Market environment

Energy market in Poland

Power industry is a broad branch of economy made up of various areas in which the Polenergia Group has been engaged:

  • power engineering,
  • heat generation,
  • gas industry.

The main legal act which regulates the power industry in Poland is the Energy Law. The current and future regulations of law are formed mostly by the following documents: “The Energy Policy of Poland until 2030” and “The Energy Policy of Poland until 2050” – announced by the Minister of Economy.

The Polenergia Group operates only in Poland (100% of sales income). Its range of activities covers generation, trade and distribution of electric energy, heat and natural gas. Due to the proximity of locations, similar economic conditions and general risk, the area of activity should be considered as uniform.


Power engineering

In Poland the dominant energy generating facilities remain power plants and combined heat and power plants fueled with coal (46.5% in 2015) and lignite – 32.2% [after: Agencja Rynku Energii, December 2015]. Due to the fact that Poland has to fulfil the objectives of the EU climate policy, the segment of RES-E producers has been growing dynamically in recent years.

The following types of companies operate on the Polish market of electric energy:

  • producers of electric energy (e.g. baseload power plants, municipal and industrial combined heat and power plants, independent energy producers),  
  • Polskie Sieci Elektroenergetyczne SA – a company owned by the State Treasury managing the National Energy System – transmission of electric energy via highest voltage grids,
  • distribution system operators,
  • companies dealing with trade in electric energy.


The Polenergia Group keeps on investing in new high-performance facilities, at the same time providing high level of safety and environmental protection which cannot be delivered by run-down power units.

As a consequence, it will be necessary to construct new generating capacities, including inter alia the RES. Another priority will be also the growth of transmission grid as far as cross-border connections are concerned.

The electric energy sector in Poland is characterized by high degree of exploitation and requires new investments. The Polenergia Group keeps on investing in new high-performance facilities, at the same time providing high level of safety which cannot be delivered by run-down power units.


Renewable energy sources (RES)

Renewable Energy Sources are an alternative for conventional energy sources. In the structure of energy generation in 2015 they in total accounted for 13.73% of electrical energy production. RES is one of leading branches of power industry on which the Polenergia Group is focusing right now.

Using RES significantly reduces the effect of conventional power generation on natural environment, mostly by reducing the emission of carbon dioxide, dust, sulphur and nitrogen compounds. Thanks to their advantages, RES are used to a growing extent in production of electric energy and heat, as well as in transport.

RES can be divided into the following:

  • wind power plants,
  • hydropower plants,
  • biomass and biogas as well as biomass and biogas co-combustion power plants and CHPs,
  • solar power plants.

As far as RES in Poland are concerned, wind power plants have the highest installed power. In 2015 1266 MW of new wind farms were built (a two times greater increase than at the end of 2014). In the electrical energy generation structure (according to generation sources) for 2015 wind energy accounted for 6.6%. In the structure of newly completed wind installations it makes our country rank second in Europe – after Germany having over 6 GW of new wind power capacity put into operation in 2015. In the whole European Union in 2015 the wind farm capacity increased by 12.8 GW (after: the European Wind Energy Association).

Polenergia Group also contributed to the development of onshore wind power industry as in 2015, with its approximately 245 MW portfolio, it became the second largest company with the biggest portfolio of wind farms in operation.

Most of new capacities in the European Union – 9.766 GW – are onshore installations, but newly constructed offshore wind farms accelerate the industry development: in 2015 there were in total over 3 GW of new capacity installed in offshore wind farms, which is twice as much as in 2014.

Polenergia is also preparing new offshore wind farms and is planning to implement two large projects with a total capacity of 2.4 GW. The projects have already obtained their artificial island construction permits as well as their connection conditions, and in 2016 it is planned to obtain the environmental decisions for enterprises included in the “Green” project (wind farms with the infrastructure of their connection to the National Power System).      

Structure of electrical energy generation in 2014 and 2015:

 2014 (GWh)
2015 (GWh)
Total:158 985,5164 707,1
Including thermal power plants (comprising conventional CHPs, excluding biomass/biogas co-combustion and hybrid systems)138 620,5141 504,1
RES19 813,722 599,9
Including: hydropower plants2 182,41 832,3
Wind power plants7 679,010 801,6
Biogas power plants783,6848,2
Biomass power plants4 428,24 582,1
Biomass/biogas co-combustion4 733,54 480,0
Photovoltaics6,955,8

 

In Poland there are some significant limitations resulting from geographical location, which influence the potential level of renewable energy generation from solar radiation and tidal power plants. On the other hand, biogas-fired generation is characterized by the highest costs of all the RES generation technologies.

Due to its conditions and geographical location, Poland has the most mature wind energy market in the Central and Eastern Europe. The best conditions for onshore wind power industry are in the northern part of the country. A new direction of the branch’s expansion will be offshore wind power plants. In the open sea there are perfect and stable wind conditions, which definitely improves the predictability of that type of generation source and enables to compensate much higher investment costs as compared to onshore wind sources.

Poland has one of the highest potential for offshore wind farms on the Baltic Sea and the Polish exclusive economic zone is an area of the best wind conditions.

 

Diagram. Wind map of Poland.


Biomass energy

Biomass is one of the most important RES in the world. It may be used directly in combustion, gasification, or pyrolysis of solid biofuel, or processed into liquid fuel (the rapeseed oil esters, alcohol) or gas fuel (e.g. agricultural biogas).

Using biomass for generation of electric energy requires having adequate power boilers, such as CFB or BFB boilers, or dedicated stoker-fired boilers.


Heat generation

The Polish market of heat generation plants is characterized by high degree of geographical dispersion. Heat is supplied to consumers as hot water or water steam, via heat distribution network (pipes), which is the reason why the plants have only local range. That is the reason why individual heat sources and distribution networks operate near a given industrial facility, a town or city.

Structure of fuel types used for generation of heat in Poland has changed in recent years. Coal remains the basic fuel. In addition to that, fuel oil, natural gas and biomass are used in small quantities.

The heat energy sector is made up of three basic groups of companies:

  • heat industry companies dealing with providing consumers with heat produced in their own heating plants and CHPs as well as heat purchased from other producers,
  • power industry companies, dealing mostly with generation and distribution of electric energy, which produce heat as an additional activity,
  • a group of CHPs or heat plants owned by small, medium and large industrial and retail plants, producing heat for its own purposes, for which heat generation is only a small part of activity.

Coal power

Coal remains to be the basic fuel for generation of electric energy in Poland. In 2014 approximately 86% of Poland’s electric energy was produced from coal and lignite. Coal maintains its leading position, despite the growing significance of RES. In 2012 coal was also a dominating fuel used in companies generating heat without cogeneration – 87.2%, and in companies generating heat with cogeneration – 70%.

In 2014 there was a decline in energy production from coal (by 5.1%). According to Redpoint data from December 2013, in 2035 the share of RES in energy generation will rise to ca. 35% and the share of coal and lignite will decrease.


Gas industry

The majority of gas is consumed in Poland by industry, including power plants and CHPs. The second significant group includes households. The third largest gas consumer on the Polish market is the sector of retail trade and services.

The major quantity of gas is delivered from abroad, mostly from the East. The volume of gas imported from Germany has been gradually increasing – it doubled from 2010 to 2012. Attempts of diversifying fuel gas supply sources are being made on an ongoing basis in Poland. In 2015 an LNG terminal in Świnoujście became operational and 210 thousand cubic meters of liquefied gas were supplied for the terminal start-up at the beginning of 2016.

The Polenergia Group is an active participant in the market of trade and distribution of gas fuel, and we plan to significantly extend our activity in that scope.