Energy sector growth outlook

As Poland’s economy gradually improves enabling it to catch up to Western European economic growth the demand for electricity will trend upward. According to the Ministry of the Economy, the demand for electricity in 2020 will be 169.3 TWh, and in 2030 it will be 217.4 TWh versus last year’s consumption of 158.7 TWh.

Decisions taken at the EU level have a considerable impact on the Polish energy market. At the end of October 2014 the European Council agreed on the 2021-2030 climate and energy policy framework. The Council approved the binding EU target calling for a reduction of greenhouse gases emission by at least 40 percent by 2030 from the 1990 level. The reduction target is 43% in the sectors to which ETS (Emissions Trading System) is applicable. Free allocation of allowances to Poland’s energy sector was maintained. According to the estimates of the Polish Electricity Association, the Polish energy sector will receive 280m free allowances in 2021-2030.

The growth of the energy sector will be affected by the new renewable energy sources law enacted at the beginning of 2015. This new law introduces an auction system with funds to be used to support electricity generation from renewable sources to be allocated first of all to generators willing to accept the lowest price for generating a unit of electricity.

Due to the advanced age of some Polish generation units (nearly 45 percent of the generation fleet is more than 30 years old and approximately 77 percent is more than 20 years old), the energy sector faces the challenge of replacing them by building new generation sources. The draft of Poland’s energy policy until 2050 prepared by the Ministry of the Economy assumes that approx. 6.5 GW of capacity will be decommissioned from the national power generation system by 2020. In its optimistic scenario the Ministry of the Economy assumes that new generation units with similar capacity will be commissioned by 2019. Currently, the construction of generation units in Jaworzno, Opole and Kozienice, among others, is underway.

Sometime after 2020 two nuclear power plants with a total capacity of 6 GW should be added to the power system. The total CAPEX to build the first nuclear power plant (3 GW), including the costs of preparatory works is estimated to be PLN 40-60bn.


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