Poland is one of the fastest growing markets for distributed solar PV in Europe, and it also has a strong programme to drive offshore wind deployment. The country has also taken important steps to improve energy security, and is focusing on diversifying energy imports away from Russia. However, the country’s energy mix is still dominated by fossil fuels, and thus, significant work is required in order to decarbonise the country’s energy supply. REGlobal presents an extract from International Energy Agency’s recent report titled “Poland 2022 – Energy Policy Review”, that provides a range of energy policy recommendations to help Poland smoothly manage the transition to an efficient and flexible low-carbon energy system.
From 2010 to 2020, the share of renewable energy in Poland’s total final energy consumption (TFEC) increased from 9.5% to 16%, driven mainly by growth in wind generation and in direct use of solid biomass, mainly for heating. The large increase in the share of renewables seen in 2018 resulted from improved data collection on the use of solid biomass for heating. Poland’s share of renewables in TFEC remains relatively low, ranking 21st among IEA member countries in 2019. Using Eurostat’s definitions, in 2020, renewables covered 16% of Poland’s gross final energy consumption, 16% of electricity generation, 22% of heating and cooling demand, and 6% of transport demand.
Poland’s energy policy gives a key role to renewable energy in several strategic areas of its energy transition. Renewable electricity generation, especially from offshore wind and small-scale solar PV, is one of the main options to displace coal-fired electricity without increasing import dependency and to increase the role of prosumers in electricity markets. Poland places a focus on reducing transport sector oil demand through biofuels and renewable electricity. There is a push for renewables in heating and cooling, with support for bioenergy and heat pumps. Poland is also aiming to decarbonise its gas supply with biomethane and hydrogen produced from renewable electricity. The targets and supporting measures for renewable energy are defined in Poland’s NECP, the Energy Policy of Poland till 2040 (EPP2040), and numerous national laws and regulations.
Renewable energy targets
Under the EU Renewable Energy Directive (RED), Poland has 2020 and 2030 targets for renewables in gross final consumption, and indicative trajectories for renewables in electricity, heating and cooling, and transport. The RED targets and trajectories are intended to support the achievement of EU-wide targets for renewables in gross final consumption to reach 20% by 2020 and 32% by 2030. Poland’s 2020 targets and supporting measures are set in its National Renewable Energy Action Plan. The 2030 renewable targets and support measures are set in Poland’s NECP and the EPP2040.
Poland achieved its 2020 target for renewables in gross final energy consumption. However, this resulted in large part from the change in methodology to calculate biomass use for building heating. The 2020 shares for renewables in electricity and in transport
remain below their indicative trajectories.
In October 2020, the European Commission published its review of Poland’s NECP, noting that the 2030 target for a 23% renewable energy share in gross final consumption was unambitious and that a 25% share is necessary to support the EU-wide renewables target (EC, 2020). In December 2020, the EU-wide GHG emissions reduction target for 2030 was increased from 40% to 55%. The EU has indicated that it will update the RED to increase the EU-wide renewable energy target from 32% to 40%. It is likely that Poland will need to increase its 2030 renewable energy targets to support EU-wide targets for renewables and GHG emissions.
Assessment of Poland’s renewable energy policy for the electricity sector
The EPP2040 places an emphasis on increasing renewable electricity generation to drive the energy transition, especially on solar PV and offshore wind. It includes targets for solar PV capacity of 5-7 GW by 2030 and 10-16 GW by 2040, and for Poland to have 1 million prosumers using distributed renewables (mainly PV) by 2030. Although the EPP2040 was released in February 2021, it does not reflect the reality of PV deployment in Poland. At the end of 2021, PV capacity had already reached around 7.7 GW, mainly from prosumers (5.9 GW). This strong deployment of prosumer PV was supported by the popular My Electricity programme and favourable net metering. In addition, utility scale PV has been the main winner of recent renewable energy auctions. Industry indicates that PV capacity could reach 10 GW by 2023 and 18-20 GW by 2025.
The rapid deployment of PV, especially by prosumers, is a notable policy success for Poland. The government should take steps to ensure that this strong success with PV can be continued and safely integrated in the grid. The IEA encourages the government to
accelerate investment in distribution grids and quickly add support for distributed energy storage to the My Electricity programme. It would also be beneficial to introduce market reforms such as dynamic pricing and a strong role for aggregators. The government is working on legislation that introduces the legal framework for dynamic pricing and aggregators. However, the government has indicated that full use of dynamic pricing will only be possible once the CSIRE energy data system is fully operational in 2024.
Poland has developed a strong offshore wind policy and contracts are in place for 5.9 GW of wind farms that should be fully operational by 2027. These projects are eligible to receive a maximum support 71 EUR/MWh. The majority of these projects are joint ventures between Polish energy companies and experienced offshore wind developers. The next rounds of offshore wind projects will be selected through competitive auctions planned for 2025 (2.5 GW) and 2027 (2.5 GW). The government should take steps to ensure that these auctions attract competitive bids that result in a minimal level of subsidies. Recent offshore wind auctions for projects in the North Sea have been highly successful while offering no direct subsidies; however, in most of those cases, the TSO covered the cost of the undersea connection, while in Poland this must be covered by the project developer.
Onshore wind has historically been the main driver for growth in Poland’s renewable generation. However, onshore wind deployment has significantly slowed, with capacity only increasing from 5.8 GW to 6.4 GW between 2016 and 2020. This slowdown in wind deployment has coincided with the passing of a law in 2016 that places notable restrictions on wind farm deployment. The government recently proposed allowing municipal authorities to relax wind generation siting requirements, which has been welcomed by wind developers. The government should quickly pass the law relaxing the siting requirements for onshore wind, monitor onshore wind deployment and take additional steps as needed to drive robust onshore wind deployment.
Both offshore wind and onshore wind deployment will require notable transmission system investments to bring wind generation from the north of the country to demand centres in the south. The government should work closely with the TSO to ensure that expansion of the transmission system keeps pace with wind development.
Although Poland’s renewable energy auction system has separate baskets for bioenergy, geothermal and hydro generation projects, there have been very limited bids for these technologies and no major projects commissioned in recent years. The government and the ERO should continue to consult with representatives from these industries to better understand how the auction system could be adjusted to support bioenergy, geothermal and hydro generation.
Poland has a small capacity of energy storage that consists mainly of pumped hydro (with a capacity of 1.7 GW and 7.6 GWh in 2020). There is limited deployment of battery storage in Poland, with total battery storage capacity of around 15.4 MW and 35 MWh in 2021. Energy storage can play a critical role in supporting the secure integration of variable renewable generation, while providing additional benefits to increase overall system flexibility. The government has set targets for 1.0 GW of energy storage (excluding pumped storage) by 2040 and made significant changes to the Energy Law to support the deployment of storage. The government should build on these efforts and develop a comprehensive energy storage strategy that includes a clear assessment of the role energy storage can play in the electricity system and markets (especially in relation to integrating renewables) and identifies key barriers and solutions to address these.
The government should update national strategic documents like the EPP40 and the NECP to take into account the new reality of the PV market, planned relaxation of onshore wind-siting rules and enhanced EU GHG emissions reduction targets. This would provide all market participants with long-term visibility on the government’s plans and help to build a sustainable market, increase competition, drive down the costs and help grid operators efficiently integrate higher shares of renewables.
The government of Poland should:
- Update 2030 renewable energy targets to reflect the rapid deployment of solar PV and anticipated growth of onshore wind, and to prepare for the higher level of ambition needed to meet upcoming EU goals; drive accelerated decarbonisation; and account for continuing cost reductions in wind, PV, energy storages and other key technologies.
- Ensure that electricity system development provides both additional capacity and increased flexibility to support the secure integration of renewables.
- Develop a strategy for accelerated deployment of energy storage to increase electricity system flexibility and support the integration of renewables generation.
- Develop a clear strategy to accelerate the deployment of renewable heating and cooling that covers both individual and district heating, considers all renewable technologies, and is aligned with energy efficiency policy and support programmes.
- Deploy renewable generation and charging infrastructure to maximise the potential for electric vehicles to increase the share of renewables in transport.
- Develop a strategy for the use of bioenergy across all energy sectors and support the development of a domestic industry for the production of sustainable feedstocks.
The complete report can be accessed here