WARSAW — For years Poland boasted that its vast coal reserves helped keep power prices down, but that’s no longer the case and the country now consistently has the EU’s most expensive electricity.
The coal-dominated energy mix — it generates about two-thirds of Poland’s power — as well as the relatively small share of renewables are the culprits, said energy experts.
“Despite growing generation from renewables, coal remains the primary source of energy and prices aren’t going to drop below the costs of generating energy from it,” said Paweł Czyżak, senior energy and climate data analyst at Ember.
On Tuesday, Poland’s day-ahead power price was €135 per megawatt hour, according to eunergy; the electricity price in most other EU countries was around €90 per MWh.
It’s an additional problem for an economy already struggling with double-digit inflation — prompting the central bank to hike interest rates to the highest level in two decades.
To protect households and smaller companies, the Law and Justice party government said it plans to spend 100 billion złoty (€22 billion) over the next two years from the state budget and from state controlled companies to keep energy bills low.
Deputy Prime Minister Jacek Sasin said last month that the government plans to spend 600 billion złoty on Poland’s energy transformation by boosting renewables, while also ensuring that coal continues to play a role until 2049.
“Part of our agreement with the public is the preservation and protection of Polish coal as an indispensable fuel until such time as large nuclear and [renewables] investments are completed,” he said.
Coal is no longer a cheap power source. Coal prices in Poland have increased by 135 percent to over 700 złoty per ton at the end of April, according to the most recent available data compiled by the government’s Industrial Development Agency. Added to that, coal-fired power is increasingly expensive thanks to rising prices on the EU’s Emissions Trading System, currently at over €92 per ton.
“Emission-intensive electricity generated from expensive Polish coal is going to belong to the most expensive in the EU,” said Bernard Swoczyna, lead energy and climate expert at Instrat, a Polish energy think tank.
Technical limitations of Poland’s ageing coal-fired power plants are also at play, said Czyżak.
“The prices are relatively high because the energy mix always includes some coal blocks. These are expensive production units, so the minimum of 8 gigawatts of coal in the system exists because it is difficult to shut them down due to increased risk of failures,” Czyżak said.
Poland’s coal-reliant centralized dispatch energy system also limits electricity imports to avoid the risk of having to switch off inflexible baseload coal-fired power plants.
“In a situation where many European countries had very low or negative prices, we could increase imports and lower prices in Poland. But it doesn’t make sense to import energy when we have to limit our own renewable energy sources because coal is always providing 8 to 9 GW out of 20 GW demand,” Czyżak said.
Poland has been adding renewables to its energy mix — especially in solar power, where it is an EU leader — but the pace of transitioning away from coal remains slow, and renewables only supply about a fifth of Poland’s power. Coal is also likely to shrink as an energy source if the country opens its first nuclear power plant in the early 2030s.
That leaves Poland lagging other countries.
“In other EU countries and also in Ukraine there are many power plants with lower production costs: wind, solar, nuclear, hydro, and — at current prices — even gas. Prices in Poland would be even higher if it weren’t for the development of solar energy in recent years,” Swoczyna said.
Poland, along with other countries in Central and Eastern Europe, could lower electricity prices by almost a third by 2030 if they deployed more renewable energy capacity, said a recent report from Ember.
“The recent reluctance of several CEE countries to adopt more ambitious EU renewable energy goals for 2030 could turn into a threat for the region’s energy security and competitiveness,” the report said.
