ERO on challenges in issuing grid connection conditions – analysis of the 2023 report of the President of the Energy Regulatory Office.

Refusals to issue connection conditions in figures

According to data for 2023, energy companies reported as many as 7,448 refusals to issue conditions for connection to the electricity grid, covering a total capacity of 83,612.412 MW. Of all the refusals, the majority, i.e. 3,568 refusals (41.8 GW), were due to a lack of technical conditions for grid connection, whilst 2,231 refusals (17.9 GW) were due to economic considerations. In the remaining 1,649 cases, the refusal was the result of a simultaneous lack of both technical and economic conditions.

Compared to 2022, the number of refusals to issue grid connection conditions increased by 6.05 per cent in 2023, and in terms of total connection capacity, this increase amounted to as much as 63.76 per cent. In 2022, 7,023 refusals of connection conditions were issued. Compared to 2022, the capacity of projects that were refused also increased significantly – in 2023 it reached 83.6 GW, whereas in 2022 it was over 51 GW.

Legal regulations concerning the issuance of connection conditions

Pursuant to Article 7(1) of the Energy Law, energy network operators are obliged to treat all applicants equally and to connect them, giving priority to installations using renewable energy sources, provided that they meet the technical and economic conditions for connection to the grid. However, the Act does not specify these concepts, which leads to a broad and flexible interpretation depending on the context of the case, and consequently determines whether a decision to refuse connection conditions is issued. Consequently, operators currently have the freedom to establish their own individual practices regarding the assessment of applications for connection conditions, which leads to a lack of consistency in the interpretation of technical and economic requirements.

Definition of technical and economic conditions in the context of refusals to grant connection conditions

The absence of legal definitions of technical and economic conditions necessitates their interpretation based on legal doctrine and case law. Technical conditions are permanent and objective obstacles that prevent the implementation of an investment, such as grid overloads or exceeding the permissible voltage (Judgment of the Court of Appeal in Warsaw, 16 June 2015, VI ACa 890/14, LEX No. 1923890). Technical conditions for grid connection relate to the possibility of connecting to and receiving energy via the existing grid. Economic conditions, on the other hand, refer to situations requiring significant expenditure on connection, e.g. due to a long distance from the grid. Refusal on the grounds of a lack of economic conditions is possible only in exceptional circumstances (judgment of the Court of Competition and Consumer Protection, 18 September 2002, XVII AmE 100/01, LEX No. 1727654). However, reference should be made to paragraph 9 of the aforementioned provision, according to which, where an energy company refuses a grid connection on the grounds of a lack of the economic conditions referred to in paragraph 1, that company may enter into a grid connection agreement, setting in that agreement a connection fee at a level agreed with the entity applying for the grid connection. In such cases, the provisions of Article 7(8)(1), (2) and (3)(a) of the Energy Law concerning the rules for determining the grid connection fee shall not apply. The parties to the so-called ‘commercial connection agreement’ may thus determine the amount of the connection fee at their discretion, and therefore in a manner exceeding the framework set out in the Energy Law.

In view of the above, there has been a significant increase in the number of refusals to connect facilities to the electricity grid, which, according to the President of the Energy Regulatory Office, stems from the lack of detailed economic and technical regulations. Consequently, this creates significant obstacles for renewable energy investors.

The position of energy companies regarding refusals to issue connection conditions

The ERO President’s report for 2023 also highlights the positions of operators responding to the record number of refusals to issue connection conditions. Tauron Dystrybucja points out that refusals to connect RES to the grid often result from investors choosing locations far from consumers and industry, where there is only a low-voltage network with a small number of consumers. PGE Dystrybucja, in turn, emphasises that the development of renewable energy sources takes place in sparsely populated areas with no industry, which limits the possibility of connecting new energy sources due to low demand for electricity. Enea Operator, however, pointed out that the most common technical reasons are: a lack of generation capacity relative to demand at a given network node, exceeding the permissible voltage level, and overloading of the distribution network. Similar conclusions were also drawn in Energi-Operator’s explanations. The company emphasises that such technical problems are the cause of refusals, particularly in cases where the connection point is located deep within the medium-voltage network, which is not covered by the published information on available connection capacity.

URE recommendations to reduce refusals to issue connection conditions

In its published report, the URE proposes a series of measures to streamline connection processes. These include strengthening the regulator’s position by granting it legal tools to effectively influence energy companies in disputed matters, particularly in cases of delays or applications left unprocessed. The Office also advocates for increased transparency through the digitisation of connection processes, e.g. via a public list of applications for connection conditions on the operator’s website. Furthermore, it proposes introducing auctions for available connection capacity and establishing milestones for the implementation of RES investment phases, with the sanction of contract termination in the event of inaction. The ERO highlights the need for stable funding to carry out its tasks, including the preparation of expert reports and opinions. Furthermore, it recommends adopting regulations enabling the connection of renewable energy installations and energy storage facilities without significant expenditure on grid development, through grid capacity profiling, which will increase grid flexibility and facilitate access to the grid for renewable energy installations and energy storage facilities.

Author

Martyna Dobkowska

Associate

She specializes in civil, commercial and business law. In the corporate and energy department, her activities are mainly based on providing corporate services to companies, reviewing and preparing commercial contracts, drafting litigation and non-litigation pleadings and preparing analyses and legal opinions, particularly in the sphere of business law and energy law. She also has professional experience in administrative and civil proceedings, which she gained in Warsaw law firms. She supports the Firm's…

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