The state-owned leader of Poland’s energy market PGE has revealed its updated strategy last week, which unexpectedly rattled the media due to pre-election tensions.
PGE’s transition
On August 29 at PGE National Stadium Polska Grupa Energetyczna presented its strategy update as a response to geopolitical and energy challenges. The company promises to increase the capacity of RES and a faster transition from coal, as Jacek Perzyński reported from the press conference.
According to the updated strategy, PGE will phase out the use of coal for electricity and heat generation by 2030. It will allocate PLN 125 billion for investments in offshore wind farms, energy storage, nuclear power plant construction, distribution network, as well as modernization and decarbonization of heating. By 2040, the PGE Group will have built 12 GW in renewable capacity.
PGE is decisively accelerating the energy transition with the goal of achieving climate neutrality as early as in 2040. „This is one of the most ambitious strategies presented by a European energy company,” says Karol Pawlak, PhD., Eng., from the Institute of Power Engineering at the Warsaw University of Technology.
„The sine qua non condition is moving the coal assets to NABE,” Wojciech Jakóbik tweeted. More about this mysterious acronym will be written below.
Ministry of State Assets denies
The news about the strategy caused a storm. The Ministry of State Assets responded. „With regard to press publications concerning the updated strategy of the PGE Group, we inform that the energy policy of the Polish government implemented by the Ministry of State Assets does not assume an acceleration of the transition from coal,” the Ministry said in a statement.
„Yesterday, Polska Grupa Energetyczna presented an update of its strategy, which assumes a faster transition away from coal and an increase in the capacity of RES. The new plan until 2030 assumes that the total investment in the years 2024-2030 will amount to more than PLN 125 billion. Investments under the strategy will focus on decarbonisation and electrification. As stated, the Group’s ambition is to achieve absolute zero emissions in 2040 by expanding the portfolio of renewable energy installations, developing zero-emission power generation and decarbonizing the heating industry,” the Ministry said. „In accordance with the current social agreement on the transformation of the bituminous coal mining sector, the deadlines for ending hard coal extraction in individual mines have been set for the end of 2049. Coal is a transitional fuel during the energy transition,” the Ministry explained.
„The stable functioning of the coal sector will be ensured by the emerging National Energy Security Agency. The Ministry of State Assets expects that the assumptions of the government’s energy policy will be implemented in practice by all energy companies with shares owned by the state Treasury, which will also be reflected in their strategies and investment activities,” said the Ministry.
Newspaper dismisses CEO
Despite this, the media were flooded with speculation about the resignation of President Dąbrowski. „PGE President Wojciech Dąbrowski may lose his position after announcing a green strategy for his company’s departure from coal. It turned out that either the government does not tell the truth on closing mines, or the strategy of PGE is up in the air,” wrote the Wyborcza daily. It has announced the CEO would resign due to pressure from Law and Justice leader Jarosław Kaczyński.
Reality is spoiling the headlines
„The problem is that this anger can be the result of a misunderstanding. PGE is expected to dispose of its coal assets as early as 2023, provided that the delayed National Energy Security Agency is actually created. It will be a state-owned company taking over coal assets from energy companies so that they can continue the energy transition and a sine qua non condition for PGE to continue its climate neutrality plans into 2040,” explained Wojciech Jakóbik from BiznesAlert.pl.
„Whereas, coal assets, such as the Opole or Bełchatów power plant, will go to NABE, which is to be built on the basis of the PGE GiEK. The pace of phasing out coal in mining has been agreed on in a social agreement and is to end in 2049, but there is no agreement with the energy industry. The fact that Poland does not have an alternative to coal in the 2020s means coal-fired units will stay on the market at least for another decade. It may turn out that due to the abundance of alternatives in 2030, coal will not actually be needed in Poland, but not because of the provision on the departure of PGE from coal in the 2030s,” he added.
„The crisis has not been completely averted. Basically, we are facing the challenge of the next winter season and we must do everything so that this period is not difficult for us either,” the President of the Energy Regulatory Office Rafał Gawin told BiznesAlert.pl in an interview in May 2023. „So in order to ensure continuity of supply, we need available sources, and today in the national system they are based on coal, but also increasingly on gas. It should be noted that the development of gas sources fits into the assumptions of the state’s energy policy. Even the draft of its update does not in any way undermine the functioning of the gas market and the expansion of gas sources. Of course, according to the long-term energy policy of the state, the stabilization of the system based on renewable sources should be carried out through nuclear sources, but this is quite a distant prospect. And in the transition period, we will still need coal sources, and gas sources will also be necessary,” the President of the Office stated.
The Energy Regulatory Office has analyzed the investment plans of power producers until 2034. The production potential of the studied entities will be less by approx. 11 percent (4.6 GW) compared to 2020. New research is underway, but it looks like we won’t be without coal throughout at least the 2020s.