The future of the Polish energy sector

The Polish energy sector is constantly changing, it is however impossible not to notice that these changes have significantly accelerated over the last several months. The implementation of the “Energy Policy of Poland until 2040”, the incredible development of renewable energy sources (at the end of April 2021, the installed capacity of photovoltaic systems in the PPS [Polish Power System] reached 4,690 MW), the rising prices of CO₂ emission rights (at the time of writing this article, they reach approx. 50 euros per ton) or the problems that the energy sector had to face during the SARS-COV-2 virus pandemic (such as a reduction in demand for electricity, in particular in the first phase of the pandemic) resulted in accelerating the changes. And this is just the beginning.

TIME FOR CHANGE

For the Polish energy sector, the most important event of the beginning of 2021 was the approval of the “Energy Policy of Poland until 2040” by the Council of Ministers in February 2021. It is the first document describing the energy strategy of Poland in 12 years. This document is intended as a roadmap for the development of the Polish energy sector. Key assumptions of EPP2040 include:

 • Commissioning of the first 1-1.6 GW nuclear power plant unit in 2033.

 • Reducing the share of coal in electricity generation to a maximum of 56% (by 2030).

• Increasing the use of biomass, biogas, geothermal energy and heat pumps.

• Increasing the use of RES technologies.

• Increasing the use of alternative fuels in transportation.

• Reducing greenhouse gas (GHG) emissions by 30% (by 2030, relative to 1990).

• Reducing primary energy consumption by 23% by 2030 (relative to 2007 PRIMES projections)

According to the adopted document, the key assumptions of the “Energy Policy of Poland until 2040” are the development of RES and improvement of energy efficiency. By 2040, half of the installed capacity is expected to come from zero-emission sources. The planned share of renewable sources in the structure of national net electricity consumption by 2030 is planned to be no less than 32%; according to the assumptions, this level will be based primarily on photovoltaic systems and offshore wind energy.

At the same time, the development of low-emission capacities is connected with limiting the role of the coal capacities (lignite, hard coal) which have, so far, been the most important sources of energy. To achieve the described goals, the strategy calls for capital expenditure. The scale of investments in 2021–2040 may reach approx. PLN 1,600 billion. Investments in the power and energy sectors alone will involve financial resources of some PLN 867-890 billion. The projected outlays in the electricity generation sector will reach approx. PLN 320-342 billion, of which some 80% will be earmarked for zero-emission capacities, i.e. RES and nuclear power. The implementation of the Polish Nuclear Power Programme alone is expected to cost over PLN 200 billion.

OFFSHORE WIND FARMS

Offshore wind farms are to become a very important element in the energy transformation of Poland. Plans for offshore energy have a chance of rapid implementation (adoption of the Act of 17 December 2020 on the promotion of electricity generation in offshore wind farms). The business plans of some investors interested in the development of OWF are at an advanced stage; Polenergia S.A. and Polska Grupa Energetyczna have already obtained the environmental permit for some of their projects. PSE S.A. (Polish Power Grid) has issued connection conditions for offshore wind farms with a total capacity of 8.4 GW. EPP2040 predicts that in 2030, the share of OWF in the energy mix should reach 5.9 GW (13.2 percent of generation in the mix) and in 2040 – 11 GW (19.3 percent of generation in the mix).

PHOTOVOLTAIC ENERGY

In the light of the installed capacity data as of the end of April 2021, in which PV reached the value of 4,690 MW, the projected increase in photovoltaic capacity under EPP2040 to approx. 5-7 GW in 2030 and approx. 10-16 GW in 2040 seems to be an underestimate. The key advantage of photovoltaic energy is the fact that it requires lower investment outlays compared to conventional energy. It should also be noted that with the increasing demand for energy, it is difficult to build new conventional sources in a short period of time, while the construction of a photovoltaic farm is feasible in a matter of months.

NATURAL GAS

One of the strategic objectives of EPP2040 is to create a regional system for gas transmission and trade (the so-called gas hub). Another assumption is the final deregulation of gas prices for all consumers by 2024, as well as the development of a gas exchange. Poland plans to increase natural gas use from 14 TWh (in 2019) to 54 TWh (in 2030). Gas is to be used mainly in power generation units, including backup units for renewable energy sources, as well as in heating systems and units; additionally, it is planned to increase the effective cooperation between the gas system and the power system (sector coupling) and to increase the use of gas in the form of LNG and CNG as alternative fuels in maritime and land transport.

THE FUTURE

Changes in the Polish energy sector are accelerating rapidly. The energy transformation towards net zero emissions and the high costs of energy production from hard coal and lignite (resulting from high prices of CO₂ emission rights, among other factors) contribute to phasing out these energy sources. In the light of EPP2040, one can assume that the era of coal in the Polish energy sector is coming to an end.

Author:

GrECo

Last Updated on January 7, 2022 by Anastazja Lach