To whom does the windfall tax act apply?
Electricity generators and energy trading companies.
How does the Polish windfall tax act work in principle?
Generators obtain an individual price cap, but they can sell to any offtaker at a price that can be set freely. Any revenue above the price cap must be reported and contributed the Fund.
Example: Energy generator has a cap at 355 zł/MWh. They can sell energy for 1000, 600, 550, etc. The difference between the selling price and the cap must be contributed to the Fund.
Energy trading companies:
Trading companies' margin on trading is capped. Trading companies can buy energy at a cost that is currently available, but the difference between these costs and the price of further resale (the margin) is capped.
In the wholesale market, the margin is capped at 1.5 % for transactions on a commodity exchange, an organized trading platform or as part of a single market coupling by designated operators (NEMO), and at 1 % for other transactions.
When selling on the wholesale market (to non-final offtakers) the allowed margin cannot exceed 1 % (OTC) and 1.5 % (regulated DAM/IDM).
If a trading company sells energy for a higher price, the difference between the 'allowed price' and the resale price must be contributed to the Compensation Fund.
Which energy sources are affected by the levy?
Wind energy (exception: participant of the auction system), solar energy (exception: participant of the auction system), geothermal energy, hydro energy (exception: participant of the auction system), biomass and biofluids, waste, lignite, liquid fuels, hard coal and gas fuels (excluding biogas and agricultural biogas) are affected by the Polish windfall tax law.
Does the 1 MW limit apply?
Yes. Electricity generators of power plants with up to 1 MW installed capacity are not affected on condition that an SPV may not have more than 3 MW in the portfolio, e.g.:
- A company with 3 installations, 1 MW each will not have a price cap
- A company with 4 installations or more, 1 MW each will have a price cap
How high is the price cap on market revenues?
Technology-specific market revenue cap:
- PV: 355 PLN/MWh (75,68 EUR/MWh)
- Wind: 295 PLN/MWh (62,89 EUR/MWh)
The volume-weighted average of the market price of electricity purchased on a given day by energy trading company * the margin defined as either 1 %, 1,5 %, 3 % or 3,5 %
To what extent are surplus revenues skimmed off?
100 % of the monthly surplus revenues are skimmed off.
How is the surplus revenue calculated?
Windfall tax is referred to as the "Contribution for the Fund" It is calculated as:
- OFd = the contribution to the Fund on a given day,
- Wd = volume of electricity sales on a given day,
- XCRd = the volume-weighted average market price of electricity sold on a given day for the obligated entity,
- XCLd = volume-weighted average cap price of sold electricity on a given day for the entity
Energy trading companies
- Commodity Exchange:
Contribution to the Compensation Fund = volume of energy sold*[(Sell price) – (volume-weighted average purchase price * 1,015)]"
- Other customers (not end-user):
Contribution to the Compensation Fund = volume of energy sold*[(Sell price) – (volume-weighted average purchase price * 1,01)]"
How long does the rules apply?