Energy market in Poland – monopoly or investment opportunity according to European Green Deal – Public – private partnerships opportunities in energy market in Poland – Renewable Energy Sources

The previous energy market model in Poland was based on a monopoly of five different electricity suppliers.

Since 2007, the energy market in Poland has been liberalised and both companies and individuals are free to change their energy supplier. However, elements of a monopoly remain, as energy production and transmission is still the responsibility of these companies. Energy trading, on the other hand, is completely free. All elements of this market are licensed and supervised by the Polish Energy Regulatory Office. At present, the energy sector is being restructured and put in order, especially as regards competition. In the near future, the situation related to the stable position on the energy producer market may change drastically due to the new energy policy and the gradual abandonment of energy production from fossil fuels. This may lead to the liberalisation of the energy production and transmission market and an increase in the number of energy traders.

As part of the strategies contained in the Green Deal, the European Union aims to achieve zero greenhouse gas emissions and separate economic growth from the use of natural resources by 2050. These activities are intended to protect EU citizens and its environment. The main idea of the transformation process is its fairness and taking into account the level of development of the desired energy solutions in particular Member States. According to estimations, the production and consumption of energy is the source of 75% of greenhouse gas emissions. Therefore, the EU is planning extensive changes in the production and use of energy in various sectors of the economy. However, these changes are connected with large costs, which are to be covered by the EU budget. According to estimates by the European Commission, an additional EUR 260 billion per year will be needed to achieve the 2030 plan (at least 50% reduction in greenhouse gas emissions compared to 1990). The EU wants to mobilise both the public and private sector for this purpose, so the public-private partnership solution will have an important role to play. As part of these investment plans, a European Just Transition Fund has been set up to assist countries that are in a worse initial situation than others, including Poland, which is to receive more than EUR 4.4 billion between 2021 and 2027 to mitigate energy transition problems.

The energy sector in Poland is based on energy obtained from combustion of both lignite and hard coal. To a lesser extent it is based on generating electricity from other sources and from Renewable Energy Sources (currently the share of RES in energy production is about 20%). According to the Polish Energy Policy 2040, by 2033 the share of coal in energy production is to fall below 56%, at least 23% of energy is to come from RES and nuclear energy is to be implemented. In addition, electricity consumption is to be reduced by 23% by 2030. The launch of a nuclear power plant and the development of RES are to have a positive impact on air quality in Poland and reduce CO2 emissions into the atmosphere, which is desirable not only by the European Union, but also by the international community. Nevertheless, there is also the issue of coal mining in Poland, which currently provides the majority of the country’s electricity needs. According to the government’s assumptions, the last mine in Poland will be closed by 2049. In view of this, the energy sector must switch to producing energy from other sources or importing fossil fuels from abroad. In view of these plans, it is Poland’s raison d’etre to make the transition to energy from sources which do not emit CO2 or particulates into the atmosphere as efficiently as possible. Poland, wishing to participate in the energy transition and in creating a clean environment, has adopted a document entitled “Energy Policy of Poland until 2040”. It was adopted by the Polish Council of Ministers in February 2021. It assumes that the Energy Transformation will be based on three pillars: a just transition, a zero-emission energy system and good air quality. The first pillar assumes the reduction of coal consumption, the development of the Renewable Energy Sources industry and the reduction of energy poverty. The second pillar is based on the development of nuclear and RES energy as well as local and civic energy. The third pillar assumes the transformation of the heating sector and the electrification of transport. In each of these branches there is a potential for business development, not only in the field of energy, but also in the production and sale of electric vehicles and the installation of RES as part of civic energy.

Public-private partnership is intended to facilitate cooperation between public administration bodies that perform their duties and private sector companies. The realization of these tasks takes place on the basis of a civil-law contract between a private company chosen in the so-called competitive dialogue and the public authority that wants to realize the given duty. A public-private partnership contract is most often of a complex and purposeful nature, involving comprehensive design, construction and maintenance of a particular investment. The contract is also usually for a long period of time. Risks, but also benefits are shared between the authority and the company. According to Article 18 of the Polish Energy Law, the municipality’s own obligations include supplying residents with electricity. Therefore, this is the field for investments especially within the scope of Renewable Energy Sources generated from wind, sunlight or biogas combustion. As far as investments in conventional energy are concerned, no investments are currently planned, with the exception of nuclear energy. At present, the construction of one nuclear power plant is planned, which is to be activated in 2033. In the following years, its power is to be increased from 1-1.6 GW to 6-9 GW in 2043. This investment, as well as any other investments that may be forthcoming, provides opportunities for investments within the framework of public-private partnerships, both in the energy sector and in the construction or transport sectors.

Microenergetics from renewable energy sources is becoming increasingly popular in Poland, especially when it comes to the installation of photovoltaic panels on private properties. The popularity of this type of solution is connected with subsidies from the government and local authorities for the installation of such panels on the roof of a building or in an adjacent area. An alternative to energy generated by RES is also nuclear energy, coming from nuclear micro-reactors. Such a micro-reactor is expected to provide energy for about 30 years for one house. However, for the time being there are no Polish or EU regulations that would require a permit for their purchase and installation. Other individual energy sources only require notification of their connection to the transmission grid to the operator, agreement of the project with a fire safety expert and an environmental decision if the photovoltaic farm covers more than 1 hectare in an unprotected area or 0.5 hectare in a protected area, while for wind farms such a decision is always necessary. There is potential for development in both the RES and the micro-nuclear sectors, although only in the case of RES there are legal regulations and investments in this sector will be more secure.

To sum up, the current changes caused by the European Green Deal offer many opportunities for investment not only in the energy sector, but also in the related construction and transport industries in Poland.

Sources:

1. https://businessinsider.com.pl/gospodarka/szokujace-energetyczne-prognozy-na-2022-r-wedlug-prof-swirskiego/6xw6nbd
2. Komunikat Komisji do Parlamentu Europejskiego, Rady Europejskiej, Rady, Komitetu Ekonomiczno-społecznego i Komitetu Regionów z dnia 11.12.2019 r. Europejski Zielony Ład
3. https://www.funduszeeuropejskie.gov.pl/strony/o-funduszach/fundusze-na-lata-2021-2027/aktualnosci/fundusz-sprawiedliwej-transformacji-do-ktorych-regionow-trafi-wsparcie/
4. The EU is ready to co-finance our energy transformation ― what does the Polish government have to say? – Forum Energii (forum-energii.eu)
5. https://www.money.pl/gospodarka/zamykanie-kopaln-szef-zwiazkowcow-komentuje-polityke-energetyczna-polski-6606439323474592a.html
6. Polityka energetyczna Polski do 2040 roku
7. https://www.rynekelektryczny.pl/produkcja-energii-elektrycznej-w-polsce/
8. http://ippp.pl/strona/partnerstwo-publiczno-prywatne-ppp
9. https://www.rp.pl/inne/art1490621-partnerstwo-publiczno-prywatne-a-tradycyjne-zamowienia
10. https://businessinsider.com.pl/technologie/lokalizacja-elektrowni-atomowej-juz-jest-kiedy-powstanie-wyjasniamy/e8xy866
11. https://wysokienapiecie.pl/40085-moj-prad-nie-wszystko-gdzie-sa-wyzsze-doplaty-fotowoltaiki/
12. https://businessinsider.com.pl/gospodarka/szokujace-energetyczne-prognozy-na-2022-r-wedlug-prof-swirskiego/6xw6nbd
13. https://wysokienapiecie.pl/32373-nowe-wymogi-dotyczace-fotowoltaiki-ogrzewania-w-prawie-budowlanym/
14. https://www.srodowisko.pl/artykuly/fotowoltaika-a-decyzja-srodowiskowa-kiedy-jest-niezbedna–152503-6
15. https://www.gramwzielone.pl/energia-wiatrowa/26999/decyzje-srodowiskowe-na-wiatraki-nowe-wytyczne-gdos