The energy construction market can be divided into three segments:
- transmission and distribution of electricity,
- electricity generation,
- transmission and distribution of gas.
Good news comes from the electricity transmission market, where the Polish Power Grid (PSE) announces further investments. The President of the URE approved the Development Plan for Meeting Current and Future Electricity Demand for 2021-2030. The total investment outlays anticipated therein amount to approximately PLN 14 billion in 2019 prices. In February of 2021 research on the seabed of the Baltic Sea began. In 2022, work is expected to begin on the Kozienice – Miłosna line, for the construction of which PSE has already received environmental approval. In the next 10 years, PSE promises to invest approximately PLN 950 million in transmission infrastructure in Lower Silesia.
In 2021, the domestic energy market was most influenced by events on the European market, including above all the increase in the price of CO2 emission certificates and gas prices. Price pressures are forcing countries such as Poland to accelerate their energy transformation, which is currently unsuited to the available low-emission technologies. In this context, the use of renewable energy sources is becoming increasingly important. In 2021, Poland was a net importer of electricity, however, it is noteworthy that during the year the advantage of import over export decreased from 13 224 GWh to 820 GWh.
Electricity production in Poland In GWH
Source: based on PSE data, from the beginning of 2021, the output of industrial power plants is included in the individual categories of utility power plants.
The size and structure of energy investments are determined by Poland’s energy policy. In February 2021, the Council of Ministers adopted the Energy Policy of Poland until 2040 (PEP 2040). The document sets out the directions for the development of the energy sector.
The strategy is to be based on three pillars: equitable transformation of all regions, zero-emission energy systems and good air quality. In terms of the energy mix, it aims to achieve the following indicators in 2030:
- no more than 56% coal in electricity generation,
- at least 23% RES in gross final energy consumption.
Greenhouse gas emissions should fall by 30% by 2023 compared to 1990.
Poland will strive to ensure the ability to meet demand for power from its own sources, while allowing unimpended cross-border exchange.
Poland’s Energy Policy until 2040 assumes that Poland’s first nuclear power plant will be built by 2033. In 2021 it was decided that the nuclear power plant would be located at Lubiatowo-Kopalino in the commune of Choczewo (wejherowski district, Pomorskie voivodship). In 2033, the first nuclear power plant unit with a capacity of about 1-1.6 GW should be in operation. Subsequent units will be commissioned every 2-3 years, and the entire nuclear programme assumes construction of 6 units.
There is growing interest among Polish companies in small nuclear power plants. In 2021, the first two contracts for the construction of modern small modular nuclear power plants were signed. It is also worth noting that in December 2021 the Polish Hydrogen Strategy until until 2030 with an outlook until 2040 was published.
Poland is now facing the start of the extinction of its oldest coal-fired power units. PGE and Tauron have already decommissioned coal-fired units with a total capacity of over 1,800 MW in 2021. The activities of energy companies are focused on the implementation of investments aiming at climate neutrality. Among other things, PGE is preparing a project for the largest offshore wind farm in the Baltic Sea and is working on the construction of two gas and steam units at the Dolna Odra Power Plant. Another important event in the energy sector is the merger of Orlen, Lotos and PGNiG. The creation of a multi-energy company may become an unprecedented event on the domestic market, which may change the balance of power on the map of European energy interests.
In June 2021, the Energy Regulatory Office presented a document entitled Information on investment plans in new generation capacities in 2020-2034. The analysis of data obtained by URE indicates that in 2020-2034, energy companies plan to commission a total of over 14.2 GW of new generation capacity. At the same time, the number of planned decommissioning capacities in this period amounts to approximately 18.8 GW.
The reasons for the abandonment of generating units include the lack of possibility or justification for adjustment to increasingly higher environmental requirements resulting from, inter alia, the BAT conclusions, the age and level of use of the units, as well as the level of economic efficiency of the operation of individual units. The generators surveyed planned total investment outlays in new generation capacities at a level of about PLN 76 billion (in current prices) in the 2020-2034 period, of which about 60% of the planned total outlays will be for off-shore wind generation units and about 15% for natural gas-fired units.
PEP 2040 predicts offshore power plants with a power of 5.9 GW will be built by 2030. The current law on wind power investments from the 20th of May 2016 introduced one of the most restrictive distance rules in Europe – the so-called 10H rule, i.e. ten times the height of a wind power plant as the minimum distance of a new investment from existing residential buildings and forms of nature protection. It was a response to social discontent in some parts of the country related to the rapid development of wind power plants. It resulted in limiting the possibility to locate new wind power plants and initiate new wind farm projects, as well as blocking residential development in the vicinity of existing power plants. Work is currently underway to amend this law in order to unblock wind energy development.
The Ministry of Climate and Environment, the National Fund for Environmental Protection and Water Management and PGE will take joint action to develop pumped storage power plants. A letter of intent to this effect was signed on 22 October 2021. Several sites with conditions favourable for the construction of pumped storage power plants have been identified. The PGE Group owns the project of a pumped storage power plant Młoty with a capacity of approx. 750 MW in the Dolnośląskie Voivodship.
Russia’s attack on Ukraine has led to increasing calls for independence from natural gas imports from Russia, which currently supplies around 60% of all imports.
In order to increase the use of gas in the economy, it is crucial to develop the infrastructure for its supply and storage. PEP 2040 assumes that in the coming years the share of LNG in the consumption of natural gas in Poland may reach even 30%, which will result in the development of LNG and transmission infrastructure at the borders with other countries, i.e.:
- expansion of the LNG terminal in Świnoujście to a throughput (reception and regasification) of 8.3 bcm per year;
- construction of a natural gas regasification terminal in the Gulf of Gdańsk (FSRU), the first stage providing a throughput of at least 4.5 bcm is scheduled for start-up after 2025;
- construction of the Baltic Pipe – a gas pipeline between the gas fields on the Norwegian Continental Shelf and Poland consisting of the Norway-Denmark and Denmark-Poland connections (offshore connection) as well as the expansion of the Polish and Danish transmission systems; the investment is to be completed by October 2022, enabling import of 10 bcm of natural gas and export of 3 bcm;
- building a connection with Slovakia, with an import capacity of 5.7 bcm and an export capacity of 4.7 bcm per year ;
- construction of a connection with Lithuania (GIPL) with an import capacity of 1.9 bcm and export capacity of 2.4 bcm per year;
- projects for new gas cross-border interconnections Poland-Czech Republic and Poland-Ukraine;
- expansion of the national natural gas transmission and distribution networks;
- projects using liquefied natural gas regasification stations with local island networks (so-called virtual LNG pipelines);
- expansion of capacity and offtake from underground gas storage to a minimum of 4 bcm by the winter season 2030/2031.
Thus, the prospects for energy and industrial construction in Poland are good. The estimated value of ongoing and planned investments until 2026 is PLN 253 billion, of which PLN 30 billion is for investments under construction and the remainder for investments that are at the stage of bidding or planning.