Energy policy choices of Poland. Marek Wąsiński The Polish Institute of International Affairs Paris, 27 September 2016

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1 Energy policy choices of Poland Marek Wąsiński The Polish Institute of International Affairs Paris, 27 September 2016

2 Main Principles of Polish Energy Policy Energy independence Stable and price-efficient supply for industry Tackling energy poverty Energy effectiveness and adjustment to EU climate policy

3 Responsible Development Plan In energy to modernize energy sector and to diversify the sources of energy sine qua non for competitiveness of Polish industry, energy effectiveness, reliability of energy supply

4 Responsible Development Plan Stability of energy supply Goals in next 10 years Decreasein consumption of primary energy Gradual and cost-effective increase in share of RES in energy mix Limit increase of energy prices for households

5 Responsible Development Plan Directions Energy efficiency i.a. buildings, transfer, cogeneration (nuclear), distributed energy sources Energy safety i.a. diversification of energy sources (RES, nuclear, shale gas), energy storage, new capacity Modernization and development i.a. new cross-border links, smart grid, gas hub, electromobility Restructuring of coal industry i.a. increase in productivity, cost-effectiveness, higher addedvalue

6 E-mobility pledges: 1 million electronic cars by billion PLN (about 0.58 billion EUR) sales of Electronic buses 2 billion PLN (0.46 billion EUR) sales of Energy annually

7 E-mobility results Tackling low emission (in big cities car traffic is cause of 60% of emissions) Better energysafety (lower dependenceon oil&gas) Growth of the industry (investments in R&D in the field of green energy) Smart grid potential (energy storage)

8 But

9 Electricity production in 2014, % 2,0% 12,5% 35,0% 50,5% hard coal brown coal gas RES Source: Ministry of Economic Dev.

10 Modernization needs 59% of energy electricity machines (turbines) has over 30 years 16% has over 20 years 80% of transmission lines 220 kv and 23% of lines 400 kv and 38% of transformers has over 30 years Losses on transmission 8.2%; EU-average 5.7%

11 Final energy intensity (at PPP) climatecorrected in 2014 Energy intensity 15% higher in Poland than in Germany Source: Odyssee

12 Energy dependency 97% of oil is imported (from the East) 72% of gas is imported (53% of which from the East) However, Gas terminal in Świnoujście was opened, capacity to import of 1/3 of Polish gas consumption First import of oil from Snaudi Arabia (with perspective of import from Iran or the U.S.)

13 Energy dependency Energy union was presented as a solution Overall EU-28 imports from Russia 37.5% Nord Stream 2 does not lead to diversification of supply

14 0,0400 Gas prices for industrial consumers in 2015, EUR/KWh 0,0350 0,0300 0,0250 0,0200 0,0150 0,0100 0,0050 0,0000 Romania Lithuania Estonia Denmark Netherlands Bulgaria Belgium Latvia Czech Republic Finland Austria Italy Greece Spain Hungary Slovenia Sweden Poland Slovakia France United Kingdom Ireland Germany Croatia Luxembourg Portugal Source: Eurostat

15 Electricity prices for industrial consumers in 2015, EUR/KWh 0,1600 0,1400 0,1200 0,1000 0,0800 0,0600 0,0400 0,0200 0,0000 Denmark Sweden Finland Romania France Slovenia Netherlands Austria Bulgaria Czech Republic Hungary Luxembourg Germany Poland Estonia Lithuania Croatia Latvia Italy Belgium Portugal Greece Slovakia Spain Ireland Cyprus Malta UK Source: Eurostat 2015S2 EU Average

16 Electricity prices for individual consumers, 2015, EUR/KWh 0,2500 0,2000 0,1500 0,1000 0,0500 0,0000 Bulgaria Lithuania Hungary Romania Denmark Estonia Croatia Finland Czech Republic Latvia Poland France Slovenia Portugal Sweden Malta Greece Netherlands Slovakia Austria Luxembourg Germany Cyprus Italy Belgium Spain Ireland UK Source: Eurostat 2015S2 EU average

17 Energy poverty in Poland in 2013 According to a Report of Foundation for Eco- Development: Energy costs exceeded 10% of the household budget of 44% of Poles In the case of 13% cap, 33% of Poles Energy poverty was problem of 17% of Poles when counted in Low Income High Costs (LIHC)

18 Stability of supply Short limits on energy in 2015 Problem of uncontrolled transmissions New investment needs Capacity market mechanisms

19 Polish Transmission Network, 30 April 2015 But Source: PSE S.A.

20 Polish Transmission Network, Investments until 2025 But Source: PSE S.A.

21 Polish Transmission Network, After 2025 But Source: PSE S.A.

22 Nuclear? Plans were for first reactor in 2025 Polish Transmission Operator predicts first reactor at Lack of clear plans how to finance the project.

23 Primary energy production from RES in 2014, % 3% 2% 1% 9% 8% 77% Solid biofuels Liquid bofuels wind biogas hydro geothermal solar other Source: GUS

24 Climate policy Support for Paris Agreement Poland wants all countries to contribute to emission reductions Absorbing CO 2 by forests Coal-dependencyand wish for energy-independence is declining the support for European climate policy The problem of base-year

25 GHG emission reductions, %, 1988 base year Lithuania Romania Bulgaria Latvia Estonia Hungary Slovakia Czech Republic United Kingdom Poland Germany Denmark Sweden Belgium Croatia Italy France Slovenia Luxembourg Finland Netherlands Greece Austria Ireland Portugal Spain Source: Eurostat

26 But Poland reduced 20% since 1990 And 4% since 2005

27 The choice PEP 2050 was developed in Assumption annual growth of demand 1.1% until 2030 Three scenarios: Sustainable (reference) Nuclear Gas&RES

28 Consumption of primary energy in 2050, reference scenario, per cent 16% 30% hard coal and brown coal oil and oil products 14% gas 18% 22% nuclear RES Source: Polish Energy Policy 2050

29 Consumption of primary energy in 2050, gas&res scenario, per cent 30% hard coal and brown coal oil 55% gas&res 15% Source: Polish Energy Policy 2050

30 Consumption of primary energy in 2050, nuclear power scenario, per cent 15% 15% 10% hard coal and brown coal oil and oil products gas 45% 15% nuclear RES Source: Polish Energy Policy 2050

31 The choice New government is developing new policy Two tendencies Energy ministry (independence based on coal) Economic Dev. Ministry (dispersed energy sources)

32 Three scenarios presented by Instytut Jagielloński June 2016 Assumptions similar to these of PEP2050 Energy mix should reflect the Polish economic model Dependence on gas, RES or nuclear means importing resources or/and know-how and technologies

33 COAL SCENARIO % 0% 10% 23% 51% hard coal brown coal gas nuclear RES Source: instytut Jagielloński

34 GAS SCENARIO % 16% 39% hard coal brown coal 19% gas nuclear RES 26% Source: instytut Jagielloński

35 LOW EMISSION SCENARIO % 12% 11% 26% 20% hard coal brown coal gas nuclear RES Source: instytut Jagielloński

36 Summing up Most important for Polish government are Energy independence Reliability of energy supply Tackling Energy poverty Development of technologies supporting the economy Rising cost of emissions These factors will shape energy choices of Polish governments

37 Marek Wąsiński The Polish Institute of International Affairs