Pat Koza in Warsaw -
Poland is on the cusp of an energy revolution in Europe. More wind power was installed in the EU in 2008 than any other electricity-generating technology, according to figures released in February by the European Wind Energy Association. And among those countries involved in a "third wave" of harnessing wind capacity on the continent, Poland is developing its sector the most intensively.
Little wonder. The EU has prescribed that 15% of energy production must be "green" by 2020. That's what's fuelling the wind energy boom in Poland, where 95% of electricity and 80% of energy for heating derives from coal.
About 43% of all new capacity in the EU in 2008 was wind energy, exceeding all other technologies including gas, coal and nuclear power. On average, 20 wind turbines were installed for every working day of 2008 in Europe, which has experienced two waves of investment led by Germany and Spain, followed by France, the UK and Italy. Denmark leads in terms of intensity, however, providing 21% of electricity consumption by wind power.
Central and Eastern Europe joined the breeze bandwagon in 2008. Hungary doubled its capacity to 127 megawatts (MW) and Bulgaria tripled its capacity to 158 MW. Other significant players include the Czech Republic with 150 MW, Lithuania with 54 MW and little Estonia with 78 MW. But Poland's capacity jumped from 276 MW to 472 MW, or about 0.25% of its total energy consumption. And the government's ambitious plans call for wind generation to contribute a 2.3% share in domestic energy consumption by 2010. Currently, about 200 MW of new wind farm capacity is being built in Poland, with agreements for grid connection for an additional 4,000 MW.
Studies show that about 30% of Polish territory is economically suitable for wind turbine applications, and 5% is "very favourable" – particularly the so-called "Baltic wind corridor," which follows parts of Poland's northern coast.
This potential has attracted a wide range of international investors including Germany's E.On and RWE, Spain's Iberdrola and Gamesa, Japan's Mitsui and J-Power, and Denmark's Elsam and Vestas, as well as domestic firms Windpol and Polish Energy Partners.
However, since the first commercial wind turbine was installed in Poland in 1999, development has been hamstrung by a bundle of problems, including difficulties in obtaining ecological permissions and grid connections - a process that can take five years or more. "Moreover, in northern Poland, home to the country's best wind conditions, electricity lines are in miserable condition and do not allow for the connection of significant capacities without additional investments in infrastructure," says Erste Group analyst Stefan Lingnau. Nevertheless, he adds, the market "has great prospects," as it is strongly supported by EU and government regulations.
Winds of change
Prospects have been slowed as well by the global recession. "Investment by the big firms such as Gamesa and Vestas has slowed down dramatically since the last quarter," Lingnau tells bne. But the long-term outlook remains good. "There's a definite cost advantage in wind power compared to other renewables," he says. "There is vast untapped potential."
To unleash that potential, between 2009 and 2012, the Polish government will channel PLN1.5bn (€328m) into co-financing renewable energy projects, half of which (PLN742m) is designated for wind farms. The funds will come from fines paid by energy producers that fail to meet current prescribed renewable electricity norms.
Under the scheme, renewable energy investors will be offered long-term preferential loans of up to PLN50m to cover up to 75% of project costs, up from 20-30%. The government is collecting applications for this first phase through April 14. "The task set before us by the EU is very ambitious, and implementation will involve considerable financial support," Environment Minister Maciej Nowicki said recently. "This fund, combined with money from the EU, creates the possibility for acceleration of the development of renewables in our country."
By 2010, energy utilities in Poland are required to provide 10.4% of energy consumption from renewable energy, a figure that rises to 15% by 2020. According to Polish grid operator PSE, that means 2,000 MW of installed capacity in the next two years.
The government is also working to update Polish energy law to ensure that grid connection permits granted for wind power projects are actually used. The current system is bottlenecked with speculators who hold valid authorizations they have not acted upon, preventing other market players from working out connection deals with power companies.
A second loan programme budgeted at PLN800m will be operated by regional authorities, while a third financial support program will be launched in 2010 worth up to PLN300m granted by commercial banks to small entrepreneurs and individual households. Overall, that amounts to PLN2.5bn set aside to produce an additional 800 MW of clean energy.
"We expect that our financial support for putting up new wind power plants as well as single windmills, calculated at approximately PLN370m, will bring on the further growth of the clean energy sector, paying off with another 60 MW of clean energy," says Jan RÄ czka, president of the National Fund for Environmental Protection and Water Management, the agency under the Environment Ministry that will oversee dispersal of the funds.
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