Polish state-owned utilities will be financially untethered from their coal-fired plants, which they currently use for most of their electricity generation, as the government plots a “revolutionary” plan to restructure Poland’s energy sector and allow for more green investments.
Poland’s minister for state assets, Jacek Sasin, says that carving out coal would give three of Poland’s big energy firms, PGE, Enea and Tauron, “new life and hope for development” by allowing them to refocus on offshore wind and gas.
In response to the news, stocks of state-owned firms in the energy sector rose on Monday and Tuesday.
Sasin, who also serves as deputy prime minister, said that coal-fired generation was “unprofitable” and had “few prospects” as emissions prices continue to rise. Nonetheless, the ailing coal-fired plants are still expected to operate for the next two decades, noted the minister.
He told Polskie Radio on Tuesday that energy companies were being denied access to funding so long as they were invested in coal. This has stifled plans for “huge, multi-billion dollar investments” in the country’s energy transformation.
“If we do not do this, we would have to become energy importers in the future and lose energy independence,” warned Sasin.
After Sasin first announced on Saturday that the government was preparing a “revolutionary” plan to restructure the sector, shares of state-owned energy firms began soaring. PGE’s shares rose 10% by midday on Monday, while those of Enea and Tauron jumped by 9% and 8% respectively.
“In spinning out its coal energy assets, Poland is following the German route,” noted Tomasz Chmal, partner at Trzeciak|Chmal advisory group. He pointed to the examples of German utilities RWE and Eon, which swallowed writedowns on coal and gas-fired power plants in 2016.
“These projects are no longer bankable, or there is little return on investment,” Chmal told Notes from Poland, adding that when Polish state-owned companies bought into coal projects in recent years there was still some hope that European carbon emissions prices would stay low.
“The other ongoing discussion is about what to do with Poland’s coal reserves”, said Chmal. The government last year concluded a landmark agreement with unions to close coal mines by 2049. Yet, at the same time, Poland has still pushed ahead with plans to open new mines.
“Offshore is one big project, but there is also legislation at the development ministry to allow for onshore wind farms,” added Chmal. In January PGE, Enea and Tauron signed a letter of intent on a joint offshore wind venture. In recent months Poland has set records for both wind and solar energy generation.
Poland has been under growing pressure to wean itself off coal, which accounts for over 70% of its energy generation. It has the EU’s highest wholesale electricity prices and faces mounting pressure from Brussels to cut emissions.
The government recently unveiled long-term energy plans that include heavy investment in offshore wind, with hopes of launching the first farm in 2025, as well as in nuclear, with the first reactor scheduled to go online in 2033.
It has also started reversing some of its previous coal investments, including dismantling what was meant to have been Poland’s last newly built coal-fired power station. The decision comes after the Ostrołęka C project had already cost state-owned firms more than €330 million.
For more on last month's decision to begin dismantling work on what was supposed to be Poland’s last newly built coal power station, Ostrołęka C, and instead convert it into a gas-fired plant, see our report https://t.co/YNSY3o1y4g
— Notes from Poland 🇵🇱 (@notesfrompoland) April 12, 2021
Main image credit: Greenpeace Polska/Flickr (under CC BY-ND 2.0)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
