Poland’s energy U-turn: Gov’t steps up efforts to reduce coal use

As renewable energy costs plummet, Poland’s governing party has gone from a blocker to a booster of wind farms.

Poland, which currently relies on coal for more than 70 percent of its electricity generation, is stepping up efforts to replace the dirty fuel with renewable energy [File: Bartek Sadowski/Bloomberg]
Poland, which currently relies on coal for more than 70 percent of its electricity generation, is stepping up efforts to replace the dirty fuel with renewable energy [File: Bartek Sadowski/Bloomberg]

As Europe prepares a multi-billion-dollar blitz to cut greenhouse gas emissions, a race is on to cash in on the green transformation of its most-polluting member.

Poland, which currently relies on coal for more than 70% of its electricity generation, is stepping up efforts to replace the dirty fuel with renewable energy. As the country finalizes its 2040 energy policy, some of the world’s biggest players in renewables are seeking to capture a share of the market.

“Poland is busier than any market I’ve seen since I’ve been working in renewables,” said Gary Bills, regional director for Europe, Middle East and Africa at energy consultants K2 Management. “There’s massive interest in on and offshore wind.”

It marks a drastic turnaround for Poland’s ruling Law and Justice party, which went from a blocker of wind farms to booster, amid the plummeting cost of renewables and a public backlash against some of the dirtiest air in the region. The government’s shift also comes as the European Commission proposes linking its 750-billion-euro ($841 billion) economic stimulus program to the bloc’s climate goals.

Poland will increase its renewable power capacity by 65% from 2019 to 2024, mostly from onshore wind farms, according to International Energy Agency estimates. The country’s first offshore wind turbines, in the Baltic Sea, are expected to start producing power by 2025.

Source: Government website. Share of given technology in power mix as described in 2040 Energy Policy in November 2019 [Bloomberg]

“We will never manage, as Poland, to meet the Paris commitment based on onshore renewables,” said Marek Roszak, DNV GL’s head of energy in Poland and Central Eastern Europe, referring to the 2015 global climate pact. “We will need to push more offshore.”

Poland’s Climate Ministry is treating offshore projects as a priority, it said by email.

The conditions in Poland’s Baltic Sea are ideal for the giant turbines increasingly common off the coasts of the U.K., Germany and the Netherlands. There’s strong wind resources, shallow waters and the sites are near to shore, Roszak said.

Poland’s government estimates its offshore wind potential will be about 10 gigawatts of capacity, or about a quarter of the nation’s current total available generation. Industry groups think it could be nearly three times higher.

That could unleash billions of dollars in investment over the coming years. PGE, the country’s biggest utility, estimates that it will cost about 12 billion zloty ($3 billion) to build every gigawatt of offshore wind capacity.

Developers have taken note. Orsted A/S, Equinor ASA, RWE AG and Iberdrola SA have each sought partnerships with state-owned or local companies that already hold the few licenses to develop offshore wind.

Investors are now awaiting the passage of a key law that introduces state subsidies for building the first offshore farms. Renewable industry companies also want the government to open up the sea for more investments under a sector-wide agreement, which is set to happen soon.

“We just need to make this first step and show it’s working,” Janusz Gajowiecki, head of the Polish Wind Energy Association, said.

Poland may also be a key piece of a bigger puzzle. With the growing capacity of offshore wind farms in nearby Danish, German and Lithuanian waters, the country could be the linchpin to connect green power across the Baltic Sea.

Source : Bloomberg

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