Why Poland Will Transition From Coal to Solar and Wind

Jeff Siegel

Written By Jeff Siegel

Posted October 20, 2022

Belchatow power station

By 2036, the coal resources required to run the coal-fired Belchatow power station in Poland will run dry.

This, by the way, is the largest coal-fired power plant in Europe, which means this is not a trivial issue.

So lawmakers and analysts are now trying to figure out what to do when, in less than 15 years, there will no longer be enough coal to keep the plant operational. 

Unsurprisingly, renewable energy may be the solution. 

According to a new Bloomberg report, this power plant could actually replace most of its coal-fired generation with renewable energy and batteries, and do so in a manner that would lower overall power system costs in the region where the plant is located while still maintaining energy security. 

Here are some highlights from the report:

  • War and energy crisis have boosted demand for lignite generation, but the medium- and long-term outlooks are bleak for the fuel. The mines that serve Belchatow are expected to be depleted by 2036 but BloombergNEF projects Poland’s lignite generation to drop well before that. Lignite is a carbon-intensive fuel, and Poland’s generation from lignite drops by 85% over 2021–2030 in BNEF’s base case outlook for Poland. A drop of 75% is seen even if high gas prices persist, due to rising carbon prices and renewable capacity additions. 
  • Much of the generation at Belchatow could be replaced by new generating capacity pre-2030, even if some lignite units remain as back-up capacity. Belchatow is located at a major grid connection point, which could be repurposed to support up to 6 GW–11 GW of wind and solar plus 1 GW–1.5 GW of new firm capacity.
  • Freeing part of Belchatow’s existing grid connection pre-2030 to new technologies has the potential to maintain Polish energy security and create new economic opportunities in the region. Some 2.5 GW of solar and 1.5 GW of wind capacity could use the connection by 2030 following the retirement of 1.8 GW lignite capacity. Like lignite, solar and wind generation is not reliant on global commodity markets, once built. These technologies can support the delivery of a cheaper electricity mix and lower emissions, without compromising energy security. 
  • New capacity being developed elsewhere in Poland will weaken the economics of lignite generation at Belchatow. A total of 6 GW of offshore wind is expected online by 2030 and 4 GW of gas power plants are under development. However, much of this is being built in the north of Poland, far away from centers of power demand in the south. 
  • Belchatow is located in central Poland, and new capacity built on this site could reduce strain on Poland’s grid. Up to 80% of Belchatow’s generation could be replaced with 5.7G W of onshore wind and 5 GW of solar located within a 20 km30 km radius of the current plant. Such new generation would also mitigate the risk that the valuable grid infrastructure around Belchatow becomes stranded. 
  • Proven clean technologies paired with batteries and a smaller gas-, biomass- or waste-fired power plant would offer the most cost-optimal and energy-secure replacement. Solar and wind are the cheapest available technologies and, when co-located, can achieve a stable generation profile, given local resources. By 2036, 6.4 GW10.7 GW of wind and solar with 1 GW1.5 GW of firm capacity could replace 80% of lost generation at Belchatow.
  • A build-out of local wind and solar would not hinder potential investments in emerging energy technologies in the region as well. This could include a small-scale nuclear reactor, a hydrogen power plant, or new forms of energy storage. Such technologies are not mature enough to be available today and are unlikely to significantly contribute to Polish energy security by 2030, but they present long-term opportunities for the local economy as lignite generation declines and eventually ends. 

Transitioning to renewable energy will not only offer environmental benefits but economic and security ones as well. 

As an energy investor, this naturally piques my interest, as such a transition could offer an opportunity to make a few bucks from the companies already building and operating renewable energy facilities in Poland. 

Here are some renewable energy companies currently operational in Poland:

  • Northland Power (TSX-NPI)
  • Acciona (OTCBB: ACXIF)
  • EDP Renovaveis S.A.(OTCBB: EDRVF)
  • Iberdrola S.A. (OTCBB: IBDRY)
  • Nordex SE (OTCBB: NRDXF)
  • Ørsted A/S (OTCBB: DNNGY)
  • Siemens Gamesa Renewable Energy S.A. (OTCBB: GCTAF)
  • TotalEnergies SE (NYSE: TTE)
  • Vestas Wind Systems A/S (OTCBB: VWDRY)

While the threat of climate change may not be enough to motivate a transition away from fossil fuels and toward cleaner energy, supply constraints are. And that, dear reader, is why the largest coal-fired power plant in Europe will ultimately be replaced by renewable energy and energy storage.

And by ultimately, I mean in less than 15 years.

Invest accordingly. 

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