Coal still dominates Poland’s power generation, but wind and solar could turn the tables with the right policies and investments that modernise the grid
STARTING POINT
Coal’s share of power generation exceeds 70% and the government is not planning to retire coal until mid-century STEPPING UP
Poland must increase its renewable energy ambitions to meet decarbonisation goals and bring down energy costs KEY QUOTE
The biggest bottleneck in coming years for Poland’s energy transition will definitely be the grid
On a windy and sunny day in June 2022, Poland’s wind and solar photovoltaic (PV) plants satisfied 67% of the country’s electricity demand, a new record. The feat was particularly remarkable given that Poland is one of Europe’s most coal-dependent countries. Over 70% of electricity generation is still generated by coal-fired power plants, while the total production from fossil fuels tops 80%. Although Poland is only at the beginning of its energy transition—politicians have indicated that the country could exit coal only in 2049—progress is clearly being made. Coal-fired generation is down from the 87% of total power generation it stood at in 2010, while the share of renewables has more than doubled from a 7% share to about 17%. While Poland’s energy transition is likely to have bumps in the road, there are reasons for optimism besides the country’s ample wind and solar potential. Polish households are increasingly solar power producers and are largely in favour of developing wind power, both on land and offshore. BOTTOM-UP PRESSURE
Monika Morawiecka of the Regulatory Assistance Project (RAP), a non-governmental organisation, expects the bottom-up push from Polish society and industry will help accelerate the energy transition, bolstered by an increasingly strong economic case. “In the last ten years, Poland has enjoyed healthy growth in GDP (gross domestic product) and disposable income, so people have been getting richer and richer at the same time as renewables becoming cheaper and cheaper. If you look at these two lines, it just makes sense.” Poland has emerged as a frontrunner in rooftop solar, with one million prosumers helping to push cumulative solar PV capacity past the ten-gigawatt (GW) mark halfway through 2022, reaching the low end of the government’s 10-16 GW solar capacity target for 2040 nearly two decades early. Supported by attractive policies, a growing number of households have also exchanged polluting and inefficient coal boilers to heat their houses with heat pumps, often in combination with rooftop solar. Poland had Europe’s fastest-growing heat pump market in 2021, with 67% growth and continued to expand strongly in the first half of 2022, with an 86% rise compared to the year earlier. BUSINESS SUPPORT
Jarosław Wajer of consultancy EY notes that Polish companies are also keen to decarbonise and are seeking support for setting up renewable energy power purchase agreements (PPAs). “Many are in the value chain of big producers and would like to comply with the Paris Agreement,” he says. Poland’s portion of the Baltic Sea is also attracting investors looking to build offshore wind projects. In 2021, the Polish energy regulator awarded Contracts for Difference for the first 5.9 GW of offshore wind capacity expected online in the second half of the decade, with the first electricity slated to be injected into the grid in 2026. Competitive auctions for a further 2.5 GW each are scheduled for 2025 and 2027, and the government expects up to 11 GW in offshore wind capacity by 2040. The Polish Wind Energy Association (PWEA) places the country’s offshore wind potential at 33 GW. 
ONSHORE BARRIER
It is the onshore wind sector that has contributed most to the growth of renewable electricity in Poland to date. With a capacity of about 7 GW, onshore wind projects generated over 50% of all power from renewable sources in 2021. The government is targeting a total of at least 10 GW from onshore wind by 2030. Construction of new onshore wind farms had been restricted considerably in recent years by the so-called “10H rule” put into place in 2016. The measure, one of the most restrictive in Europe, stipulated that wind farms must be sited at a distance that is at least ten times the turbine height—as much as two kilometres—from buildings and protected areas, placing the development of projects in much of Poland off limits. The Polish legislature is expected to amend the law more favourably towards project development but has not yet done so as of the start of February 2023. While Poland’s government justified the measure as a means to limit social conflicts, most Polish people favour the development of onshore wind—including nearly three-quarters of the voters for the Law and Justice party that leads the current coalition government—according to a poll carried out by the ClientEarth environmental organisation and the Avaaz foundation in June 2022. Particularly supportive of developing onshore wind were voters in the Podkarpackie region bordering Ukraine, with 79% of those surveyed there agreeing the Polish government should make increasing onshore wind production a priority.
LINGERING LIGNITE
Poland has no official target date for retiring coal
CHEAPEST TECHNOLOGY
Getting rid of current onshore wind restrictions is essential if Poland is to roll out renewables on a massive scale and to help make the energy transition more affordable. “From an economic point of view, onshore wind is the cheapest technology in Poland [for producing electricity],” says Wajer. “Onshore wind is much cheaper than PV.” Janusz Gajowiecki of PWEA points out that wind power in Poland wins out against most other forms of generation. “Electricity from wind is five times less expensive than from conventional fuels and new onshore wind farms mean more green and inexpensive electricity and lower electricity bills,” he says. Forum Energii, a Polish energy think tank, estimates that over 50% of Poland’s electricity could be produced from renewables by 2030, should the distance law be dropped. This could be achieved with a fleet of renewable plants including about 25 GW in onshore wind, 25 GW in solar PV and 6 GW in offshore wind. In a 2021 report, Instrat, a Polish think tank that focuses on public policy advisory, pointed to the potential for renewables to rise to over 70% of the country’s electricity generation in 2030 and to exceed 80% in 2040. DANGER TO TARGETS
Ember, a UK-based energy research group, calculates that Poland’s onshore wind capacity could reach 44 GW in the 2040s should the required setback be reduced to 500 metres, in line with the European Union average. An amendment to draft legislation now in Poland’s parliament would reduce the setback to 700 metres, a distance the Polish wind energy association has warned could reduce future capacity potential by about 60-70% compared to a 500-metre setback. Given its high CO2 emissions, however, Poland alone could endanger the EU’s overall 55% greenhouse emission reduction goal for 2030 should renewable energy ambitions not be raised, Ember warns. Poland is targeting just a 32% share of renewables in electricity generation in 2030 compared to an EU average of 59%. The view that Poland could do more is widely shared. In an assessment of Poland’s 2030 national energy and climate plan, the European Commission called Poland’s renewable energy targets “unambitious”. Meanwhile, in a 2022 energy policy review, the International Energy Agency (IEA) recommended that Poland, “updates 2030 renewable energy targets to reflect the rapid deployment of solar PV and anticipated growth of onshore wind, and to prepare for the higher level of ambition needed to meet upcoming EU goals”. GRID MODERNISATION
Even with the removal of obstacles to onshore wind, Poland’s energy transition is not expected to be either easy or cheap—even if wind and solar power are the cheapest options for new generation. One issue is the country’s power grid, which was designed and built for big power plants running on fossil fuels, is in serious need of modernisation. Transmission system operator PSE is planning grid reinforcements, including those needed to transmit power from future offshore wind farms in the north to the more heavily populated south. In the meantime, distribution grids are showing signs of strain. “Distribution system operators (DSOs) were not ready for this rapid rise of renewables and didn’t carry out investments needed to connect new installations to the grid,” says Wojciech Modzelewski of ClientEarth. Between 2015 and 2021, grid operators turned down connection requests for around 30 GW of new generation capacity, mainly in renewable energy projects, equivalent to about half of Poland’s total current capacity of both conventional and renewable energy sources, with a sharp rise in rejections registered in 2021. For many rooftop PV installations that did get connected, owners now suffer from being disconnected to avoid overloading the network. “We are hearing more and more that solar panels are being disconnected between 11am to 4pm,” Modzelewski adds. Aleksandra Gawlikowska-Fyk of Forum Energii says that the regulator and distribution companies have begun discussions about how to handle the situation. “There are technical but also permitting issues, some of which will be overcome with regulations,” and with new infrastructure built, she says. EY estimates that investments needed for Poland’s energy transition to 2030 could total about €135 billion, of which €25 billion would be for the grid. Some €18 billion of this will be needed for distribution grids, the consultancy calculates. “The biggest bottleneck in coming years for Poland’s energy transition will definitely be the grid,” says Wajer of EY. IGNORED DEMAND-SIDE
There are alternative solutions that would help reduce the need for grid upgrades. Insufficient attention is being paid to demand-side flexibility that could be offered by big consumers as well as households, says Morawiecka. “DSOs are not considering demand-side flexibility as a big help in integrating renewables, but once they start considering it and planning for this, there will be less investment needed,” she adds. The balancing tasks of DSOs are likely to be facilitated by the installation of smart meters, expects ClientEarth’s Modzelewski. According to legislation approved in 2021, by the end of 2028 smart metres will be installed in at least 80% of end-users, including at least 80% of Polish households. By the end of 2023, DSOs are obliged to equip at least 15% of their customers with smart metres. 
COSTLY COAL
As is the case throughout Europe, coal-fired power generation in Poland increased with the start of the conflict in Ukraine. Yet Poland has also found itself facing a shortage, as coal used to heat households was largely imported from Russia, which ceased almost immediately after the war broke out. Poland has no official target date for retiring coal. According to a 2020 agreement between the government and mining unions, Poland will close its last hard coal mine in 2049, decades after most European Union countries exit coal. However, “From an economic point of view, coal won’t make sense long before 2049,” says Morawiecka. The Energy Policy of Poland Until 2040 (EPP2040) sets a target for reducing the country’s share of coal in power generation to 37.5-56% by 2030 and to 11-28% by 2040, with the most ambitious targets tied to a “high price” scenario in which the price for emission allowances on the European Union’s Emission Trading System (ETS) reach a price of €54/tonne in 2030 and €60/tonne in 2040. Prices in 2022 were consistently above these levels, approaching €100/tonne twice during the year. “ETS prices are expected to rise, which will have adverse consequences on the competitive position of Poland’s large fleet of coal-fired generation plants and could result in the closure of these plants at a much faster pace than forecasted in Poland’s energy policy,” said the IEA. Already 8 GW of coal plant generation has been kept alive with capacity payments, which they will no longer receive after 2025. The Institute for Energy Economics and Financial Analysis (IEEFA) found in 2022 that should a coal phase-out be achieved by 2030, resulting savings could enable Poland to build twice as much clean energy generation than that envisaged in its EPP2040 plan. NUCLEAR DISTRACTION
Poland’s government has also made nuclear power a cornerstone of its decarbonisation plans and the EPP2040 plan foresees that the first, 1-1.6 GW nuclear plant will be operational by 2033, with total nuclear power capacity rising to 6-9 GW a decade later. In October 2022, the Polish government announced it had reached an agreement with Westinghouse Electric to use its reactor technology to build Poland’s first nuclear plant in the northern part of the country. In the same month, Korea Hydro & Nuclear Power inked a preliminary agreement with Polish energy companies ZE Pak and PGE to study the viability of building four 1.4 GW nuclear reactors in central Poland. “The simple reasoning behind nuclear is that ‘renewables are intermittent, coal is dirty and gas is imported, so let’s have nuclear power,’” says Morawiecka. She fears that, “[The] nuclear hype will divert attention and money from things we need like renewables, energy efficiency and insulating houses.” Forum Energii’s Gawlikowska-Fyk says she is not concerned about nuclear energy from a technological point of view but instead is apprehensive about the timeframes that surround building new nuclear generation. “It worries me because it will only be in the system around 2033 and that’s what the government says,” she notes. If it comes, “It will probably be later because these big projects take a lot of time.” •
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Heather O’Brian