By Ewa Krukowska and Maciej Martewicz (Bloomberg) — After decades of prompting coal as the guarantor of national energy security, Europe’s fourth-biggest greenhouse-gas polluter is shifting to embrace wind power.
PGE SA, which is Poland’s largest utility, wants to turn to turbines to harness the breezes in the Baltic Sea and eventually supply 2.5 gigawatts from the technology by 2030. It is considering teaming up with one of the top European players in the project and is also working to speed up investments in generation plants fired by gas and those that use combined heat and power technology, according to Monika Morawiecka, the company’s director of strategy.
The moves reflect a plunge in the cost of wind turbines and rising costs for emissions permits. With the European Union determined to clamp down on climate-damaging fossil fuels, even the most polluting utilities are starting to look at how to clean up their industries.
“Cheaper renewables are a positive development, while rising CO2 prices are negative because they take away the funds that we could otherwise invest in green sources,” Morawiecka said in an interview. “The investment choice is simple for us: we’re heading toward the cheaper scenario.”
Poland’s right-wing government is shifting its view, too. It recently announced a plan to reduce dependence on coal, which generates more than 80 percent of the nation’s electricity and underpins jobs in the mining industry in Poland’s southwest. It also highlights a wider trend, where utilities from Germany to Spain are placing renewables at the heart of their growth strategies.
The U-turn in Poland comes after the growth of renewables slowed last year as the Law & Justice government in Warsaw unsettled investors with changes to support measures for power producers. Poland is at risk of missing its 2020 clean energy target, which is part of a wider EU goal.
The cost of carbon-dioxide emissions permits more than doubled over the past year as the 28-nation bloc agreed to overhaul its cap-and-trade system and accelerate the pace of pollution cuts in the next decade. Benchmark permits jumped to around 11.50 euros ($14) a metric ton and may rise to as much as 32 euros by 2023, Bloomberg New Energy Finance projected last week.
By diversifying sources used to generate power and incorporating offshore wind, Poland may be able to reduce the share of coal in its energy mix even below the 60 percent currently expected by the government in 2030, Morawiecka said.
“We are a natural market leader, and we will also cheer our colleagues on so that they go in this direction, too,” she said.
In years past, PGE supported coal as a path to energy security for Poland and to appease trade unions. Those arguments look less durable since the nation doubled its imports of the fuel from 2016 to 2017.
“I used to defend coal on the ground that it was a wider element than energy policy, that it facilitated our foreign policy,” Morawiecka said. “But renewables can also guarantee energy independence once you build them.”
For its green venture, PGE wants to find a partner company among the top developers of offshore wind in Europe. They could buy a minority stake in the project and bring skills in developing the multi-billion-dollar projects. The utility may also look to financial institutions such as the European Investment Bank for support.
“From the financial angle, there won’t be any shortage of options,” Morawiecka said. “There are many more investors interested in such projects than those willing to invest in fossil fuels.”
© 2018 Bloomberg L.P