With the end of the year comes the season for concluding new and amending already concluded contracts for the sale of electricity. Although the energy law’s provisions on the rules for conducting sales have not changed dramatically, there have been several developments that have significantly affected contracting practices. In today’s post, I summarize the most important issues faced by market participants at the contractual level this year and what new developments to expect in 2025.
1. Redisposition and negative pricing
Both phenomena did not surface in their full glory until 2024 and immediately created confusion. In the case of redispatch, it was most painfully felt by generators whose projected amount of energy had to be reduced due to either forced curtailment of work or shutdown. In such cases, it is suggested that the sales contract describe the legal consequences for both parties in the event of the introduction of redispatch, particularly in terms of the billing rules for the energy that was to be delivered, as well as the possible impact on the forecast volume covered by the contract.
On the other hand, the emergence of negative prices was particularly acute during the summer season, when, due to the large installed capacity of photovoltaic power plants, cyclically prices in the day-ahead market fell to negative values. In such a case, generators should take care of the right to shut down the source themselves, so as not to expose themselves to losses.
2. PPA reporting
The popularity of the PPA formula does not seem to be declining, particularly in light of the growing ESG awareness of businesses. Generators entering into agreements with end-users should remember that they are under an obligation to report the conclusion of an agreement under the PPA formula to the ERO President within a month of its conclusion. The notification should include information about the conclusion and the parties to the agreement, the amount and price of electricity that is the subject, the location and type of renewable energy source from which the energy was generated, and the period for which the agreement was concluded (Article 5, paragraph 11a of the Energy Law). The sanction for failure to fulfill this obligation is a fine of between PLN 10,000 and PLN 50,000 (Article 56(1)(51a) in conjunction with paragraph 2h(9) of the Energy Law).
3. New formula for reserve sales
Both end-users and sellers should refresh their provisions on reserve sales, as they will be held under new rules starting July 1, 2025. While the situation for end customers does not change significantly, sellers should keep in mind:
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- Revision of the provisions of the General Distribution Agreements concluded with the DSO,
- Verification of the status of the obligated seller in a given area,
- Mandatory accession to the Central Energy Market Information System and conclusion of an agreement with the operator (Polskie Sieci Elektroenergetyczne S.A.).
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4. Self-consumption vs. energy sales – key aspects
Entrepreneurs, especially owners of commercial facilities such as shopping malls, office buildings or large-area warehouses, continue to look for opportunities to self-consume energy from renewable sources. Roof-mounted photovoltaic installations are leading the way. While the provision of “green” energy from such an installation by the landlord seems to be an attractive offer for tenants, it is worth remembering that this issue is strictly regulated by the energy law. Before an entrepreneur chooses and implements the so-called PV as a Service model, he should plan well the organizational and regulatory details, as the consequences can be severe. Violations of electricity trading regulations are subject to criminal liability.
5. Electricity sales contract checklist
Just like last year, today, when negotiating an electricity sales contract, it is worth remembering the following points:
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- correctly determining the place of delivery,
- correctly estimating the amount of energy to be delivered under the contract. Receiving too little or too much energy sometimes entails additional costs.
- Ensuring the provision of electricity distribution services by entering into an agreement with the relevant distribution system operator,
- ensuring commercial balancing,
- verification of the premises and rules for the establishment of financial collateral,
- ensuring the right to terminate the contract in certain cases, such as violation of basic contractual obligations,
- safeguarding against uncontrolled changes in pricing terms,
- safeguarding against uncontrolled changes in contractual provisions in the event of legal or economic changes,
- Proper description of force majeure and other cases in which the liability of the parties is excluded or limited.
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