Poland Is holding course on the chosen energy transformation path

Wojciech Dąbrowski, President of the Management Board of the Polish Electricity Association – PKEE and PGE Group, explains the current situation
in the energy market and Polish activities in the field of transformation of the energy sector.
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Wojciech Dabrowski

By Wojciech Dabrowski

President of the Management Board of PGE and PKEE

14 Dec 2022

Is the European Green Deal and the ambitious goals for 2030 and 2050 still relevant in the face of the energy crisis and current geopolitical events?

The deliberate destabilisation of the EU gas market by Russia has led to an energy crisis throughout the European Union and many other parts of the world. The EU and national governments have taken several measures to make final energy prices acceptable to consumers. Nevertheless, it led to the lack of a stable regulatory environment and this is currently a significant problem for the energy sector, which faces increasingly ambitious transformation challenges. Recent months clearly indicate that the EU ETS, fuel, and electricity markets are susceptible to the geopolitical situation and speculative activities of market participants. Further, the effective transformation of the energy sector requires the use of all available resources to stabilise electricity prices. Note that economic recession and increasing energy poverty could increase the risk of slowing down the energy transition process or even stopping it.

The energy crisis caused by the war in Ukraine increases the risk of escalating energy poverty. How can we prevent this development becoming a problem?

High energy prices for consumers may bring energy poverty to a so far unseen level. Recognising this as a serious threat, the EU and Member States have taken various steps to tackle this issue. In Poland the government has temporarily cut taxes on fuels and electricity as well as introduced additional financial support for the most vulnerable energy consumers to help them pay their energy bills and provide the maximum price cap for electricity sold to selected groups of final users.

To mitigate the effects of rising energy prices on the market, the Polish government announced to freeze energy prices for households in 2023 at this year’s levels up to a certain limit of usage, as well as offer discounts for energy saving. Poland will also spend €3.5 billion between 2022 and 2024 to help energy intensive companies cope with surging global gas and electricity prices.

Social acceptance is undoubtedly a pillar of a just energy transition so for this reason keeping energy prices at an acceptable level must be perceived as a priority.

Social acceptance is undoubtedly a pillar of a just energy transition so for this reason keeping energy prices at an acceptable level must be perceived as a priority.

We often hear about the different starting point of Poland and its dependence on coal. What has the Polish energy sector done to reduce its impact on climate change?

Poland has been effectively implementing the energy transformation process for years, but due to a different starting point, resulting from objective, historical, geopolitical, and economic reasons, such countries like ours needs more time to achieve the increasingly ambitious EU climate targets.

However, Poland has made notable progress in its energy transition. It has not only significantly reduced its emissions in the last decade, but also increased its power generation from renewables. Moreover, Poland overreached its 2020 target regarding the share of renewable energy. The biggest Polish energy companies are playing a key role in this process by developing RES, including - wind farms and photovoltaic projects on a large scale. Moreover, our country has one of the fastest-growing markets for solar energy. Currently in the Polish energy system around 10 GW of capacity in photovoltaics is installed, whereas 4 years ago it was less than 200 MW.

Offshore wind is also essential for the energy transition. Poland plans to build 5.9 GW of offshore wind in the Baltic Sea by the end of 2030 and 11 GW by the end of 2040 which due to economic and technical conditions have the greatest prospects for development.

I have no doubt that Europe can build a strong, independent, environmentally friendly, and solidary energy sector and Poland will play an important role in this process.

From the point of view of the Polish energy sector, what is the biggest challenge related to the transformation process? What funds must the energy industry invest to meet ambitious climate goals?

As the history and experience of already developed countries show, energy transition requires a lot of investment and incurs significant costs. According to the EY Report “Polish Energy Transition Path”, expenditure 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 EU ETS mechanism (until 2030) and the National Energy Transformation Mechanism (until 2031) is estimated at approximately €70 billion. Nevertheless, even considering the existing and planned possibilities of obtaining aid from the EU and the state budget, a huge gap remains. Additionally, this financial gap may get even bigger as EU funds will be used in other sub-sectors, such as gas and transport, and since market conditions and investment outlays may change.

We need a stable regulatory environment and financial support which will enable the realisation of necessary investments. I have no doubt that Europe can build a strong, independent, environmentally friendly, and solidary energy sector and Poland will play an important role in this process.

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