Finding Balance: Poland Struggles to Meet Renewable Goals, Despite Reliance on Coal

Published: Wed 22 Jun 2016
A blog entry by Haresh Patel

Contributed by:

Haresh Patel
CEO
Mercatus Inc.

Haresh Patel's Blog

When it comes to having an energy mix, Poland is to the European Union what West Virginia is to the United States. Despite their commitment to the EU to cut emissions, Poland still gets around 85 percent of its electricity from coal. This number is not only high for an EU member country, but is extremely high for any country. While the country's reliance on coal has stifled its renewable industry growth, this is commanded to change. Keeping in line with the EU-wide goal of 20 percent set by the Renewable Energy Directive,the European Commission assigned Poland the target of  reaching 15 percent renewables by 2020. Despite this modest goal, Poland faces many challenges in reaching their renewable energy commitment. While policy reform is critical in moving the nation towards acceptance, power producers who have the right asset investment management capabilities can be capitalise on Poland's potential for renewable energy generation. 

 

The Polish government has been reluctant to let go of coal as a source of electricity. Much like West Virginia, the problem stems from the fact that Poland has extensive coal reserves. Many of these reserves are state owned, which only exacerbates the problem. For a country that is not cash-rich, the idea of passing legislation that will lead to stranded resources is a tough pill to swallow. Lawmakers who oppose renewables publicly point to its inconsistency as an energy source; a matter only made worse by Poland's archaic energy grid.

 

All along the countryside in northern Poland, the outdated grid is evidenced by rickety, wooden distribution infrastructure that's been around since pre-Cold War times. However the landscape for much of northern Poland is characterised by this juxtaposition between old and new, with an abundance giant wind turbines. While the growth of wind technology is promising, new legislation may seriously jeopardize its future. This past May, the Polish Parliament passed a bill that will severely limit the siting of wind turbines. Most notably, wind turbines must now be a distance that is ten times their height away from any housing. Since wind turbines are regularly over 100 meters tall, this poses major space use conflicts. This timing of this bill is not good in the final stretch towards the 2020 goal. However, there may be more promising legislation on the horizon.

 

While the Poles have, up until until now, made decent use of wind resources in the north, solar resources in the south have gone largely untapped. Through 2014, it had only 24.4MW of installed solar, putting it third to last in the EU, ahead only of Ireland and Estonia. This spurred the creation of the Renewable Energy Settlement Operator SA (OREO) in October of 2015, which creates funds to offset price increases created by renewables. Tariffs are to be auctioned off to those who can bid the lowest prices, and the program is expected to be a boon for the solar industry. While the first auction was put on hold via amendment, it is expected to proceed on July 1. For those concerned with Poland the energy future of greater continental Europe, this will be something to watch closely. 

 

Poland's energy divide is not unknown in the States. In the US, many wonder what will happen in conventional energy states like West Virginia, should the stay be lifted on the Clean Power Plan. Poland’s stance on the EU’s energy directive mirrors the attitudes of many US states on the CPP. While the CPP would have the teeth of federal law, what ultimately happens in Poland will serve as a crystal ball into the future. 

 

In today’s transforming energy market, outcomes on one side of the world often inform and affect the other side. For power producers looking to diversify their investment portfolios in different regions, it is difficult to stay abreast without the right tools. Quality data management, full pipeline visibility and the ability to quickly identify risk factors are all crucial in ensuring the success of renewable energy projects. Having an asset investment management system will enables power producers to make step change increases in organizational productivity, enabling them to move faster, gain insight and increase compliance.