Draft Poland's Energy Policy 2040 - new and better?
On the 8th of November 2019, the Ministry of Energy has presented an updated draft of Poland's Energy Policy until 2040. Yet, the adoption of the energy strategy will be the responsibility of the new government, including new ministries - the Ministry of State Assets and the Ministry of Climate. In our opinion, it is high time for Poland to address the climate and energy crisis. It is also important for us to start implementing the commitments made at the EU forum. The energy sector should be given a course in line with international trends, and not be allowed to float in a random direction.
At the beginning of the year, the Ministry of Energy presented two strategic and long-awaited documents - the first version of the Polish Energy Policy until 2040 (PEP2040) and the National Energy and Climate Plan for 2021-2030. The new draft of PEP2040 submitted by the Ministry of Energy for consultation on 8 November this year does not differ significantly from the previous version. The most important remarks are presented below:
1. Insufficient CO2 reduction plans
- The Ministry forecasts that by 2030 the implementation of PEP 2040 will allow Poland to reduce its emissions by 29% (compared to 1990), while the EU target is 40% (also compared to 1990), and in the ETS sectors it is as much as 43% (compared to 2005). This target will be increased in 2020 - already existing EU regulations allow the EU to reduce emissions by nearly 50% in total. As a consequence of the proposed scenario, electricity and heat consumers will be charged with the costs of CO2 emission allowances.
Slow increase in the share of RES in the power sector
- The proposed share of 23% in 2030 means an increase in the use of RES in the next decade by 8 percentage points. This means that the ministry assumes the same growth as in the years 2010-2020. With the technology that continues to develop and is getting cheaper, and the need to increase CO2 emission reduction, such an approach is incomprehensible. This is particularly true as after 2030, the ministry assumes a further slowdown - in 2040, RES are to reach only 28.5% in the final energy consumption.
- We believe that the potential of solar installations by 2030 is higher than the proposed 7 GW. Almost 4 GW of additional capacity will be created in the next few years as a result of the RES auction and the "My Electricity" programme, and annual capacity increase of at least 1 GW is as realistic as possible. Therefore, in 2030, Poland may have more than 10 GW of capacity in such installations, which was predicted by the Ministry in the previous version of PEP 2040. This amount of capacity can also be easily integrated into the NPS system, after introducing changes in the organisation of the energy market.
- Onshore wind power plants are one of the cheapest sources of electricity generation in Poland, which is why this technology was rightly included in the updated version of PEP 2040 (the previous version did not assume the expansion of onshore wind farms). However, the development path proposed now assumes stagnation after 2022. We recommend enabling the expansion of wind energy in the next decades, including, among others, the change of the so-called 10H rule to refine the currently weak rules of spatial planning. Reaching even 14 GW of capacity by 2030 will then become possible, especially due to the decrease in investment costs (insufficiently taken into account in PEP 2040) and the increase in the number of projects that will be developed on the basis of the energy market.
- An increase in the share of RES in the power and heating sectors will have a positive impact on Poland's energy security and will improve the deteriorating fuel balance of the country. It is also a way of slowing down the increase in electricity prices and limiting its excessive import.
3. Lack of an ambitious heating policy
- The PEP 2040 project still lacks a comprehensive overview of the entire heat supply area, i.e. district and individual heating systems. Synergies between the different segments of the sector have also not been noticed and PEP perceives heating mainly from the perspective of district heating systems. There is no reference to the second, twice as large segment of heating sector - individual heating. It lacks appropriate policies and actions, which is very worrying, especially in the situation of such a bad air condition in Poland.
- The PEP 2040 project is contrary to the objectives of the government's Clean Air Programme (PCP), which assumes tackling the problem of smog by 2029 as a result of replacing individual heating (furnaces) with low-emission sources. In accordance with the PCP objectives, this will lead to a reduction in annual CO2 emissions from 3 million buildings by 30 million tons of CO2/year, i.e. approximately 85% of current emissions. PEP2040 assumes the same action as PCP, but by 2040, which in fact means that it will give a clear permission for burning waste in households. In PEP it has been stated several times that this situation is a result of historical conditions. Meanwhile, the current PEP, instead of solving the problem, sanctions the current pathological situation, without setting more ambitious goals for heating - both district and individual.
We postulate that an unambiguous objective should be adopted to abandon coal combustion in individually heated buildings from 2030, and in the area of district heating from 2030 to 2035. The level of the assumed reduction of energy consumption for heating buildings is in PCP 15%, and in PEP 4.5% (!). Not only are the targets in government documents divergent, but they are also very conservative. Analyses show that it is possible to achieve a 30% reduction in the consumption of non-renewable primary energy in buildings by 2030.
The objective formulated in this way will contribute to the improvement of air quality in Poland, balancing the decreasing coal extraction in Poland with the needs of the energy and heating sectors, and will be in line with the decarbonisation policy of the heating sector promoted by the European Union.
- In the PEP project, two latest technological developments, which are important for the future of the entire heating sector and increasing its cost efficiency, were not recognized:
1. development of low-temperature 4G and 5G networks
Low-temperature networks allow to increase the share of RES energy and waste energy in the heat stream with relatively lower investment and operating costs than in the case of traditional networks.
2. connection of the heating sector with the National Power System (NPS)
The NPS will need more and more effective tools to balance temporary changes in power and energy supply as a result of the increase in the share of variable RES sources. Effective management of aggregated groups of heat pumps, heat storage facilities and cogeneration units will generate additional services for the NPS and at the same time will reduce balancing costs.
These two technological trends should be included in the list of priority actions of the Axis 7 Development of heating and cogeneration.
The PEP project does not take sufficient account of the "heat electrification" trend. The emergence of nearly zero-energy buildings and the deep thermo-modernisation of existing buildings will make electricity a significant source of primary energy used for heat production within two decades.
We propose to revise the calculations concerning the energy production from heat pumps (supplied from distribution networks and prosumer sources). The assumption of 30 PJ in 2030 and 51 PJ in 2040 is significantly underestimated. Our analyses show that these values may amount to 42 PJ and 93 PJ respectively (Calculations of KAPE for Forum Energii, 2019).
4. Under-estimation of the potential and need to improve the energy efficiency of the economy
- In the PEP draft, in Axis 8, Energy efficiency improvement of the economy, only general forecast calculations of primary and final energy consumption are presented. At the same time, PEP refers to the document of the Ministry of Energy, "National Energy Efficiency Action Plan for Poland 2017", which in the forecasting scope does not extend beyond 2020, and therefore does not constitute a greater value from the perspective of PEP. The lack of an annex to the PEP in the form of assumptions and calculations of forecasts of energy consumption by the national economy does not make it possible to assess the correctness of the adopted improvement of energy efficiency target of 23% in 2030.
- We propose to verify the results of the calculations, because the adopted reduction target is inconsistent with the EU target of 32.5%. The lack of ambition to improve energy efficiency makes our country uncompetitive on the market due to the high energy intensity of the economy.
- The PEP project also does not include specific targets and methods for improving the energy efficiency of buildings and reducing their demand for non-renewable primary energy. PEP only refers to the need for thermomodernization of buildings without setting specific targets to achieve in the form of reduction of primary and final energy consumption. From the data presented in the PEP it can be concluded that in the area of households by 2040 (vs. 2015) the demand for final energy will decrease by 6.8% (Tab. 5 app. 2), which means approximately a reduction in the demand for heating energy by 32 PJ (!). Even assuming a certain increase in the number of houses and their area, the reduction of the heating stream of buildings, currently around 700 PJ by only 32 PJ (4,5%), is an alarmingly small value.
- Forum Energii proposes to include in PEP specific targets for the reduction of consumption of non-renewable primary energy by buildings for 2030 and 2040. Analyses carried out by Forum Energii (KAPE calculations for FE, 2019) show the possibility to achieve such reductions of 30% to 2030 and 80% to 2050. This result is an effect of the combined reduction of final energy consumption and RES use.
5. Risks associated with the draft PEP
The following risks are associated with the proposed draft of PEP 2040:
- Risk of power shortages in the power system due to coal-fired power plants being shut down faster than assumed by the Ministry.
- Lack of price risk management, taking into account the specificity of the energy market. Deterioration of the competitiveness of the Polish economy in Europe.
- Risk of excessively growing electricity imports to Poland due to significant price differences in neighbouring energy systems.
- Risk of failure to meet energy and climate objectives in 2030, which is particularly dangerous due to the failure to meet EU commitments in 2020.
- Presentation of the Poland's Energy Policy 2040, which refers to the actual state and challenges of the energy sector - the situation of the mining sector, the state of generating units and liabilities under the EU energy and climate policy.
- Presentation of a plan for balancing the energy system in 2030 based on energy efficiency, domestic renewable resources, new sources and real coal energy resources that will be available in the next 10 years. Presentation of the energy market change process.
- Inclusion of the whole area of heating in PEP - not only district heating systems, but also individually heated households. Presentation of specific objectives to be achieved, which will be consistent with the declarations concerning the improvement of air quality and reduction of CO2 emissions.
- Realistic level of RES use after 2030.
The long-term vision of the EU until 2050 should be the engine for further decarbonisation of our energy sector, despite the lack of official national targets for the period after 2030. Energy systems in the future will be built around renewable energy sources and we should already set ambitious plans. This will enable us to carry out the energy transition in a cost-effective manner and to tap the potential of our economy. The analyses of the Forum Energii show that increasing the share of RES in heating and power sector is possible and economically justified.
The time has come for Poland to set ambitious targets. On the verge of the debate on climate neutrality in 2050, during the negotiations on the Multiannual Financial Framework or the forthcoming discussion on raising the emission reduction target for 2030, this is more important than ever before.
Authors: dr Aleksandra Gawlikowska-Fyk, dr Joanna Maćkowiak-Pandera, Andrzej Rubczyński, Marcin Ścigan - Forum Energii.
Date of publication: 29 November 2019