Conducting a swift energy transition in Poland requires full commitment from all interested parties. Polish power companies play a crucial role in this process as they are at the forefront of the fuel and energy transition. The direction of the climate and energy policy set by the European Union, the growing ambitions of the EU’s climate goals and the impact of greenhouse gas (GHG) emissions on climate change, care for human health, the need for sustainable development and minimizing the impact of energy sector on the environment are factors that motivate energy companies to carry out ambitious actions toward energy transition.
From vision to transition — strategies
The entities affiliated with PKEE plan further work in regard to the transformation of the Polish energy sector, which is reflected in the long-term strategies of companies that will allow them to adapt their core business to the changing surroundings and regulatory requirements.
The PGE Group declares to reduce its environmental impact and achieve climate neutrality by 2050. This will be achieved through investments in low- and zero-carbon energy sources and network infrastructure. PGE’s strategy is based on three pillars: environmentally-friendly energy, modern energy services, and efficient and effective organization. Therefore, PGE is implementing an ambitious program of building offshore and onshore wind farms and continuous development of the photovoltaics (PV) potential. PGE is also seeking acquisition opportunities for further renewable projects. By 2030, the share of renewable energy in the group’s portfolio will be increased to 50 percent and carbon dioxide (CO2) emissions will be reduced by 85 percent, which means 120 million tons fewer CO2 emissions.
A sixfold increase in installed capacity in renewable energy sources (RES) and a reduction in emissions by nearly 80 percent are the key objectives of the Tauron Group’s new strategy until 2030. The strategy also assumes the generation of the PLN 4.5 billion (€955 million) in EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2025 and PLN 6.5 billion (€1.4 billion) in 2030. It assumes decarbonization of the heating plants and acceleration of the development of renewable energy sources. Tauron wants to have 1.6GW installed capacity in renewable sources in 2025: wind farms, photovoltaics and hydropower plants. In 2030, it will be 3.7GW, which will constitute 78 percent of the generation mix of this group. Tauron wants to have 1.1GW of onshore wind and 1.4GW of photovoltaics. At the beginning of the 2030s, it wants to launch offshore wind farms in the Baltic Sea with a capacity of about 1GW. By 2030, approximately 50 percent of capex (capital expenditure) will be allocated to the development and modernization of the electricity distribution grid. Tauron will also consider investments in pumped storage and virtual power plants. It intends to provide all customers with smart meters by 2030 and customer will remain the focus of the group. Moreover, Tauron also supports further development of hydrogen technologies and assumes involvement in the development of competences and readiness to implement modern nuclear technologies after 2030.
Enea intends to achieve climate neutrality by 2050 by investing in the development of renewable energy sources based on state-of-the-art technologies. The increase in the installed RES capacity will be achieved through acquisitions, the development of own projects and in collaboration with business partners. By 2030, the Enea Group’s installed capacity in renewable energy sources will increase by roughly 1.5 GW, followed by another 2GW by 2040.
Over the next 10 years, Energa, Orlen Group, plans to significantly increase its renewable energy sources installed capacity, achieving on its own and by holding a stake in these assets, a total installed capacity of approximately 2.4GW. Energa plans to achieve approximately 1.1GW of installed capacity in onshore renewable energy sources, as well as a share in offshore wind farm projects with a capacity of approximately 1.3GW. The company will also allocate approximately PLN 29.7 billion (€6.3 billion) by 2030 toward the implementation of projects that respond to the needs and challenges resulting from the ongoing energy transformation.
From vision to action — investments
The biggest Polish energy companies are playing a key role in this process by developing PV projects and initiating the implementation of offshore wind energy projects on a large scale. Poland has one of the fastest-growing markets for solar energy in whole Europe. Now in the Polish energy system around 10GW of capacity in PV is installed, whereas four years ago it was less than 200MW. Offshore wind is also essential for the energy transition. Poland plans to build 5.9GW of offshore wind in the Baltic Sea by the end of 2030 and achieve 11GW by the end of 2040, which due to economic and technical conditions have the greatest prospects for development when it comes to increasing power generated from renewable energy sources in Poland.
Entities operating within PKEE have completed many projects that support the transformation of the sector in the areas of electricity and heat generation, as well as power networks. PKEE members plan further work in regard to the transformation of the Polish energy sector, which is reflected in the long-term strategies of companies that aim to allow them to adapt their core activity to the changing surroundings and regulatory requirements. PGE is working on offshore wind farms with a total capacity of 2.5GW until 2030 and commercial hybrid electricity storage. Tauron plans the construction of the PV Mysłowice solar farm with a capacity of 37MW (phase one), as an example of the reuse of post-industrial areas and is working on distributed energy model 2.0 — self-balancing areas of the power grid. Enea will build the biomass combined heat and power (CHP) unit and will run a program of building hybrid energy-generation sources. Energa’s projects assume such activities as developing renewable sources with a capacity of more than 400MW and implementation of group hydrogen strategy by 2030.
The Polish power system will follow the path of decarbonization of the sector, including through the gradual reduction of the share of fossil fuels and increase of renewables, supplemented by nuclear power (large-scale, small- and micro- modular nuclear reactors).
Costs and financing of the energy transition
As the history and experience of already developed countries show, energy transition requires a lot of investment and incurs significant costs. According to an EY study Polish energy transition path, expenditures for the transformation of the energy sector in Poland by 2030 may amount to as much as €135 billion, including protective measures for the mining sector related to the power and heat sectors. The required outlays significantly exceed the investment possibilities of energy companies and potential investors. Support for the energy transformation in Poland from the EU budget for 2021-2027, the European Union Emissions Trading System (EU ETS) mechanism (until 2030) and the National Energy Transformation Mechanism (until 2031) is estimated at approximately €70 billion. Nevertheless, even taking into account the existing and planned possibilities of obtaining aid funds from the EU and the state budget, there still remains a huge gap. Additionally, this gap may get even bigger as EU funds will be used in other sub-sectors, such as gas and transport, and due to the fact that market conditions and investment outlays may change.
One EU, many paths of energy transformation
Poland has been effectively implementing the energy transformation process for years. Nevertheless, due to a different starting point, resulting from objective, historical, geopolitical and economic reasons, countries of Central and Eastern Europe need more time to achieve the increasingly-ambitious EU climate targets. A different starting point for the CEE region results in a different pace of the transformation process caused by a larger scale of challenges. The answer to these challenges are measurable actions of the energy companies that bear the burden of energy transformation.