mBank – CASE Seminar Proceedings

How to overcome the energy crisis in Poland?

We are pleased to present the mBank-CASE Seminar Proceedings No. 174 entitled "How to overcome the energy crisis in Poland?". The publication consists of an article by Maciej Stanczuk and Robert Kuraszkiewicz under the same title, and a commentary on the article by Janusz Steinhoff.

 

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On the threshold of winter 2022/23, Europe is facing its biggest energy crisis since the end of the Cold War. Its immediate cause is Russia's armed attack on Ukraine and the associated sanctions imposed on Russia by the European Union. For years, European markets have become dependent on Russian raw materials, which in the current circumstances translates into increased energy prices. The dependence on imports from Russia varies between EU countries, hence the scale of the current crisis also differs from one country to another.

Poland, however, is affected more severely. Fossil fuel prices have increased significantly in the last 12 months, and the Polish economy is hugely dependent on them. The energy sector needs a crisis plan at the moment. However, this plan must be embedded in a larger project - the construction of a modern low-carbon system. The problem is much bigger than it may seem, and a return to the status quo after the end of the war, which will happen sooner or later, is not a good solution for Poland.

The goal of this study is to present global trends important for the future of the energy sector in Poland, and to put forward recommendations for short-term and long-term economic policy. The authors came out with a proposal of seven areas of action that in the short term can minimize the costs of the current crisis for society and the economy, and allow to start building a modern, low-carbon power system. The authors proposed the following:

  1. Government crisis management must be set in motion as a matter of urgency, together with the preparation of a programme for Poland’s economy to function in autumn and winter 2022 when hit with restrictions in electricity, coal and gas supplies.
  2. A programme for investing in the development of modern distributed transmission networks, currently capable of accommodating significantly larger volumes of renewable energy, needs to be urgently drawn up and implemented.
  3. Investments in renewable energies have to be unblocked immediately.
  4. It is essential that modern digital systems for managing the demand side of the energy market be introduced, thereby significantly increasing the energy market’s flexibility and reducing the risk of having no capacity reserves.
  5. The rapid decoupling of coal assets from the balance sheets of Polish energy groups is essential.
  6. Operation of the old coal-fired units (200+) needs to become more flexible while simultaneously presenting the European Commission with a comprehensive and credible programme for energy transition towards decarbonisation.
  7. We should continue programmes of investing in offshore wind power and finally take decisions concerning the execution of nuclear power projects.

The analysis shows that Poland needs to shift its energy sector significantly to renewable energy sources, and that it is necessary to decide on investments in nuclear power. Poland needs to move in the direction of implementing the European Union's climate and energy policy, i.e. increase the dynamics of creating new capacity in renewable sources. Large investments in distribution and transmission networks are also necessary.

In conclusion, the authors emphasize that the energy transition is the biggest challenge facing Poland, and it will take decades. Stability is necessary in the energy sector, and order in terms of competences and regulations is essential. It is essential to move away from the manual steering of economic entities, and to cease the replacement of the state’s regulatory functions with primitively-understood ownership policy.