The “Polish Wind Energy 4.0” report: wind must be the basis of Polish energy transformation

13. June 2022 | Reading Time: 6 Min

Growing energy prices, Russia’s attack on Ukraine, and thus the need to become independent from Russian gas supplies, increasing fuel prices, changes to protect the climate – these are just a few arguments that should convince decision-makers in Poland to turn towards green energy as soon as possible. It’s worth starting with that from wind. 

Why is wind an opportunity? 

Poland has enormous potential, resulting, i.a., from its location by the Baltic Sea, and it would be a shame not to use it. In the latest edition of the report, we discuss that potential, the business and legal barriers to the development of the wind energy sector and how to overcome them. 

“The première of the 9th edition of the report – this year entitled ‘Polish Wind Energy 4.0’ and with a special focus on offshore wind energy – took place during the annual conference of the Polish Wind Energy Association (PSEW). The report was once again co-authored by the PSEW and the DWF law firm. It is the most comprehensive sector study on the Polish market to date, appreciated by developers, investors and financing institutions as well as all interested in wind energy,” said Wojciech Sztuba, Managing Partner at TPA Poland/Baker Tilly TPA. 

First: wind energy 

No one needs to be convinced that wind energy is one of the pillars of the energy transition. By creating proper conditions and offering necessary support, onshore and offshore wind can guarantee Poland’s energy security, and enhance the national economy by building a modern and strong supply chain. It is of extreme importance – especially looking at the events in Ukraine – that a power system based on distributed energy sources is more resilient to security threats and increases the geopolitical independence of the economy and the state. The situation in Ukraine is undoubtedly having an impact on the acceleration of transformation not only in Poland, but throughout Europe.  

So what needs to be done to make these plans a reality? Development of renewable energy must be prioritized. The more renewable energy sources there are in the system, the less coal and gas are required, which not only improves the CO2 efficiency of the national generation system, but also makes energy prices more predictable and competitive for businesses and households. This is why it is imperative that onshore wind energy development, which has been restricted by the 10H rule since 2016, is unblocked without delay. It is onshore wind that has enormous development potential as the currently cheapest energy source. 

The fundamental role of RES is evidenced by the addition of the fourth pillar concerning energy sovereignty to Poland’s Energy Policy until 2040 (PEP2040), which is in line with the main goal of the state policy, namely the competitiveness of the economy and reduction of the energy sector’s impact on the environment. PEP2040’s update from Q1 2022 also provides that 50% of electricity generation by 2040 will come from renewable sources.  

Second: removing barriers 

The voices asking why Poland has not gone in the direction of green energy and has not built wind power plants on a large scale are becoming louder and louder. The existing regulatory barriers, including, among others, the distance rule, the rule requiring connection of projects to the national grid system, or the environmental impact assessment issues, effectively hinder the development of this industry.  

All issues regarding the role of the local community in the investment procedure are also important. Fulfilling the EU’s target to reduce emissions by 55% in 2030 compared to 1990 by Poland will require more than 18 GW of onshore wind power. The infamous 10H rule in its current form excludes 99% of Poland’s territory from wind projects, making it impossible to install 10 GW of capacity. The relaxation of the distance law will allow for 12–13 GW of additional capacity by 2030. It is worth noting that the total potential of onshore wind energy in Poland exceeds 44 GW. 

The removal of impediments to the construction of new onshore wind farms would help to stem the rise in energy prices. The latter, after all, have been increasing very dynamically recently – it is enough to just look at the data. In April 2022, the average megawatt-hour price on the Polish Power Exchange was at the level of 466.60 PLN/MWh and was nearly 100% higher than the average price from a year before. This is the result of more expensive fossil fuels, such as gas and coal, and carbon allowances.  

Third: a sea of opportunities 

This year’s report “Polish Wind Energy 4.0” includes a special supplement devoted to offshore wind energy. Poland may be the leader in the development of this sector in the Baltic Sea region and in Europe – it is only necessary to properly assess and then use the potential lying in the Baltic Sea. 

The amount of 11 GW assumed so far is already being revised upwards by the government in the Poland’s Energy Policy until 2040. However, the industry estimates that the Polish offshore capacity is much greater, reaching up to 28 GW. In addition, effective planning and making a full use of the potential of Polish suppliers will mean that the local supply chain for offshore wind farms can reach up to 65%. This is undoubtedly an opportunity to boost the development of the entire economy. 

“This year we are expanding our analysis to include offshore wind energy. We present many interesting parameters – including LCOE at different levels of IRR and CAPEX, as well as many benchmark data and summaries. We also discuss the challenges facing Poland’s offshore wind energy. Securing financing for an offshore project will certainly not be an easy undertaking without adequate guarantees. Investors are definitely not helped by the uncertainty as to the final CAPEX per MW, the current rise in interest rates, as well as the euro exchange rate in the case of foreign investors or those using financing in currencies other than PLN. Our analysis indicates that with an expected IRR in PLN of 7.1% and CAPEX per MW of 13.2 million (Baltic average so far), LCOE in 2028 must be 481 PLN/1MWh. Certainly CAPEX will have to be adjusted due to inflation-related factors. Therefore, LCOE levels around 580 PLN/1MWh do not seem unrealistic,” commented Krzysztof Horodko, Managing Partner, Baker Tilly TPA. 

Fourth: efficient offshore 

When planning the development of wind policy in Poland a question arises how to ensure rapid and most effective growth of modern generation capacity. The most important point seems to be the timely completion of offshore projects currently in the pipeline. Experience gained in such large and complex projects has shown that there are areas that need to be optimized and updated.  

The sector sees, among other things, the need for modifications in the area of permits, both in the offshore and onshore sector, which would shorten the time of project execution.  

Renewable energy projects are attracting increasing interest not only from industry players, but also from financial investors and businesses looking to reduce their carbon footprint. Due to the demand outweighing the supply of available power plants, transaction prices have reached levels that guarantee high returns for developers, while the number of transactions unfortunately remains low,” said Tomasz Manowiec, Director, Corporate Finance, Baker Tilly TPA. 

Poland is currently at a good time for wind energy development. Both onshore and offshore energy offer tremendous prospects. What is needed is the removal of barriers to development and ensuring stability in terms of legal regulations of the investment process.  

We invite you to read the latest “Polish Wind Energy 4.0” report. The report was prepared by experts from TPA Poland / Baker Tilly TPA, Polish Wind Energy Association and DWF Poland. 

Download the report


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