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Poland takes first steps to offshore wind target, passes key legislation

20 January 2021 Cristina Brooks

A legal framework to build the first subsidized offshore wind farms in Poland is one signature away after being passed by the Senate as the country tries to decrease its dependence on coal-fired power plants. Polish offshore wind farms had previously only reached the planning stage and gained environmental permits.

The Offshore Wind Act will enter into force in late January or early February after its expected signing into law by President Andrzej Duda, according to the Polish Wind Energy Association (PWEA). The senate approved the act on 13 January.

In an effort to aid development, the act sets out rules for offshore wind project grid connections and competitive auctions. These will lead to subsidies for projects, while the legislation also sets out a timeline for when Poland will meet capacity targets.

In the first phase, the Polish regulator-the Energy Regulatory Office-will allocate financial support for 5.9 GW of offshore wind projects by 30 June. After 30 June, Poland will hold auctions and award Contracts for Difference (CfD) that will help developers and investors secure stable returns. Poland will launch the second phase of auctions, each consisting of 2.5 GW of capacity, in 2025 and 2027, pushing ahead to a 2030 goal of 11 GW of offshore wind.

Poland laid the groundwork for the act in 2019 revisions to the Polish Energy Policy to 2040 plan, which foresaw the rapid startup of 8-11 GW of offshore wind, including 5.9 GW of capacity by 2030.

Poland's 11 GW offshore wind target for 2030 tops by some margin the goal for another nascent European offshore wind market—France, which aims to reach 8.75 GW by 2028. But both newcomers' targets for offshore wind are eclipsed by those of the established frontrunners in the region; Germany has a target of 20 GW and the UK is aiming for 40 GW by 2030.

The UK is currently on track to meet this goal. It had the largest installed offshore wind capacity in the world at 9.8 GW two years ago, according to the British government.

The EU executive body, the European Commission, is hoping to grow the bloc's installed offshore wind capacity from 12 GW currently to "at least" 60 GW by 2030, and ultimately reach 300 GW by 2050, it said in its Strategy on Offshore Renewable Energy released in November.

In meeting its own offshore goal, Poland will take advantage of Northern Europe's strong winds, existing offshore wind supply chain, and interconnectors used by utilities in nearby Denmark and Germany. "Offshore wind historically happens in the North Sea, but if you look at the map you will see there is not much space in the North Sea, and the Baltic Sea is as suitable for offshore wind as the North Sea," IHS Markit Senior Research Analyst Andrei Utkin said in an interview.

"The Baltic Sea has very high capacity factors and very good interconnection," he said.

In July, Polish government officials agreed to work with members of the offshore wind energy sector to hammer out a so-called Polish Offshore Sector Deal. It appears to be based upon the British Offshore Wind Sector Deal that helped the UK become Europe's largest offshore wind market, according to law firm Pinsent Masons.

In September, Poland also signed a pact with neighbors Estonia and Germany called the Baltic Sea Offshore Wind Declaration, aiming to strengthen shared offshore wind interests.

Poland realizes it must decarbonize to battle the narrative that it is addicted to high-carbon coal-fired generation. It has adopted a goal of 21% of total energy consumption from renewables by 2030, and is aiming for 27% renewable energy in the generation mix, despite relying on coal for 80% of the country's annual energy use. Offshore wind will be an important contributor, said IHS Markit Senior Analyst Zoe Grainge.

Industry watchers expect domestic demand for Poland's offshore wind will limit its energy exports. "Poland today mainly relies on lignite (coal) to power its electricity system. Therefore, it is not very likely that Poland will become a large exporter of wind energy and supply most of the Baltic region," Christoph Zipf, communications manager at WindEurope told IHS Markit in an email.

"This is even more true as Poland is not the only country in the Baltic Sea that has plans to expand its offshore wind volumes," Zipf added. "The Baltic states-Latvia, Estonia, and Lithuania-also have auctions coming up, with Estonia and Latvia collaborating on a hybrid offshore wind project that will connect to both countries, while Lithuania is having independent tender rounds."

Others cast the move as a chance to help the Polish economy recover from the pandemic. "It will not only be a direct cash injection for the economy, but also tax revenues for the central budget and for municipalities, tens of thousands of new jobs and an opportunity to build a strong industry around the sector, including a revival of Polish shipyards and ports," said PWEA Vice-President Kamila Tarnacka.

The EU, which in December exempted Poland from its ambitious Green Deal emissions target after heated debate, is supporting Poland's greening moves with funding. Prime Minister Mateusz Morawiecki announced 18 January that Poland would spend some of its EU-allocated US$92 billion in economic development and pandemic recovery funds on renewable energy to align the country with the 55% emissions reduction goal of the Green Deal.

Posted 20 January 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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