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Poland foresees using a "diverse" mix of renewable, nuclear, and
coal-fired power sources to soften energy price spikes after Russia
cut off natural gas exports to the country last week.
Poland's pipeline gas imports from Russia ended on 27 April
after state-controlled gas company PGNiG refused to make a payment
in rubles to its Russian counterpart, Gazprom Export.
The move drove up European wholesale gas prices at the Dutch TTF
gas hub by 28% on the same day to €125/MWh ($131.77/MWh), according
to data from exchange operator ICE.
Poland lost about half of its total imported gas supply, or 27
million cubic meters per day, according to S&P Global Commodity
Insights Executive Director for EMEA Gas Power and Renewables
Laurent Ruseckas.
While Poland does not expect a shortage of gas, it is extending
price protection for consumers and adopting a range of measures to
combat inflation in a policy called the Government Anti-Inflation
Shield.
On 5 May, the National Bank of Poland (NBP) held monetary policy
sessions to raise interest rates.
Polish inflation is projected to remain high due to soaring
commodity prices, strong wage growth, and expansionary fiscal
policy, according to a report by S&P Global Director, Emerging
Europe, Sharon Fisher.
Clusters of renewables, hydrogen storage, and
more
On 29 March, Poland's executive Council of Ministers adopted a proposal to update
its Energy Policy until 2040 (PEP2040) to reflect energy security
concerns.
PEP2040, initially adopted in 2021, enforced Poland's
EU-mandated National Energy and Climate Plan (NECP) for the years
2021-2030, which aims to get countries to align with the EU's pledge under
the Paris Agreement.
The energy policy is being revised to help Poland cut dependency
on imported coal, crude, and natural gas and their derivatives
(LPG, diesel oil, gasoline, and kerosene).
"The current international situation affects many aspects
related to energy policy and makes it necessary to change the
approach to ensuring energy security towards greater
diversification and independence," the executive body said.
Under the revised PEP2040, Poland will meet more of its energy
needs from domestic sources and add a target of reaching 50% of all
power demand from renewables in 2040.
A previous version of PEP2040 targeted at least 23% of
electricity consumed to be from renewable sources by 2030, before
hitting at least 28.5% in 2040, according to law firm
Dentons.
Poland is not there yet. It produced just 10.75% of its
electricity from renewables in 2020, according to the US Department
of Commerce, and the update would aim to increase this
fivefold.
The revised PEP2040 targets using even more wind and solar
power, as well as the use of biomass, biogas, or geothermal.
It suggests using several technologies together in hybrid
"energy clusters and energy cooperatives."
The update will also "strive to replace" natural gas with
decarbonized gases, such as hydrogen, and use biomethane, hydrogen,
low-emission synthetic fuels, or electricity in the mobility
sector.
Faster development of hydrogen, so-called "prosumer" energy
storage facilities, and hydroelectric plants will also play a role
in storing power to prevent blackouts, while small nuclear reactors
and energy efficiency secure domestic power supplies.
Coal use may increase despite targets
Counterbalancing some of its green measures, Poland may keep
coal-fired power plants and coal mines in operation for longer.
While the prior PEP2040 included the EU-aligned goal to
potentially cease coal-fired power generation in 2049 and limit
coal use to a 56% share of power generation by 2030, down from
70.8% last year, think tank Ember criticized its failure to set a
2030 deadline to end coal use.
This slow pace of the phase-out may deteriorate further due to
current energy security concerns. For example, shifting coal-fired
district heating to gas could be shelved.
Poland plans to continue to produce coal from its mines, having
transferred ownership of the mines between state-controlled
entities in April, but it wants to do so using more "clean coal
technologies."
While Poland may increase the use of coal-fired generating units
in the medium term, it may modernize the units to decrease
emissions, also enabling the plants to provide improved backstop
generation for variable renewable sources.
"An element of the new document will be a plan for the use of
the existing generating units," taking into account carbon prices
for coal emissions, according to a 29 March
government statement on the PEP2040 update.
Polish utilities PGE and ENEA are the second- and fourth-largest
European utility producers of emissions from coal, according to Ember. Its 2021
power generation carbon intensity ranking of EU countries puts
Poland dead last.
Other European countries like Germany, which aims to phase-out
coal generation by the 2030s, may also potentially to turn to coal in the
short term, according to a paper by consultancy Aurora Energy
Research.
Alternative gas supplies
While gas pipelines connect Poland to supplies in the Czech
Republic and Germany, importing all of its demand from Germany
could push up spot prices on the German THE hub and across
Northwest European spot markets, said Ruseckas.
Poland will have the ability to replace the remaining Russian
gas imports with Norwegian supplies when connections between the
Polish, Danish, and Norwegian gas networks come online in
October.
Poland has also increased LNG imports, which now make up 20% of
total imported natural gas, according to Moskwa.
In addition, Poland's construction of a floating LNG
regasification terminal in the Gulf of Gdańsk will be accelerated
under the updated PEP2040, enabling it to import even more LNG.
Posted 06 May 2022 by Cristina Brooks, Senior Journalist, Climate and Sustainability
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
