Investment climate, green transition and overcoming energy crises in Poland: policy design and practical implementation
lut 21, 2023
Such a small change of 200 m makes ca. 6 GW of onshore wind impossible by 2030, said Olga Sypula, country manager of European Energy in Poland, regarding the “10H distance act,” which was approved by the Sejm, where the required distance between residential areas and wind turbines was raised from 500 m to 700 m.
Recently, European Energy in Poland hosted a round table discussion with the European Commission, International Monetary Fund, World Bank, BloombergNEF, and Instytut Jagielloski on how to save investment climate, progress with green transition, and overcome Poland’s energy crises.
Instytut Jagielloński president Marcin Roszkowski described how the Polish energy sector emits two times more CO2 than the average country in Europe. Taking into account that 550 g of CO2 per KWh is the limit of the CO2 emissions, the majority of coal power plants in Poland are almost doubling this amount, which is heavily influenced by increasing the electricity prices delivered to the market.
“Poland is far behind in comparison to EU countries in the level of CO2 emissions, and this has a negative impact on the economy’s competitiveness. The whole Polish economy emits 130 million tons of CO2, which at today’s prices is a burden on the Polish economy in the amount of billions of PLN annually,” said Mr. Roszkowski.
The energy system, including both technologies and policy design, must be adjusted by aligning everything and focusing on the future needs, security, and environment.
The European Energy Country Manager in Poland, Olga Sypula, underlined in her speech that, despite the huge need for changing the energy mix and growing the share of clean, cheap renewable energy, private investors in Poland still face a bunch of challenges. To begin with, there is a lack of available grid connections and insufficient electricity, a complex and lengthy permitting process, and legislation that lacks definition and a policy framework for the combination of land use and farming, known as “Agri-PV.” However, it is not only legislation that is lacking; social awareness is also lacking. Legislation is also lacking for repowering, referring to the simplification of the procedures; for cable pooling in hybrid renewable energy projects with both solar and wind technologies; and for the direct line solution that will allow the large energy consumers to have their own energy for consumption.
Regarding challenges in legislation, the 10H rule has been blocking the development of new onshore wind farms since 2016 by restricting the distance between installed wind turbines. Recently, the government made amendments to the draft bill, changing the distance supported by the private market players from 500 m to 700 m, that makes a huge difference. According to the Polish Wind Energy Association, a distance of 500 m between wind turbines will allow Poland to reach its goal of ca. 10 GW of new onshore wind projects till 2030, but a distance of 700 m would mean no more than ca. 4 GW of new onshore wind capacities to be constructed.
Olga Sypula: “The 700-meter distance in the H10 rule means for European Energy Polska that we will not be able to construct 70% of what we have in our portfolio. We are sure that 500 is a sufficient distance. Raising up 700 m, such as small change of 200 m makes ca. 6 GW of onshore wind impossible by 2030.”
From another side, the European Union has put all possible resources into decarbonizing economies, setting up different goals such as increasing renewable energy, energy efficiency, etc. Paweł Olechnowicz, European Commission, Directorate-General for Regional and Urban Policy, Poland: “In regards to the financial perspective, we have 19 cohesion policy programs till 2027 for around EUR 10 billion, with the priorities of decarbonization of the Polish energy mix. So the money is not a problem, problem of green transition progress is constantly changing Polish legal framework in energy sector and carbon intensive energy mix.”
In the presented report of the World Bank “The Green Transformation in Poland – Opportunities and Challenges for Economic Growth,” Poland can sustain inclusive growth and income convergence in the context of the transition to a low-GHG emission economy, through an effective policy mix that addresses market failures, institutional challenges, and changing technological needs.
“Poland needs to loosen spatial planning restrictions for renewable energy, including the H10 rule, in the short term; facilitate grid connection through improved grid infrastructure and quick and transparent grid connection procedures, and so on,” said Cristina Savescu, World Bank country economist.
Among the drivers of long-term growth, in the report of World Bank, the focus would be on capital deepening – through investments, nevertheless there is a deficit of private investment. In more ambitious scenario for the decarbonization, two times more investments are needed. The transition to a full market and a stable policy environment will help attract investors, foreign and domestic, and contribute to tackling the financing challenge.
International Monetary Fund senior resident representative of the regional office for Central, Eastern, and South-Eastern Europe, Geoff Gottlieb, referring to the energy crises of 2022, mentioned in his speech that price shocks could happen again due to the cut-off of energy from Russia, so governments should think about a more robust policy framework for 2023 and beyond. He underlined several criteria for the policy development: the price signals have to be better preserved, as they incentivize energy efficiency by users and investments by suppliers, but price freezing does not prevent inflation; there should be targeted support for those who need it the most, but at the same time providing support to the whole society is not an efficient use of fiscal resources; and investment incentives have to be preserved.
“There needs to be a major supply response to address the lack of renewable energy. Private investors have a role to play in this response, so it is important to preserve the market and incentives to invest,” said Geoff Gottlieb.
BloombergNEF associate of Energy Transitions Research, Felicia Aminoff, in her speech about “The European energy transition: policy drivers and investment opportunities” underlined both the opportunities and risks of reaching the EU Net Zero target by 2050. “In an economic-led scenario, the power sector investment opportunity is USD 2,1 trillion by 2030, with more than a third of investments needed in power grid and renewable energy new facilities for electricity generation.” And these investments could occur over this decade, if there was no policy bottlenecks.” – said Ms. Aminoff.
Summarizing the discussion and speeches, even with different angles on the issues of investment climate, green transition, and energy crises in Poland, all speakers mentioned the common milestones that the Polish government has to take into account for long-term policy development: easing the spatial planning restrictions, specifically the H10 rule, grid infrastructure improvements, preserving investment market signals, more renewable energy being needed to replace the cut-off of Russian energy resources, so there is a need to support investors, money from the EU is not a problem for the green transition, and policy design is the only bottleneck.
European Energy A/S
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