POLAND Trends and Developments Contributed by: Tomasz Młodawski, Krzysztof Cichocki, Łukasz Wyszomirski and Krzysztof Fasula, Sołtysiński Kawecki & Szlęzak
Poland is also exploring the possibility of building a second nuclear plant, potentially using a different reactor technology. At the same time, small modular reactors are emerging as an important new direction for Poland’s nuclear programme. The most advanced project is being developed by a joint venture between Orlen and Synthos Green Energy, and calls for the use of the BWRX-300 reactor designed by GE Hitachi (a small boiling water reactor with a capacity of around 300 MW per unit). Energy storage Battery storage is attracting strong interest in Poland as more variable renewable energy – wind and solar – enters the system and price volatility increases. Large- scale battery installations can store electricity when there is a surplus and release it when it is needed. They play a particularly important role in maintaining the stability of the power system, providing balancing services and responding quickly to sudden changes in grid frequency. Standalone battery storage projects are beginning to emerge as a distinct category of energy investment in Poland. Revenue can come from several sources, including payments under the capacity market, price arbitrage at the spot market (including shifting PV generation towards the evening peak), and revenues derived from ancillary services. The regulatory frame- work for storage is still being developed, and clearer rules on licensing and market participation are among the most important items on the regulatory agenda. The move away from coal Phasing out coal is the most difficult challenge in Poland’s energy transition. Plans to end coal extrac- tion for energy purposes present a particular chal- lenge in regions where the mining industry has his- torically constituted a significant element of the local economic structure, supporting tens of thousands of jobs directly and sustaining a wide range of ancillary economic activity. The financial pressure on coal is also mounting. The EU’s carbon pricing mechanism has pushed up the cost of emitting carbon dioxide, making coal-fired generation increasingly expensive to operate com- pared to gas or renewables. At the same time, most
of Poland’s coal-fired units are technologically obso- lete, having been built decades ago and requiring ever greater maintenance expenditure to remain opera- tional. In the short and medium term, modern gas-fired pow- er plants will play an important bridging role, provid- ing reliable electricity supply while coal is phased out and before large-scale nuclear and storage capacity comes online. Regulatory Trends and Key Developments Auctions for renewable energy and the capacity market The main tool the Polish government uses to support new renewable energy projects is a competitive auc- tion system. Developers bid for long-term contracts that guarantee them a fixed price for their electric- ity over 15 years. The government sets a maximum price for each technology category before the auction. Developers who bid below that ceiling and win the auction receive a CfD – the same type of financial sup- port mechanism described in the context of offshore wind above. Alongside the renewable energy auction system, Poland operates a capacity market. This is a separate mechanism designed to ensure capacity adequacy (meeting peak demand) and incentivise investments in dispatchable sources. Generators and storage opera- tors are paid to guarantee that they will have a certain amount of capacity available when the system needs it. This is particularly important for dispatchable tech- nologies (eg, gas-fired plants and battery storage) that can be switched on quickly when renewable output is low. Contracts awarded in the main capacity auctions for new installations were multi-year in nature. In its current form, the capacity market has now reached its end (the last auction securing long-term contracts for 2030 onwards took place in 2025). Work is underway on a continuation of the mechanism, which requires approval from the European Commission. Long-term energy contracts between producers and businesses A growing number of companies in Poland enter into long-term contracts to secure purchases of renewable electricity from producers. These arrangements, wide-
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