{"id":9786,"date":"2022-02-15T00:00:00","date_gmt":"2022-02-14T23:00:00","guid":{"rendered":"https:\/\/aspeninstitutece.softmedia.cz\/article\/2022\/polish-transformation\/"},"modified":"2024-09-30T18:52:55","modified_gmt":"2024-09-30T16:52:55","slug":"polish-transformation","status":"publish","type":"post","link":"https:\/\/www.aspeninstitutece.org\/cs\/article\/2022\/polish-transformation\/","title":{"rendered":"The Inept Transformation of the Polish Energy Industry"},"content":{"rendered":"

The energy industry in Poland is going through a difficult period. Wholesale electricity prices, which are settled on the Polish Power Exchange in Warsaw, are inexorably increasing. In November 2021, the weighted average BASE price of the day-ahead market was PLN 552.40 per MWh (approx. \u20ac120) compared to PLN 467.12 per MWh in October and PLN 251.66 per MWh in November 2020.\u00a0<\/span><\/p>\n

Although energy prices are increasing across Europe, they are rising faster in Poland than in other countries. One of the reasons is the growing prices of ETS\u2014CO2 emission allowances. Within a year, they increased almost threefold and exceeded \u20ac80 per 1 ton. The Polish power industry has the largest share of power plants fired with hard coal or lignite in the whole European Union. With the average emissivity of the Polish energy sector of 719 g per 1 KWh, an increase in allowance prices by 10 euro translates into an increase in energy price by 7.2 euro per 1 KWh.<\/span><\/p>\n

In May 2021, there was an emergency shutdown of 10 power units in the Be\u0142chat\u00f3w Power Plant with a total capacity of about 3,900 MW. Be\u0142chat\u00f3w Power Plant is the largest supplier of electricity in Poland. It produces more than 20% of the domestic energy. At the same time, Be\u0142chat\u00f3w Power Plant is one of the largest polluters in Europe.\u00a0<\/span><\/p>\n

In June, the 910 MW unit of Jaworzno Power Plant, commissioned in November 2020, was shut down due to faults. It will take until 2024 to fix them.\u00a0<\/span><\/p>\n

The Polish-Czech dispute<\/strong><\/h2>\n

The problems have been overshadowed by the Polish-Czech dispute over a lignite mine in Bogatynia that supplies fuel to Tur\u00f3w Power Plant, owned by the Polish Energy Group (PGE SA). On 21 May 2021, an interim order was issued by the Court of Justice of the EU ordering Poland to immediately stop lignite mining there. This would mean the closure of the power plant, as the open-pit mine forms a single production line with the power plant. There is no way to supply fuel from outside the mine. The Polish government decided that the mine and the power plant would not be shut down, so the CJEU imposed a fine of \u20ac500,000 a day as a precautionary measure against the Czech side\u2019s claim that the mine was causing a significant drop in groundwater. In the \u017ditava area, groundwater levels have already dropped by 100 meters, and the collapsing ground threatens houses. The first hearing before the Court of Justice was held in November 2021. The next one will be held in 2022.<\/span><\/p>\n

The Tur\u00f3w Power Plant is Poland\u2019s fourth largest coal-fired thermal power plant. Its first unit was commissioned in 1962. The plant is located in Bogatynia, at the junction of the Polish, Czech and German borders. It reaches a gross capacity of over 2000 MW. In 2019, it produced 5,597.5 GWh of gross electricity, accounting for 3.5% of Poland\u2019s power generation. In 2020, it produced 5,709.4 GWh of gross electricity\u20143.7% of domestic production.\u00a0<\/span><\/p>\n

These are significant figures, but Turow\u2019s shutdown would not cause an energy shortage in the national system. The capacity of Poland\u2019s conventional power plants is over 37,000 MW, with an average power demand of about 23,000 MW and a maximum of about 28,000 MW. Conventional power plants, mainly based on coal, are supplemented by renewable energy facilities, with a capacity already over 14,000 MW. In 2020, they supplied 28,800 GWh of energy, i.e. 5 times more than Tur\u00f3w Power Plant. Renewable energy power plants show double-digit production increases.\u00a0\u00a0<\/span><\/p>\n

The comprehensive modernization of the Tur\u00f3w Power Plant was completed in 2005; its management claims that it has become the most modern lignite-fired power plant in the country. In June 2016, the cornerstone for the 496 MW Unit 11 was built. The unit was commissioned in May 2021 and again in July after a temporary shutdown. Construction was carried out by a consortium of Mitsubishi Hitachi Power System GmbH (leader), Tecnicas Reunidas and Budimex. The investment cost was over 4 billion PLN (around \u20ac1 billion euro). It was one of several investments in coal-fired power generation that state-owned companies have made in recent years, spending nearly 30 billion zlotys (about \u20ac6.5 billion). These investments, if finally implemented, will increase the installed capacity in the national power system by nearly 4,300 MW. In April 2021, the Minister of Climate and Environment issued a license for the expansion of the company\u2019s open-pit lignite mine, which will enable coal extraction until 2044.<\/span><\/p>\n

The impact of closing the mine, and consequently the power plant, would be severe for the local community and PGE itself, which estimates potential losses at \u20ac2 billion.<\/span><\/p><\/blockquote>\n

The complex employs about 3,500 people (data from 2021), and when subsidiaries are added, it is about 5,000 people. Bogatynia\u2019s residents, in line with EU climate policy, no longer have furnaces in their own homes, they are all connected to heat from the CHP plant and it would be difficult to find another source quickly. The heat provided by the power plant is also used by the local hospital which would have to cease operations for some time.\u00a0<\/span><\/p>\n

According to the management of PGE SA, a realistic date that would allow the mine to be closed without harming the Polish energy system is 2035. However, regardless of whether the CJEU ultimately orders the closure of the mine and the power plant, continuing operations would be in conflict with EU climate policy, which Poland has accepted.\u00a0<\/span><\/p>\n

Energy policy of Poland<\/h2>\n

As recently as September 2017, Minister Piotr Naimski, one of the creators of the current government\u2019s energy policy, declared at the Economic Forum in Krynica that Poland would, at least for the next few decades, base electricity production largely on coal. \u201cWe want to build new power plants in Poland. We have it in our plan and we are building them,\u201d said the Minister. It is important to remember that most of the power companies in Poland, despite being listed on the stock exchange, belong to the state; their investment policy is decided by the government, which is responsible for the functioning of the energy sector as the regulator of the industry and the main owner.\u00a0<\/span><\/p>\n

According to the government document \u201cEnergy Policy of Poland until 2040\u201d, adopted in February 2021, the energy transition will require capital expenditures between 2021 and 2040 of about PLN 1,600 billion, or \u20ac360 billion. Poland will have to build thermal power plants based on renewable energy sources, possibly nuclear power plants, and in the interim period, natural gas-fired thermal power plants in place of thermal power plants fuelled by coal or lignite. By 2030, the government estimates spending on the energy and climate transformation at 260 billion zlotys (about \u20ac60 billion), or about 1% of GDP per year, which in light of analyses by international institutions seems an understatement.<\/span><\/p>\n

Separate from the Energy Policy document, the National Energy and Climate Plan for 2021-2030 was created and sent to the European Commission as the Polish government\u2019s official position on the energy transition.\u00a0<\/span><\/p>\n

The Polish government seems surprised by the EU\u2019s climate policy, which is forcing a much faster transition and move away from fossil fuels, especially coal and lignite.<\/span><\/p><\/blockquote>\n

The Polish government has opposed the most radical ideas of the European Union, but ultimately accepted them. In December 2019, the European Commission presented the Green Deal\u2014a strategy to achieve zero greenhouse gas emissions by 2050. Poland did not stop the strategy at the European Council summit, but recognized that it would not be able to meet its obligations on its own. As a result, Poland may lose several billion euros from the Just Transition Fund, which is supposed to help less wealthy countries move away from high-emission energy.\u00a0<\/span><\/p>\n

In July 2021, the Commission proposed the \u2018Fit for 55\u2019 package, which aims to reduce emissions by at least 55 percent by 2030. For now, it is only a proposal, but if it is accepted by the majority of countries, Poland will have to adapt to it.\u00a0<\/span><\/p>\n

At the COP26 climate summit held in Glasgow in November 2021, the Polish government, along with forty others, pledged to phase out coal-fired power over the next decade. The Polish authorities later stated that they had meant the 2040s. The government\u2019s agreement with the miners\u2019 unions stipulates that the last mine will close by 2049.<\/span><\/p>\n

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Fit for 55 is the EU's plan to reduce greenhouse gas emissions by 55% by 2030. <\/p>\n

We don\u2019t think economies will be impacted particularly strongly, but some sectors could face major disruption.https:\/\/t.co\/vVagTJmJ2Q<\/a> pic.twitter.com\/wzPv7IGihs<\/a><\/p>\n

— ING Economics (@ING_Economics) February 16, 2022<\/a><\/p><\/blockquote>\n