Poland’s energy transition: Two steps forward, one step back

Monika Morawiecka

Monika Morawiecka explains the contradictions along with the opportunities that characterise the ‘black sheep’ of Europe’s energy transition.

Poland has traditionally been viewed as the ‘black sheep’ of energy transition in Europe.

The dominance of (mostly) domestically-mined coal in its power generation — currently at around 70% — has long been contributing to the country’s energy security.

It has also, however, been a big liability weighed down by increasing CO2 prices and the ever more stringent environmental standards requiring costly upgrades of coal-fired power plants.

At the same time, the Polish economy has been one of the fastest growing in the EU: it was the only EU country not to go into recession between 2007 and 2009 amid the financial crisis and has also been among the strongest performers during the Covid pandemic.

GDP per capita, measured in purchasing power parity, is now close to 80% of the EU average, and disposable household income has grown almost twofold in the past ten years.

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These favourable economic developments, combined with the continuing drop in the costs of renewables, have made the prospect of transforming the energy sector in Poland more palatable to Polish society.

In fact, climate change now ranks high among the worries of the average Polish citizen: close to 80% of those polled last summer responded that climate change is a real threat to our civilisation.

At the same time, however, there was an interesting response regarding how to translate that threat when it comes to Polish energy policy.

Over 40% said that Poland should strive to achieve climate neutrality at its own pace, even if it means that it will be after the EU’s 2050 deadline.

This nicely illustrates the problem that European energy policies have always presented in Poland. Polish citizens, while generally among the most Euroenthusiastic nations in the EU, have usually been very sceptical of EU policies and regulations.

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This scepticism is perhaps most pronounced in the energy sector, where EU climate policy has historically been perceived as too costly, as well as threatening to deprive Poland of its domestic resource and cause widespread economic trouble in the affected regions.

Germany’s household power prices, which shot up after the generous feed-in-tariff fuelled solar boom from 2010 to 2012, was viewed as a useful example that the energy transition was only for the rich.

A lot, however, has changed in the past few years. Even if the Polish government’s rhetoric is sometimes quite sketchy, the Polish economy and Polish citizens have been heading down the path towards the energy transition.

The real turning point came after 2015 when a new law on support of renewables was adopted. That law introduced an auctioning system for renewables with support granted in the form of double-sided contracts for difference (CfDs).

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It might be argued that Poland has benefitted from a last-mover advantage. While being fairly late to the table with a comprehensive system for renewables (the previous green certificate scheme, introduced in 2005, supported initial growth in onshore wind development and biomass co-firing), it introduced a robust system.

On one hand, the CfD system gave investors certainty, and on the other hand, it protected customers from unnecessary costs in the future. The current EU energy crisis clearly points to the advantages of this type of support mechanism, which will probably be used much more widely in many more European countries in the future.

The strike prices achieved in the CfD already been observed elsewhere: that prices of renewable energy sources have plummeted to levels comparable with wholesale prices (and are currently at an order of magnitude lower than that).

Since that point the energy transformation in Poland could use a powerful argument — you could no longer say ‘we cannot afford to develop renewables’. On the contrary, you should be saying ‘we cannot afford NOT to develop renewables’.

The road since that time has been bumpy, though. In 2016, a distancing law for onshore windfarms was introduced, which prevented locating windfarms at a distance closer than 10 times the tip height of the turbine from homes and neighbourhoods.

This meant that most locations in the country were now off limits. At the time of writing this article, the Polish parliament has still not voted on the draft law amending these provisions that was presented by the government in June 2022.

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And this is while the EU package of measures aimed at getting off Russian gas — REPowerEU, introduced in May 2022 — has asked for a comprehensive review of the permitting regimes and suggested treating all renewables as being in the overriding public interest. Polish reluctance to speed up onshore wind development is completely incomprehensible in this respect.

But there are other very optimistic developments. The past two years have seen an unprecedented growth of rooftop solar, fuelled by growing social awareness and a fairly generous net metering scheme complemented with direct subsidies.

Rooftop solar has grown from around 1GW at the end of 2019 to 8GW in June 2022, which has absolutely surpassed any governmental projections.

This trend will undoubtedly continue as the economic rationale for homegrown energy sources has never been better, even if net metering has been changed into net billing — a less generous, but more equitable scheme.

Another big success story is heat pump deployment. Last year Poland was the fastest-growing heat pump market in Europe, with a growth rate of 87% (albeit from a rather small base). This year might shatter that record.

Growth is promoted by government-funded schemes that encourage replacing coal boilers with modern installations: Poland is the only country in Europe that still uses coal to heat individual houses — around three million households use this type of heating source — which explains why many Polish cities consistently rank among the most polluted in Europe.

“Polish reluctance to speed up onshore wind development is completely incomprehensible.”

The share of heat pumps in these subsidy schemes, which are also open to other technologies like gas and biomass boilers, has increased up to 60% through June: it was around 30% at the beginning of 2022.

These positive developments are also supported by the fact that three large heat pump manufacturers have recently announced plans to build new factories in Poland, increasing the total number of units produced to 650,000 by 2025.

Finally, in just a few years, a new energy source will be covering more than 10% of Poland’s electricity consumption. Offshore wind got a big boost last year with the regulatory environment decisively established (a dedicated offshore wind act adopted, a relevant grid development plan approved, and a maritime spatial plan drawn up) and five projects totalling nearly 6GW are currently under advanced development.

These projects are due to come online around 2026-2027. Another 2GW of offshore wind are a bit less advanced.

A competition to develop new sites of up to 11GW is currently under way. In addition, on 30 August the Polish Prime Minister, together with the other seven countries surrounding the Baltic Sea, signed the ‘Marienborg Declaration’, committing to ‘explore joint cross-border renewable energy projects’ and identify infrastructure needs to enable their integration. This may signal a reverse in a long-standing policy of a self-centred development of energy sources.

While Polish strategic planning documents in the energy sector are sometimes not painting a very clear picture of where the country is going, it seems that reality occasionally overtakes political discussions.

In particular, the growing understanding and acceptance among Polish consumers and industries of the merits of energy transformation towards renewables — especially in the current energy crisis — points to a more optimistic future. Even if the regulatory landscape might still be moving two steps forward, one step back.


Monika Morawiecka is a senior advisor for the Regulatory Assistance Project, a global NGO specialised in energy policy.

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