Local content in the wind energy sector – the government’s definition of “domestic content” and its meaning 

Local content is undoubtedly a concept of fundamental importance when it comes to building a strong offshore wind industry in the Baltic Sea. That is why the government’s initiative, “Local Content: for the benefit of Poland”, which aims not only to define the concept itself but also to establish rules for its application, is of paramount importance for the energy transition, infrastructure investment and the entire offshore wind sector.   

We have already written about local content here, among other places: Local Content in offshore wind – challenges in defining the concept 

The definition, measurement methodology and proposed Code of Good Practice presented by the Ministry of State Assets (hereinafter: MSA) could have a real impact on how tenders are prepared, consortia are formed, supply chains are reported on, and bids are evaluated in energy projects. 

From slogan to standard 

For years, “local content” has featured in the Polish debate primarily as an economic demand. The aim was to ensure that as much of major infrastructure investment as possible remained within the country. In the offshore wind energy sector, the topic has been present since work began on The Polish Offshore Act (and thus as early as the Sector Deal stage!). But until now there has been no uniform, operational definition that could be applied by investors, contracting authorities, state-owned companies, suppliers and subcontractors. In short, there was no definition for all participants in the supply chain. 

The MSA’s project, “Local Content: for the benefit of Poland”, has been changing this perspective. The Ministry states that the aim of the programme is to localise supply chains. Particularly in projects carried out by companies in which the State Treasury holds a stake, and to enhance Poland’s strategic autonomy and economic security as a “key player” with a stake in the development of this sector of the economy.   

From a legal perspective, the most important point is that local content is beginning to evolve from a political declaration into a management, procurement and contractual tool. This means that in future investment projects, not only the price, deadline and experience of the contractor, but also the structure of the supply chain, the involvement of domestic entities, local service capacity, industrial expertise in Poland and transparency of reporting may become increasingly important. And all this in accordance with EU law, which guarantees that companies from across the European Union must be treated on equal terms with Polish companies. 

The government’s definition of the domestic component 

According to the approach presented by MSA, the “domestic component” refers to the value of goods or services produced or provided by a domestic entity, taking into account the criteria for classifying that entity as domestic. This definition is to be applied primarily in a pilot scheme for the energy sector, in which contracting authorities, suppliers and sub-suppliers will disclose the structure of the supply chain in forms submitted to the (GUS).   

This is a significant change. Local content is no longer understood solely in terms of the nationality of capital or the place of company registration. The government’s definition seeks to capture the actual economic contribution:   

• where the business is carried out,
• where added value is created,
• where taxes are paid,
• where employees are employed, and
• whether the business has a permanent presence on the Polish market. 

This approach may be of particular significance for offshore wind. The supply chain for offshore wind farms is inherently international. Turbines, foundations, cables, installation vessels, power systems, service ports, and design and operational services often involve entities from many different countries. However, this does not mean that domestic participation is impossible. On the contrary – it can occur at many levels: from the production of steel components, through port services, logistics, design, environmental studies, cybersecurity, maintenance, maritime transport, right through to staff training. 

Criteria for determining an entity’s “domestic status” 

The Code of Good Practice, which is no less important than the definition of local content itself, provides for a points-based assessment of a company’s domestic status. The criteria include, amongst other things: 

• the registered office of the ultimate parent company being in Poland,  
• the main business activity being carried out within Poland,  
• Polish tax residency,  
• the employment of more than 50% of staff who are Polish citizens or residents of Poland and who pay taxes and social security contributions in Poland,  
• a registered office in Poland, 
• at least three years of operation,  
• and the generation of more than 50% of annual turnover in Poland.  

Individual criteria are weighted between 10% and 25%.   

This means that enterprises will need to prepare in advance the documentation confirming their status. Simply being registered with the National Court Register (KRS) may not be sufficient. Tax information, the structure of the group of companies, the place where business is actually conducted, the employment structure, the proportion of turnover generated in Poland, and the method of documenting this information will also be relevant. 

In practice, this may lead to the creation of a new category of tender and contract documentation: 

• local content declarations,
• supplier questionnaires, reporting obligations to the contracting authority,
• subcontracting clauses,
• supply chain audit mechanisms,
• obligations to update data in subsequent years of the contract’s implementation. 

A particularly sensitive sector 

In the offshore wind energy sector, the issue of local content is not a new one. The Polish Offshore Act had already introduced a requirement to submit a supply chain plan for materials and services as part of the application process for support and during pre-qualification for auctions, with particular emphasis on the involvement of local entities. There is also a requirement to engage in technical dialogue with potential suppliers and to submit reports on the implementation of the plan. 

The MSA’s new definition could therefore complement the existing system. Until now, supply chain plans have primarily served an informational and stimulatory purpose. Now, local content will, by design, be measured more uniformly, and its level will become a factor in assessing management effectiveness, procurement policy and the investor’s reputation. It may also become a tool for monitoring the involvement of foreign companies in the construction of Poland’s critical infrastructure. 

The scale is considerable. The Polish Wind Energy Association (PSEW) estimates that potential investments could reach as much as PLN 900 billion in offshore wind and PLN 214 billion in onshore wind. This illustrates just how large a proportion of future investment expenditure could be covered by the debate on the domestic supply chain. 

Soft law, but tough consequences 

The definition of local content set out here is not introduced by a law that automatically changes all procurement procedures in Poland. Rather, we are dealing with a soft-law instrument, supported by the State Treasury’s ownership policy, the Code of Good Practice, KPIs for management boards, and reporting mechanisms. 

The Code of Good Practice states that it applies to contracts awarded by companies in which the State Treasury holds a stake, to the extent not covered by the Public Procurement Law. For public contracts covered by the Public Procurement Law, however, the State Procurement Policy for 2026–2029 remains the point of reference.   

This does not, however, mean that the documents issued by the MSA will be irrelevant. In state-owned companies, ownership guidelines, KPIs, internal procurement regulations and the expectations of supervisory boards can have a significant impact on contracting practices. For contractors and subcontractors, this means that local content may become a tangible element of business discussions, pre-qualification, technical dialogues and contract negotiations, ultimately affecting the competitiveness of Polish companies. 

Local content cannot amount to direct discrimination 

The greatest challenge will be to balance local content requirements with the principles of public procurement law, EU law and competition rules. In public procurement, preference cannot simply be given to a contractor solely on the grounds that they are based in Poland. The criteria must be objective, transparent, proportionate and relevant to the subject matter of the contract. 

It is therefore legally safer to formulate requirements based on the project’s actual needs. This includes security of supply, service availability, life-cycle costs, response times, cybersecurity, mitigation of logistical risks, the competence of the local team, the quality of operational support, transport emissions and maintenance capabilities.   

This means that local content should be designed as a set of legitimate procurement tools, rather than as an automatic national preference. Contracting authorities should therefore make use of needs analysis, the division of contracts into sections, quality criteria, requirements regarding continuity of supply, service clauses, and reporting obligations regarding subcontracting, as well as environmental and social criteria related to the subject matter of the contract. 

Significance for investors and contractors  

For offshore wind investors, the government’s definition of local content means that supply chain management must be approached in a more systematic way. It is worth identifying, as early as the project planning stage, those procurement packages where it is realistically possible to engage Polish suppliers. This applies in particular to design, port, logistics, maintenance, environmental, geotechnical, legal, consultancy, training and transport services, as well as certain aspects of manufacturing work. 

For contractors and suppliers, the definition of local content could become a business argument. Companies operating in Poland should prepare a “local content profile”, i.e. a set of data demonstrating their domestic contribution. This may include ownership structure, place of business, Polish tax residence, employment, local production or service facilities, experience in energy projects, the ability to work to offshore standards, and readiness to report. 

For foreign contractors, local content does not have to be a barrier. It can serve as an incentive to establish a stronger presence in Poland through the creation of subsidiaries, service centres and production facilities, partnerships with Polish companies, the transfer of know-how, joint ventures with local suppliers, and training programmes. 

Local content in contracts 

In offshore wind projects, local content will only be meaningful if it is translated into specific contractual mechanisms. In practice, it is worth considering including the following in contracts: 

• clauses requiring reporting of domestic content at the level of the contractor, subcontractors and further sub-suppliers, 
• an obligation to notify changes in the supply chain structure, 
• rules for the qualification of domestic entities according to the adopted methodology, 
• the contracting authority’s right to audit local content data, 
• commitments regarding the use of local maintenance facilities, 
• mechanisms for cooperation with Polish SME sector, universities, research institutes or training centres, 
• provisions concerning the protection of trade secrets and sensitive data,  
• rules on liability for false local content declarations.  

Particular care must be taken when processing data relating to employees. The criteria of employing more than 50% of staff who are Polish citizens or residents of Poland and who pay taxes and social security contributions in Poland may require the use of aggregated data, declarations and data minimisation procedures, so as not to create undue risks from a personal data protection perspective. 

Legal risks 

For contracting authorities, the greatest risks relate to an imprecise definition of the criteria for ‘Polishness’, excessive restriction of competition, a lack of connection between the requirement and the subject matter of the contract, disproportionate reporting obligations, and a discrepancy between the declared local content and the actual course of the contract’s performance. 

For contractors, the risk lies in making overly ambitious commitments that cannot be met within the subcontracting structure. In offshore wind projects, where schedules are tight and the availability of components and installation vessels is limited, any commitment regarding domestic participation should be preceded by a realistic market analysis. Excessive promises may lead to contractual disputes, contractual penalties, loss of credibility or problems in subsequent tenders. 

It will also be important to strike a balance between protecting trade secrets and meeting reporting obligations. The supply chain in the offshore wind sector can be multilevel, and data on suppliers, margins, the origin of components or cost structures may be of competitive significance. Therefore, local content documentation should be prepared in advance, rather than only at the stage of an audit or a dispute. 

Is legislation needed 

The fact that the changes are not being introduced by legislation requires separate consideration. The main concerns relate to the effectiveness of the proposed measures. However, it seems that the absence of a separate local content act does not necessarily undermine the new approach. In many areas, internal procurement policies, good practices, dialogue with the market, KPIs for management boards, reporting pressure and the professionalisation of procurement may be of greater significance. At the same time, the absence of a statutory regime means that each contracting authority should very carefully select the legal instruments appropriate to the type of procedure: different rules apply to public procurement, sectoral procurement, private procurement, and contracts of companies with State Treasury shareholding outside the Public Procurement Law. 

That is why, when advising investors, contractors and suppliers in the offshore wind sector, rather than asking whether local content “applies”, what we should do is to analyse how to integrate it correctly, safely and effectively into the investment process, turning it into an asset rather than an obstacle. 

What needs to be done now 

Entities operating in the offshore wind sector should start by auditing their own supply chain. It is worth checking which parts of the project can be carried out by domestic entities, what data is available, what the subcontracting structure looks like, and whether the contracts allow for the collection of the information needed for reporting. 

Next, an internal, consistent local content procedure must be established: who collects the data, how it is verified, who makes the declarations, which documents are archived, and how trade secrets are protected. In the case of larger corporate groups, it may also be necessary to agree on a uniform reporting methodology across the entire group. 

Finally, it is worth communicating your capabilities regarding local content as early as the technical dialogue or tender stage. In the coming years, suppliers who not only possess technical expertise but can also demonstrate their contribution to the Polish economy may gain a competitive edge.  

Summary 

It appears that the government’s definition of local content is not merely an economic policy slogan. It signals a new standard for strategic investments in energy, infrastructure and industry. For offshore wind, this could be one of the key elements of the next stage of market development. 

However, the most important thing will be for local content to be implemented in accordance with the law, transparently and proportionately. If well-designed, it can support Polish companies, increase the resilience of supply chains and strengthen energy security. If poorly designed, it can lead to disputes, allegations of discrimination and inefficiency in procurement. 

For investors, contracting authorities and suppliers, this means one thing: local content is becoming an element that must be managed just as professionally as the schedule, budget, regulatory risks and contract documentation.