Energy 5 May, 2017 9:40 am   
Editorial staff

Polish energy industry must evolve (interview)

Jarosław Broda, TAURON’s Vice-President of the Management Board, talks about how Poland is tackling the new regulations that threaten its coal industry. Will Poles keep their energy independence? What are the chances and risks posed by the so-called winter package?

Jarosław Broda: The winter package is one of many proposals presented by the European Commission. In comparison to other European countries, Poland’s energy mix is quite unique, which is why the package constitutes a certain challenge. It is worth to take an in-depth look at this proposal. In my opinion, we should pay attention not only to what is so visibly present in the debate, which is emission limits for power plants on the capacity market. We should also examine the propositions on how the Energy Union should be governed.

Among other things, the EC proposed a few ideas whose goal is to regionalize the management of transmission networks and introduce binding rules for state energy policies. An entire array of tools will, at a different degree and time, lead to the centralization of energy management at the European level and will deprive member states of influence on their own energy mix.

It is important for Poland to spell our expectations when it comes to energy independence and our mix. We should also decide how to assess the package. It is also pertinent to outline positive propositions with regard to energy governance at the European level. Certainly, there exist economic synergies between energy systems of various states.

On the other hand, we need to ask what is the “energy independence” you mentioned. Should the Polish power industry rely on its own resources at all cost, or can it rely on the development of new technologies?

The decision about the mix and the doctrine is political and has been quite clearly articulated by the Polish government, which believes our security should be guaranteed by local resources. Today this is mostly coal and I think that it will stay this way for years to come. This is partly caused by the fact that it is impossible to quickly construct new energy blocks, which would boast a technology and scale that would change the energy mix.

However, in the long term it is worth thinking more openly about such resources as water, wind, the sun and biomass that may one day become a foundation of stable power production.

We should take into account two paradigms when thinking about development. In the first one we should not exclude any technologies and ensure open competition between them. The second one should make sure the market decides which technology is the best.

The decision that will determine how to coordinate the mix to ensure stable power supply should be made at the highest level. This responsibility belongs, most of all, to the Polish Transmission System Operator and to the Ministry of Energy. However, to a certain degree, which would be determined by the technical aspects of the Polish grid, I would encourage competition between those technologies.

Still, we cannot forget about the emission limit set at 550gr/kWh. Provided the winter package will actually enter into force, how will we increase our capacity using local resources if we do not have funding precisely because the new investments will not meet the required limit?

The emission limit proposal at 550 gr CO2/kWh is one of the elements of the winter package and stems from article 23 of the “Regulation on the internal market for electricity. The Polish government opposed this quite vehemently. Let’s not forget that the limit is about participation in the capacity mechanism and applies to new units, as well as all other units 5 years after the regulation enters into force.

Three scenarios are possible. The first one, which is the least likely, is that this rule will be introduced without any changes.

A more likely scenario is that a certain derogation will be available. Units that have been already planned, are under construction or received a construction permit will be able to use a derogation from the regulation.

Finally, the third scenario, which is also very unlikely, says that the rule will be scrapped altogether. We need to take into consideration these negotiation variants.

Let’s wait for the final version of the package. Then we will come back to this discussion. Once again I would like to encourage everybody to look at the package holistically. Perhaps it is not the emission limit that causes the biggest consequences for our future decisions on the energy sector.

Maybe a discussion on an ambitious EU climate policy is the right way to go, as it creates a chance for low-emission technologies and innovations to develop? Would the Tauron Group. which put its money on innovations in its strategy, be able to find its foot in a low-emission world?

Tauron, just like any other utility makes an effort to fit into the policy of a given state. This is an unquestionable paradigm. Additionally, we should perceive energy security in a short-, medium- and long-term perspective. There is no technology that would ensure energy security on a short-term basis. This is why we need to think about modernizing 200 MW blocks and completing the big blocks that Tauron is constructing in Jaworzno, PGE in Opole and Enea in Kozienice.

When a long-term decision to change the energy mix is made, new technologies and innovations will appear on the horizon.

Tauron‘s strategy and actions clearly show that we want to open up to different, new solutions. The Pilot Maker program is an example, as it encompasses 15 startups that operate in various areas, e.g. customer, distribution and production.

The companies have interesting proposals that can complement the traditional mix. We are also hoping that they will have a competitive price.

Since we are talking about technologies, what is Tauron’s opinion on coal gasification?

Coal gasification is a known technology across the world. There exist several hundred installations of this type.

It’s a pity it is not used in Poland. Such a technology could increase diversification of supply for the chemical industry. It would decrease gas imports for this sector of the economy.

As Tauron we are interested in such cooperation. We would like to learn to use this technology to ensure safer, from the point of view of EU regulations, sales market for our coal production. Developing coal gasification technology is beneficial in areas where it is economically viable.

Interview by Piotr Stępiński