In a move that aligns with the global trend of phasing out coal entirely from the energy sector, Poland has outlined its plan to phase out 8 GW of coal by 2030. The coal sector in Poland relies on substantial subsidies from the public to ensure profitable operations for the litany of companies operating in the nation. The global community is fast-tracking the inevitable phasing out of coal power across several international markets, and the decision undertaken by the Polish government underscores that global stance.
Poland’s National Agency for Energy Security holds the hope for the nation’s energy sector
As the world moves ever closer to the inevitable future without coal, the question that arises is what will the nations that rely on it do to supplement the loss in energy production?
One might think that the costs and age of the coal plants in Poland are a mitigating factor in its decision to cut subsidies, and one might be correct in that assumption. Poland is perfectly placed between several nations in Europe that are capable of exporting energy to the nation, but that would drive costs up for local residents.
According to Poland’s regulation on the internal market for electricity, from the beginning of July, the substantial subsidies that the coal sector has relied on in Poland will come to an end. The aforementioned regulation stipulates that any coal plants emitting more than 550 g CO2/kWh (and 350 g/kW/year) will no longer be allowed to subsidize their budgets through the capacity market or any other mechanism.
Several global watchdogs have urged the energy-rich nations of the world to fast-track the phasing out of coal, of which Poland seems all too happy to oblige.
“Phasing out coal power is the most important step the world can take to curb climate change” – the World Resources Institute
2025 will see up to 8 GW disappearing from the market as capacity contracts end in Poland
The news that roughly 8 GW of power will disappear from the Polish energy market might affect energy prices; however, the companies that operate the aging coal plants will suffer the worst as lucrative operations now hemorrhage money thanks to the end of subsidies.
Following the end of government subsidies this year, the next wave of capacity withdrawals will take place in 2029-2030. That period would mark the end of 5-year contracts, which were auctioned off during the fourth round of capacity auctions led by the Polish government.
After that period, the final wave of capacity withdrawals will happen at the latest in 2035, when Poland’s longest 15-year contracts for new coal units will expire. At that point, coal power in Poland will be no more. What is troubling is the undeniable fact that Poland does not have a plan in place to supplement the loss of energy capacity.
In sharp contrast to the current plans to phase out coal, Poland was recently granted approval by the EU Commission to keep one of the last coal plants alive. Poland is the only member state of the EU that produces coal-powered energy.
Poland needs to develop a sustainable method to supplement the loss of the coal power sector
As Poland aims to phase out the remaining coal plants in the country, some of its European neighbors are reaching out to the EU to request extensions for their aging coal sector. Poland will need to initiate measures and policies that foster an alternative power generation resource; if not, the overarching consensus is that prices will rise dramatically in Poland. Regardless of what energy source will power Poland into the future, one thing that is for certain is that coal power will definitely not be a part of the Polish energy sector.
