Earlier in February, the Polish government adopted the much-anticipated Polish Energy Policy 2040 (PEP 2040) – an energy strategy which, among other targets, proposes a fast withdrawal from coal, a reduction in carbon emissions and an increase in renewable energy sources.
For the once dirty man of Europe, the plans appear to be clear evidence that the transformation of the country’s energy sector is making headway.
The policy also follows existing improvements in Poland to promote greener energy, including closing mines and boosting renewable alternatives. Other legislative measures, including the first Offshore Wind Act, which was passed earlier this year, have also been hailed as signs that Poland could become a regional leader in green energy.
But whilst experts and energy commentators agree that Poland is making important progress, there are still concerns about the pace of change and the obstacles preventing further success this year.
Energy plans
The ambitious PEP 2040, which was unveiled last year, proposes that Poland will reduce its share of coal in its electricity generation mix from 72 per cent in 2020 to 56 per cent in 2030 (or to 37 per cent if there are high prices for carbon emissions permits). By 2040, this could be 28 per cent and 11 per cent respectively, a faster withdrawal than previously planned.
But the proposals haven’t gone without criticism – and arguments over the scope of energy changes could hold back progress.
Jakub Wiech, a lawyer, journalist and deputy editor-in-chief of Energetyka24 news service, says the implementation of Poland’s long-term energy plans is one of the main challenges facing the country’s energy sector this year.
“This document has already caused some conflicts within the government itself,” he notes. “One of the parties in the ruling coalition (Solidarna Polska) stated that it does not support this policy – this may affect the efficiency of implementing this transformation.”
Solidarna Polska argues that the plans are connected to EU energy targets and a sudden withdrawal from coal could be detrimental for Poland – and for its treasured mining sector itself.
Rethinking Poland’s reliance on coal
The issue of coal continues to loom large over Poland’s energy transformation. With 90,000 people employed in the mining industry and the sector’s historical economic importance for Poland, politicians have so far been wary about weaning the country off coal too quickly. Last year, pressure from the mining lobby and trade unions prevented restructuring plans for Polska Grupa Górnicza – the largest mining company in Europe – and there are also fears that Polish renewable energy sources might not be in place as the mining sector is transformed, possibly leading to reliance on Russian gas.
If the 11 per cent target in PEP 2040 was achieved, hard coal consumption in the commercial power sector would stand at only 11.1 million tonnes – a drastic change from the 36.1 million tonnes in 2019.
But with existing crises within the sector, Polish officials are now being forced to rethink the country’s reliance on coal. EU regulations have made coal an increasingly costly energy source, whilst domestic power production has been hampered by coronavirus outbreaks in mines – and sales have also dropped. As a result, energy prices have risen.
“Poland now has an electricity price problem,” says Megan Kasprzak, Junior Data Analyst from climate think-tank Ember.
“In 2020 wholesale prices were the highest in the EU driven by a perfect storm of rising carbon prices increasing coal power plant costs,” Kasprzak explains. “Additionally, uncompetitiveness of domestic coal is exacerbating problems of Poland’s power sector.”
“As the forthcoming EU Green deal reforms are likely to push the carbon prices even higher, unless Poland changes course on coal, high electricity prices look to be a long-term feature of the Polish market.”
A comprehensive strategy to reduce coal and embrace renewables is therefore needed. New projects to support the expansion and diversification of Polish gas capabilities could prevent dependence on Russia – especially the enlargement of a gas terminal in Świnoujście to 8.3 billion cubic metres of capacity per year.
A National Just Transition Plan and mine restructuring plan will also be developed this year – including measures to adopt clean coal technologies in mines.
On a smaller scale, the green revolution is already beginning to filter through. Notably, it was announced last year that a large former open pit brown coal mine near Brudzew will be transformed into the country’s largest solar farm thanks to a collaboration between power plant consortium ZE PAK and photovoltaic installation provider ESOLEO. The farm will cover 100 hectares and produce 70 megawatts/peak (MWp) of power, 18.5 times more than the current largest plant. To ensure a smooth transition from coal to solar, new jobs at the solar facility will be made available to former coal employees, who can access training schemes to gain new qualifications.
There’s hope similar schemes and transformation plans could be rolled out country-wide in the future. PEP 2040 suggests Poland will be able to rely on 60 billion zloty of EU transition funds to support transition projects – but, as Poland was the only EU country to not sign up to the EU’s goal of climate neutrality by 2050, the country’s access to transition funds could be limited.
And there are warnings that Poland needs to act as soon as possible to reduce its coal dependency and carbon emissions, particularly to ensure the country does not lag behind other EU nations.
Last year, Ember revealed that Poland had overtaken Germany as the European Union’s biggest generator of electricity from coal, generating 50.5 terawatts-hour (TWh) of energy from coal (hard coal and lignite combined) in the first half of 2020 – above Germany’s 47.7 TWh.
“It’s no secret that Poland has a big coal problem, highlighted by our recent analysis which showed that Poland now has the dirtiest electricity grid in the EU,” notes Mrs Kasprzak.
PEP 2040 aims for Poland to reduce its carbon emissions by 30 per cent by 2030 – but this is below the EU’s own 55 per cent target.
The test this year will be whether Poland can develop a fair and effective strategy to steer away from coal in the near future.
“The government and representatives of mining trade unions will have to reach a compromise regarding the closure of the mines of Polska Grupa Górnicza,” says Mr Wiech.
“It is, in fact, the beginning of the end of the Polish hard coal mining industry, and therefore a remarkable event. However, the question remains: how high the price will be for miners’ consent to such a step.”
And Mrs Kasprzak agrees.
“Poland has the major challenge ahead of developing a just, fast, and ambitious coal phase-out plan, as well as revisiting legislation that hampers the growth of onshore wind such as distance act and simplifying logistical procedures for RES prosumers,” she says.
Hope for wind energy
With the planned withdrawal from coal, interest in renewables has been growing in popularity in Poland. But progress has been slow, with renewables (gas, hydrogen, solar and wind) accounting for only around 14 per cent of electricity generation over the last few years.
But there is some hope for wind energy in particular. Already Poland’s second most important source of electricity in Poland, just behind coal, recent legislation also promises to open up the sector in the coming year and beyond.
Most significantly, the Offshore Wind Act, passed earlier this year, will support the construction of offshore wind facilities, potentially transforming Poland’s energy sector.
Aneta Wieczerzak Krusińska, from the Polish Wind Energy Association (PWEA), says the organisation “welcomes the efforts to develop generation capacity in wind farms in the Baltic Sea.”
“Works on the Offshore Act was of fundamental importance for investments in offshore wind farms,” she adds. “In the first phase of the scheme support for wind farms with a total installed capacity of 5.9 gigawatts (GW) will be granted by an administrative decision of the President of the ERO. The scheme may be entered by 30 June 2021.”
In 2025, the first energy will be produced from wind farms in the Baltic sea and there are hopes of 8-11 GW of offshore wind power capacity by 2040 and up to 28 GW of offshore wind capacity by 2050. This would make Poland a leader in the region.
“Works on executive acts to the Offshore Act and acts affecting offshore wind farm investments are pending,” says Mrs Wieczerzak-Krusińska.
“Their quick adoption is a key challenge for the development of the offshore sector in Poland”.
Onshore developments are also looking hopeful, with plans to finally liberalise the distance act, which has paralysed progress so far.
“When it comes to the onshore development, the Government published a regulation on 2021 auction volumes, which doubles the previously proposed values for installations above 1 MW — to 600 MW,” explains Mrs Wieczerzak-Krusińska. “The Government is planning to abandon the 10H principle as excessively restrictive regulation that precludes onshore wind development. The new unconditional minimum is to be 500 metres, where the 10H principle in practice translates to a distance of as much as 2,000 metres from a residential building.”
As a result, says Mrs Wieczerzak-Krusińska, the PWEA expects wind power capacity to develop over the next few years.
Solar and hydrogen: promising news
Another promising sector is solar energy, which has grown considerably over recent years. Poland aims for 10-16 GW of solar power by 2040, with its solar power capacity growing vastly last year, from 1.5 GW in 2019 to 3.7 GW in 2020.
Among other developments, renewable energy company Green Genius has recently announced plans to develop 154 MW of new solar projects in Poland by mid-2022, investing over 100 million euros.
The takeup of photovoltaic installations has been high, with 104,000 connected to the network in 2019 alone. Solar power has particularly bolstered by government support – including the Mój Prąd (My Electricity) programme, which provides individuals with subsidies for micro-installations in their homes, and which will continue into 2021. However, experts have previously called for more financial support to prevent funds for the programme running out.
The hydrogen sector may also prove fruitful for the upcoming year, particularly as the country takes steps to reach climate neutrality. A draft hydrogen strategy is currently under public consultation – these plans aim for 2 GW of electrolysers by 2030, although clear goals and measures still need to be confirmed.
Nuclear plans
A development to watch this year is the potential for nuclear energy in Poland. Although the country has so far experienced slow progress in introducing nuclear energy, the PEP 2040 strategy includes aims to construct the country’s first nuclear power station by 2033, with six operational blocks across four locations by 2040. The total capacity of these nuclear facilities will be 6-9 GW, with construction hopefully starting in 2026.
However, notes Mr Wiech, the nuclear plans are another key focus for 2021, as Poland is required to choose a partner for the project.
“Negotiations in this area have been going on for a long time,” he notes. “The United States is still the leader of the race for the Polish nuclear project, although France has also decided to join the final straight. It is an open secret that the main obstacle in this field is a financing model – Poland wants its technological partner to be also an investment partner.”
On top of partnering issues, Germany has also expressed concerns that one of the provisional locations, near the German border, could pose a threat to the German population.
Poland is undoubtedly making some steps forward and despite the challenges, the energy transformation has begun and it will facilitate the transition to a greener industry.