EDPR to Take Legal Action against Romania and Poland over Taxes

Source: www.gulfoilandgas.com 1/9/2023, Location: Europe

EDP Renewables (EDPR) has said it will take legal action against Romania and Poland over proposed taxes on energy company profits.

The Romanian and Polish governments have recently introduced emergency clawback mechanisms to restrict revenues earned by renewable energy producers and other market participants.

In Romania, a 100% tax is applied on revenues over 450 leu/MWh as well as a withholding tax on behalf of offtakers.

In Poland, a clawback mechanism is applicable to non-CfD1 energy with 100% tax on revenues above 345 zloty/MWh for wind projects under Green Certificate (GC) scheme and the corresponding strike price for projects under CfD scheme.

EDP noted that EU legislation states that emergency cap mechanisms should apply on realised market revenues only, including hedging operations against fluctuations in the wholesale electricity market.

This is necessary to avoid harming producers who do not actually benefit from the current high electricity prices due to having hedged their revenues against fluctuations in the wholesale electricity market.

“EDP considers that these new legislations in Romania and Poland do not follow the European Union Council principle of clawing back only realised market revenues as both ignore financial hedges in place within EDP,” a company statement says.

EDP warned that it will have to pay taxes as if it was benefiting from current high electricity market prices, without consideration of costs incurred with the associated financial hedges in energy markets.

This non consideration of financial hedges can result in unreasonable payments and potential costs estimated at €300m in 2023, the company claimed, depending on the evolution of electricity wholesale prices, final interpretation/implementation of the recently published legislations and their compatibility with international agreements in force.

“Ultimately, these new taxes may result in the cancelation of the effects of the existing risk management strategies legitimately implemented by renewables producers resulting in taxation of unrealised profits, clearly against the regulation principle,” EDP added.

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