Jan Cienski in Warsaw -

When the last football fans decamp from Poland at the end of June, there are fears that the investment boom that they helped cause - Poland's five-year rush to build highways and airports in time for the Euro 2012 tournament - will fade, dragging down the economy with it. While indications are that the peak of the transport building frenzy have passed, the economy's salvation could lie in the forthcoming wave of investments in power generation.

Mateusz Morawiecki, CEO of Poland's Bank Zachodni WBK, a unit of Spain's Santander, estimates that Poland will need to invest as much as €41bn in energy over the next six or seven years. "The wave of investment could act as a cyclical buffer for the economy," he says, calculating that energy investments could make up for a predicted coming slump in consumption - one of the main drivers of the Polish economy in recent years - as well as a fall off in public investments in transport infrastructure.

The scale of Poland's future needs is vast. Most current generating capacity was still built in communist times, and is largely fired by black or brown coal - providing more than 90% of Poland's electricity. Fitch, the ratings agency, estimates that Poland's three largest power companies will need to find funding of about €9bn by 2015. In all, Poland is expected to need about €50bn in energy investments until 2025 as old coal-fired plants are phased out and replaced with modern ones, as well as gas and nuclear plants, all while overall energy generating capacity is built up to accommodate Poland's growing economy.

Cleaning up

Poland has committed to generating more than 15% of its power from clean energy by 2020 - part of the EU's pledge to reduce CO2 emissions - creating a quickly growing new market. Wojciech Hann, a partner at Deloitte, the consultancy, estimates that coal's slice of the energy pie will shrink to about 55% by 2030, with the rest being taken up by renewable, natural gas and nuclear.

Although new coal plants are much less polluting than those built decades ago, there is little indication that hopes of turning coal into a true clean fuel through the use of techniques such as carbon sequestration are feasible.

PGE, the country's largest utility, recently backed out of a pilot plant being built in central Poland, that is supposed to investigate whether there is an economic case for pumping carbon underground. PGE decided that with the cost of carbon emissions credits in the EU Emissions Trading System hovering at about €6 a tonne, while carbon sequestration costs 10 times as much, the scheme currently does not make much sense.

That leaves scope for a stronger focus on renewables. "Poland is facing an explosion in renewable energy investments," says Hann. "This is proof that regulatory systems can create miracles."

Renewables already make up just over 10% of Poland's energy production, however a significant portion comes from the questionable practice of dumping biomass - largely wood and straw - into coal-fired boilers to make them greener. The other main source of renewable power is wind, currently located mainly along the Baltic coast and with increasing interest in building offshore power stations. PGE has committed to spending more than €3bn on offshore wind farms, which it hopes will replace part of its existing coal capacity.

Poland is also going to build up its natural gas generating capacity. Currently, almost no gas is used for power, with most of the 17bn cubic metres (cm) used by the country going to homes and industrial users. However, with Poland potentially sitting on large deposits of shale gas, the growth of gas in the energy mix is expected to increase, says PWC, the consultancy.

Nuclear controversy

Finally, Poland, like almost every other country in Central Europe, is looking at building up its nuclear power capacity. Poland was one of the few Soviet satellites that did not build a power plant in communist times, but the government is committed to opening two nuclear power stations by 2035.

The issue has divided Poland from Germany, where opposition to nuclear power is strong in the wake of the Japanese disaster at the Fukushima plant, but Warsaw is determined to go ahead despite the cost of about €25bn. "There is no retreat from nuclear energy," insists Hann.

PGE will formally open a tender for technology suppliers later this year, and the contract has attracted interest from the US-Japanese group GE Hitachi, France's Areva and Westinghouse, a unit of Japan's Toshiba.

Power projects may also provide a new lifeline for Poland's troubled construction companies. Three large firms declared bankruptcy in recent months because they underbid for big highway projects and were then surprised by rising fuel, asphalt and steel prices. "This sector could occupy the space left from falling numbers of transport infrastructure projects following Euro 2012," writes Peter Attard Montalto, an analyst with Nomura.