Act of 7 December 2023: shields for energy, gas and heat consumers in the first half of 2024

The Act of 7 December 2023 amending acts to support consumers of electricity, gaseous fuels and heat (Journal of Laws (Dz.U.) 2023, item 2760) extends, for the first half of 2024, the price shields introduced during the energy crisis. The Act enters into force on 31 December 2023. For gas, protection covers the period to 30 June 2024, and the settlement mechanism is based on compensation for sellers and a levy for a dedicated fund. For the biogas industry, this is price context that affects the energy and gas market.

What is changing

The most important elements of the Act:

• Electricity: the consumption limits up to which the shield price applies were set for the January–June 2024 period at 50% of the 2023 limits; prices result from tariffs approved by the Energy Regulatory Office (URE), and until those tariffs take effect, compensation is calculated from 60% of the previous tariff price; the fund's spending limit for 2024 is PLN 6 billion,
• Gas: the maximum price applies until 30 June 2024; if the tariff is lower, the lower price applies; provisional compensation is calculated from 50% of the previous tariff price; compensation limits are PLN 3.1 billion in 2024 (plus PLN 300 million for VAT refunds) and amounts for subsequent years,
• Gas levy: a levy was introduced for the Price Difference Payment Fund, calculated using a formula with a parameter of PLN 25/MWh, payable in six instalments from January to June 2024,
• Heat: the compensation covers the period January–June 2024.

The eligible consumers named include bakeries that earn at least 50% of their revenue from bread and bakery products, and entities providing physical culture tasks and services to local government units (in respect of heat consumption). In addition, PLN 180 million was allocated to compensation for emission costs in 2024.

Significance for the industry in Poland

For biogas and biomethane producers the shields do not apply directly, but they affect the market environment. Energy and gas prices for protected consumers are capped, so the price signal is weakened. At the same time, the Act indicates that the state is ready to finance interventions, which increases the pressure to replace gas with domestic sources. For biomethane, which has its own support system based on a reference price, this intervention remains in the background.

For farmers and agri-food companies, it is relevant that some of the shields apply to small businesses and selected sectors, including bakeries and food processing.

What to look out for

Companies should check whether they qualify for the shields, what documents and declarations to submit, and how the seller will settle the consumption limit. For long-term energy projects it is better to rely on stable support mechanisms (auctions, the biomethane system) than on ad hoc shields.

What next

In 2024 the government will decide whether to continue the shields or end them. For the renewable energy industry, it will be important that the decisions do not undermine the predictability of support systems.