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Power Shield in Poland for energy-intensive sectors | News Flash

January 18, 2023

On 3 January the Council of Ministers passed the resolution on adopting the government program under the name “State aid for energy-intensive sectors related to sudden increases in natural gas and electricity prices in 2022”.

The creation of the state aid program became possible thanks to the Act of September 29, 2022, on the rules for the implementation of support programs for entrepreneurs in connection with the situation on the energy market in 2022-2024 and corresponds to the Guidelines presented on October 28, by the European Commission “Temporary crisis framework of state aid measures to support the economy after Russia’s aggression against Ukraine. The assumptions of the Polish program, i.e., the Solidarity Shield, were accepted in December 2022 by the European Commission.The aggression of the Russian Federation against Ukraine, lasting from February 24, 2022, and previous manipulations on international energy markets, contributed to a rapid increase in fossil fuel prices in Europe, which was heavily dependent on eastern suppliers. On the Polish Power Exchange (abbr. TGE), the average price of gas in August 2022 was 1,110 PLN/MWh (vs. 212 PLN/MWh in August 2021) and was 424% higher than in the previous year. In addition, electricity cost in the same month equalled 1,391 PLN/MWh (vs. 383 PLN/MWh in August 2021), which states 263 % more than a year earlier. This means e.g., a significant increase in production costs for industrial enterprises, which, in principle, are the main energy consumers in the economy.

The aim of the program is to mitigate the negative effects of a sudden increase in electricity and natural gas prices. The government estimates that around 1,000 enterprises, which annually consume over 20,000 MWh of electricity, i.e. over one third of the consumption of all industrial companies in Poland, will receive support under the program. The total envelope for the program exceeds PLN 5,000 mln.

Aid beneficiaries

According to the assumptions of the program, entities (entrepreneurs within the meaning of the Act of March 6, 2018 – Entrepreneurs’ Law (Journal of Laws of 2021, item 162, as amended)) that fulfill the following conditions may apply for aid:

  • energy intensity condition – the costs of electricity and natural gas accounted for at least 3% of its production value in 2021 or at least 6% in the first half of 2022, and
  • sectoral condition – obtains at least 50% of the income or production value from the Polish Classification of Activities (abbr. PKD) subclasses or PRODCOM codes listed in the Program. The sectors listed include: mining, extraction, production and processing of metals and raw materials, production of fabrics and sale of certain groceries.

In connection with the adoption of the Act of October 27, 2022, on emergency measures aimed at limiting electricity prices and support for certain recipients in 2023 (Journal of Laws, item 2243), according to which micro, small and medium-sized enterprises are entitled to purchase electricity at a fixed maximum price, entrepreneurs covered by the above-mentioned act, may apply only for the aid for the cost of purchasing natural gas.

What will the support depend on?

Enterprises that qualify for the program will be able to count on aid up to 50% of the value of eligible costs specified in the program, i.e., an increase in electricity or natural gas prices above 150% of the average price paid by the entrepreneur in the months from February to December 2022 compared to the 2021 prices.

Support limits

The program indicates two possible aid amounts: basic and increased:

  • basic – EUR 4 mln per capital group or enterprise not being part of the capital group, or
  • increased – EUR 50 mln for capital groups or enterprises that:
    • declare negative EBITDA throughout 2022 or only in the second half of the year, or
    • declare a decrease in EBITDA by at least 40%. compared to 2021.

In the case of an increased amount of support, the amount of aid may not exceed 80% of eligible costs, and the EBITDA indicator for the entire of 2022, including the aid obtained, may not exceed 70% of this indicator in 2021.

The exact amount of support will be calculated based on eligible costs according to the formula provided in the program. In case of an announcement of a similar program for costs incurred in 2023, the limit of EUR 4 mln will apply to the amount of aid in 2022-2023.

Due dates of consultations and submission of application

The institution responsible for the program will be the National Fund for Environmental Protection and Water Management (abbr. NFOŚiGW). The call for applications will be launched in the second half of January, and information about its launch will be announced by the Press Offices of NFOŚIGW the Ministry of Development and Technology.

Entrepreneurs will have only 14 days to submit applications from the date of publication by the Ministry of Development and Technology and the NFOŚiGW information about the call for them. The payment of the program funds should take place in February 2023.

If you have any questions about the power shield in Poland or our application support, please do not hesitate to contact us.

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