Poland Energy Production Trends

How the Energy System is Structured

The Ministry of Economy is responsible for formulating energy policy in Poland. It recently released its energy policy for 2030 which states that Poland is oriented to the fulfillment of  EU-climate energy policy. Its top priority is energy efficiency improvement. It seeks to “achieve further development of the Polish economy without an increase in primary energy density and a decrease in the energy intensity of the economy to the level of EU-15.”

As energy security is a high policy priority, Poland is enhancing gas supply security by building an LNG terminal, expanding underground storage capacity, and increasing domestic gas production. Polish plans for developing electricity and gas cross-border links will also contribute to the regional security of supply. In addition, the government has announced an ambitious nuclear programme by 2030, envisaging the first unit to enter operation by 2022. Other goals include an increased share of renewables and a stronger focus on energy research and development (R&D).

In 2015, the  ruling Law and Justice (PiS) Party announced a new Law on Renewable Energy Sources (“RES Law”), and have repeatedly released revisions. The most recent version from earlier this year, signed by President Andrzej Duda, imposes additional requirements that limit the available space that can be used for wind farms. These new regulations now limit where new wind turbines can be built (specific distances away from national parks and residential areas), and now require certain permits that have to be regularly renewed. This is just another case of the PiS’s preferential treatment toward the coal industry, through attempts at limiting their clean competition and hindering their ability to fully commit to clean energy and the Paris Agreement.
Sources of Energy

Poland  sources around 90% of its electricity from fossil fuels. The country’s energy sector is responsible for the vast majority of GHG emissions. Of the electricity Poland used in 2013, coal was used to make up a 55% majority, followed by oil (26%), natural gas (15%), and finally  biomass and other renewable energy sources (4%).

Profiles of  Leading Energy Companies

Polska Grupa Energetyczna (PGE): The Polish Energy Group (Polska Grupa Energetyczna, PGE) is one of the largest power companies in Poland. The company is state-owned, with the its biggest shareholder being the Polish State Treasury, which controls almost 60% of the company (58.39% to be exact). PGE produces, sells, and delivers almost 40% of the electricity on the Polish market through a vast vertical network that includes coal mines for fuel resources, power-generating plants, and distribution networks. In 2015, they supplied 55.58 TWh of electricity to an estimated 5.26 million consumers through 49.40 million tons of lignite alone. Hard coal, in addition to lignite, makes up 91% of PGE’s fuel to generate its electricity, while gas makes up 4% and renewables make up 5%.

Since the early 2000s, many of Poland’s coal-powered power plants have incorporated “renewable energy” practices into their coal usage through biomass co-firing. This is the method of incorporating biomass, usually in the form of imported wood, straw, and peanut shells, to burn with coal, making the process “greener”. Biomass is (as of 2014) the dominate renewable energy source in Poland, with 85% of electricity generated by renewable sources coming from it (compared to the EU’s 43.8% average). PGE has stated that they are open to the potential growth this method has, if there are renewable energy source support systems to help encourage it.

PGE’s practices’ projected impact on greenhouse gas emissions is dependent on government legislation. Currently, the government is investing into coal industries to revamp and modernize Soviet-era power plants.  Beyond 2020, PGE will be implementing a new investment program, dependent on selected strategic options (developing modern coal-fired power generation, off-shore wind farms or a nuclear power plant). The choice will be determined by the external factors, among others: European Union’s climate and energy policy, the power system’s needs, or market model.

That being said, it is clear that PGE is waiting for the political seas to calm before they announce official plans for future investment, or a decision to reduce their greenhouse gas emissions. Any future investment will follow the new Law and Justice Party’s (PiS) right-wing agenda and government funding, which, as of now, is going into coal and co-firing subsidies. It is also worth noting that PGE’s mission statement guarantees energy security, a sentiment that has been repeatedly mirrored by President Andrzej Duda (PiS), among other government officials, as a priority for the country.

PGE’s practices’ projected impact, if it continues down this energy path, will be detrimental to Poland’s natural resources and the environment. Mining companies have been accused of polluting or draining lakes and wetlands, resulting in major problems for the local citizens and the country’s strong agricultural industries. Additionally, the World Health Organization estimates that of the EU’s  50 most-polluted cities, two-thirds of them are in Poland, largely thanks to the country’s coal industry.

Senvion: Although biomass is the leading RES, wind power is the fastest growing. Statistics from 2014 show that it generates just over 8% of Poland’s clean energy, up from 6.3% the year before. Senvion, a German-based, international manufacturing company, is taking advantage of the growing interest in wind energy. As a global leader in wind turbines, they pride themselves on being involved in every step of the process from planning, to installation, to future maintenance. An early version of their company even installed Poland’s first wind farm, and now has starting construction on one of Poland’s biggest wind farms, which has the capacity to generate 73.1 MW, enough to power over 92,000 Polish homes. Overall, Senvion Polska Sp. (Senvion’s current Poland-specific branch) installed almost 200 turbines, enough to generate 350 MW of electricity for Poland, and has cited independent reports, such as International Renewable Energy Agency’s (IRENA) 2015 report, REmap 2030 Renewable Energy Prospects for Poland, that estimate that Poland’s clean energy sector has the potential to power more than one-fourth of Poland’s total energy usage by 2030, given the right investment. IRENA’s report also goes on to state that a reducing fossil fuel dependence would save the country $2 billion each year in costs associated with the environment and health benefits.

Unfortunately, this continual growth isn’t guaranteed and these figures haven’t caught up to the recent political shift that has happened in the country since the PiS Party came into power. Like many other companies that make up Poland’s renewable energy industry, Senvion is a German company controlled by foreign capital, with the majority of shares held by an American-based private investment firm. Poland has had other foreign wind energy companies, such as Danish DONG Energy and Spanish Iberdrola Renewables, withdraw from Poland, and sell off their assets in the country because of the unpredictable legal environment that threatens RES investment.

Submitted by Climate Scorecard Country Manager Kathleen Gorman