Poland has a population of 37.86 million people, which decreased to 28,000 people in 2019 alone. The labor force participation rate was 56% in December 2019 (0,7% less than in September 2019, demonstrating that the pressure on the productive population is relatively low as there is a greater percentage of the labor force than people dependent on others to sustain themselves. The renewable energy market has the potential to reduce this factor.
The country is located in central Europe and it is the 9th largest country in Europe with an area of 312,679 sq km (120,726 sq mi) and approximately 27% of the total area is covered by forest. Poland has a moderate climate influenced by both maritime and continental elements, which results in the weather being difficult to predict.
The Energy Mix
The energy mix describes the combination of fossil, and nuclear energy, non-renewable waste, and the many sources of renewables. Even though Poland has been growing in the market over the past decade, coal still dominates the power sector. According to the Energy Policy of Poland, the share of coal and lignite in electricity generation will be reduced from just under 80% in 2017 to 60% by 2030 and around 50% by 2040. Poland’s total primary energy supply has coal dominating the energy mix, followed by oil, natural gas, biofuels, waste, and renewable energy.
The country has seen a great increase in renewable energy, more than 23% in the decade from 2010-2020, with a fundamental increase for the solar industry: between 2014 and 2019 the country installed 1.3 GW of capacity. In 2018 this capacity doubled and increased by 131% in 2019, with growing expectations around this sector. Onshore wind has always been present in the past decade, but since 2015 the growth pattern is becoming more stable. Poland reached in 2019 6 GW of installed capacity.
The south-east region of Poland is the one having the highest irradiance, for the highest number of PV installations. Poland has a low total installed capacity of solar PV, despite having a large number of installations. This is mainly a result of the governmental support scheme, according to which installations over 1MW have not been allowed.
Energy Policy and 2020 targets
On the 8th of November 2019, the Ministry of Energy presented an updated draft of Poland’s Energy Policy to be implemented by 2040. The EPP2040 is a response to the key challenges faced by the Polish energy sector, by setting the strategic maneuver to be made in order to reach the goals stated.
Poland’s draft National Energy Policy by 2040 is summarized in 4 pillars:
- 50% reduction of CO2 emissions in the electricity sector by 2040.
- The share of coal in electricity production will fall to 60% in 2030. The electricity production from coal will fall substantially from 130 TWh in 2020 to 75 TWh in 2040.
- The full realization of offshore wind and PV potential which can provide up to 30 GW of new power generation capacity by 2040: RES share will be 27% in electricity production in 2030.
- The construction of the first nuclear power plant is planned for 2033 with a capacity of 1-1.5 GW. 6 nuclear units are to be built by 2043 with a total capacity of around. 6-9 GW.
The national targets for 2020 for RES, are set in the table:
| Contribution of the energy produced by RES to the gross final energy consumption: 20% | Contribution of the electrical energy produced by RES to the gross electrical energy consumption: 40% | Contribution of the energy produced by RES to the final energy consumption for heating and cooling:20% | Contribution of the electrical energy produced by RES to the gross electrical energy consumption in transportation: 10%. |
Coal is forecasted to fall by 42% from 2020- 2040, with renewables increasing by 18% over this period.
Poland requires a total of USD 4.5 billion investments to reach those targets.
Most of the additional investment needs are in the power sector (USD 1.7 billion per year), in particular for wind (USD 0.9 billion per year). The European Investment Bank has been investing 4 to 5 billion euros annually to finance Polish renewable projects: The country takes great advantage of it. Even though Poland has only 2%. shares in the EIB’s capital, the total EIB share in the portfolio portfolio is almost 7%.
The Auctions
Poland has a Contract for Difference (CfD) system, based on a difference between the market price and a reference price which is agreed in an auction. Auctions are organised by the Polish government, which allocates a budget, decides on technologies allowed to bid and sizes of installations and determines a budget per each basket. In the auction scheme, baskets are separated according to technology, size (for <1MW and >1MW) and whether the power plant is new or existing, intending to shift from the green certificate system to the FIP system.
Investors in auctions can bid up to a maximum reference price and up to a maximum capacity for each basket and technology. Usually, wind and photovoltaic plants have the biggest budgets as they are key technologies. Once auctions have been won, the President of the Energy Regulatory Office announces the results in 21 days.
The Market drivers
The key drivers for the development of the renewable energy sector in Poland are linked to several factors, among those the dynamic economic growth of the recent years, fostered the increase of a number of businesses and a domestic market of 38 million consumers. Furthermore, thanks to the new energy policies, green energy demand is growing, with RES increase in final energy consumption up to 15.5% in 2020 (19.3% for electricity, 17% for heating and cooling, 10.2% for transportation fuels). The favorable wind conditions and the large potential for obtaining biomass and biogas have also been investigated by the government, finding room for improvement in this area
Last but not least, several incentives to drive investments for renewable energy producers have been set and will be soon announced.
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