separate legal act on renewable energy (Directive 2018/2001) and a separate legal act that sets out the general rules for undertaking and carrying out activities in the field of electricity (Directive 2019/944). In an analogous manner, the Polish legislator, in a separate legal act, has included regulations on renewable energy (the Renewable Energy Sources Act, the ‘RES Act’

The Act of 20 February 2015 on Renewable Energy Sources (Ustawa z dnia 20 lutego 2015 r. o odnawialnych źródłach energii”, Consolidated Text: Journal of Laws 2022, item 1378, as amended).

Currently, two legal institutions can be identified in Polish law which (albeit with certain reservations, which will be explained below) can be categorised as energy communities within the meaning of EU law. The first is an energy cooperative and the second is an energy cluster. An energy cooperative is a type of cooperative within the meaning of the Cooperative Law of 16 September 1982

Consolidated Text: Journal of Laws 2021 item 648, as amended.

Energy cooperatives’ energy generation activities can only be carried out on the basis of renewable energy. In doing so, the provisions of the RES Act do not provide for the possibility for an energy cooperative to sell the energy it generates on the market. As regards the place of its activity, the energy cooperative is a dedicated entity for areas located outside large urban agglomerations. Indeed, according to Article 38e(1)(1) of the RES Act, an energy cooperative may only operate in the area of a rural or urban-rural municipality, as defined by the provisions on public statistics, or in the area of no more than three such municipalities directly neighbouring each other. The RES Act also imposes strict, technical, requirements as to the capacity of the generating facilities and the extent to which energy generation is to cover the energy cooperative’s own members’ needs. These requirements are described by renewable energy specialists as very strict and therefore considered an obstacle to the development of this form of activity. In particular, this concerns the requirements set out in Article 38e(1)(3) of the RES Act. According to this provision, where the scope of activity of an energy cooperative is the generation of electricity, the total installed electrical capacity of all renewable energy source installations must make it possible to cover no less than 70 per cent of the energy cooperative’s own needs and those of its members during a year, while at the same time it must not exceed 10 MW. Where the scope of activity of the energy cooperative is the generation of heat, the thermal generating capacity must not exceed 30 MW and, in the case of biogas generation, the annual capacity of all installations must not exceed 40 million m³. On the basis of the provisions indicated and when juxtaposed with the previously discussed provisions of EU law, it can be concluded that an energy cooperative falls within the category of an REC as defined in the provisions of Directive 2018/2001.

An energy cluster can be considered as a type of CEC. Although it does not meet the requirement of legal personality set out in Article 2(11) of Directive 2019/944, as, according to Article 2(15a) of the RES Act, it has the nature of a civil law agreement

On the legal nature of an energy cluster, see Eryk Kosiński, ‘Art. 38a’ in Marzena Czarnecka and Tomasz Ogłódek (eds), Prawo energetyczne: Ustawa o odnawialnych źródłach energii: Ustawa o rynku mocy. Ustawa o inwestycjach w zakresie elektrowni wiatrowych: Komentarz (C. H.Beck 2020) 853 et seq.

Notwithstanding the provisions on energy cooperatives and energy clusters contained in the RES Act, the Polish legislator also intends to establish new legal provisions to be included in the EL, which will introduce the institution of the CEC into the Polish legal system. The first draft of the relevant provisions amending the EL was dated 30 April 2021 (the ‘2021 draft’)

The draft Act amending the Energy Law and the Renewable Energy Sources Act of 30 April 2021. (Government draft No. UC74 prepared by the Ministry of Climate and Environment) <https://legislacja.rcl.gov.pl/docs//2/12347450/12792164/12792165/dokument505854.pdf> accessed 1 April 2023.

Under the provisions of the 2023 draft, a CEC is to be an entity with legal capacity. Article 11zi(1) of the EL will set out the legal forms in which the entity may operate. According to these provisions, a CEC may operate in one of six legal forms, namely, (1) a cooperative within the meaning of the Cooperative Act of 16 September 1982; (2) a housing co-operative within the meaning of the Act of 15 December 2000 on Housing Cooperatives

Consolidated text: Journal of Laws 2023 r., item 438.

According to Article 3(13f) of the EL, participation in a CEC is to be voluntary and open, but the decision making and control powers are to be vested in strictly defined members, shareholders, or partners of the CEC. These are to be exclusively natural persons, local government units, micro- or small entrepreneurs within the meaning of the Act of 6 March 2018 – Entrepreneurs’ Law

Consolidated Text: Journal of Laws 2023, item 221, as amended.

The group of entities exercising decision making and control functions is defined in a special way (in the 2023 draft) if a CEC will only operate in the field of renewable energy sources. In such a case, decision making and control powers are to be vested only in those of its members, shareholders, or partners who have their residence or registered office in the area of operation of the same electricity distribution system operator (Article 11zi(2) of the EL). In this case, decision making and control powers may also be vested in medium-sized entrepreneurs within the meaning of the Act of 6 March 2018 – Entrepreneurs’ Law and the entities referred to in Article 7(1)(1), (2), (4) to (8) of the Act of 20 July 2018 – Law on Higher Education and Science

Consolidated Text: Journal of Laws 2022, item 574, as amended.

As regards the scope of CECs’ activities, it is defined in detail in the proposed Article 3(13f) of the EL. These activities may include, with regard to electricity, its generation, consumption, distribution, sale, trading, aggregation, or storage. CECs may also carry out energy efficiency improvement projects as referred to in the Energy Efficiency Act of 20 May 2016

Consolidated Text: Journal of Laws 2021, item 2166.

The implementation of the institution of a CEC into Polish law will create a complex structure of legal regulations concerning energy communities. On the one hand, a form of energy cooperative, which can be regarded as a type of CEC within the meaning of the provisions of Directive 2018/2001, already exists in the provisions of the RES Act. In addition, there is the institution of an energy cluster in this Act, which has certain characteristics of a CEC within the meaning of the provisions of Directive 2019/944. On the other hand, provisions establishing the institution of a CEC and using this very name will be introduced into the EL. These provisions are to implement into the Polish legal system both the institution of a CEC within the meaning of Directive 2019/944 and the institution of an REC within the meaning of Directive 2018/2001. This way of allocating provisions implementing energy community provisions into Polish law can be considered to be in principle in line with the provisions of Directives 2019/944 and 2018/2001. Such a solution also corresponds with the proposals made by representatives of legal scholarship

See Maciej Miłosz Sokołowski, ‘Renewable and Citizen Energy Communities in the European Union: How (Not) to Regulate Community Energy in National Laws and Policies’ (2020) 38(3) Journal of Energy & Natural Resources Law 303.