In 2019, renewable energy investments worth over EUR 3.3 billion were launched in Poland. Further development of PV projects and removing barriers to investments in wind farms will enable a deep restructuring of the Polish energy system by 2035 without the need to increase the stream of money allocated to renewable energy compared to last year. Financing is therefore not a barrier to the rapid transformation of the Polish energy sector – this is one of the main conclusions contained in the new report “Alternating current. Landscape of climate finance in the Polish energy sector”.
The report is the first study in Poland enabling identification of financing sources, determining the involvement of individual groups of investors and presenting the scale of expenditure on renewable energy sources. It also provides information necessary to determine the future financing needs of the zero-emission transformation of the Polish energy sector. Even in the most ambitious transformation scenario, the required increase in financial flows for zero-carbon energy production does not differ from Poland’s experience from previous years. Moreover, the estimated amount of European and national public funds needed for the direct investment support in the energy sector (EUR 0.6 bn per year) represents less than 10% of the total amount of funds that Poland will have at its disposal for the low-emission transition in the 2020s (a total of over EUR 6.7 bn per year) from the EU funds and the sale of emission allowances. This means that the available public funding will not only be enough to transform the Polish energy sector, but also to provide much-needed support to the decarbonisation of other parts of the economy, such as buildings, transport or industry.
The panorama of low-emission investments in the energy sector presents key indicators for the entire renewable energy industry and its individual segments:
- In 2013-2019, a total of approximately PLN 48 billion (c.a. EUR 10.8 bn) was allocated to low-emission energy investments, which made it possible to finance renewable installations with a total capacity of 8.6 GW. About 62% of these funds were allocated to onshore wind farms and 28% to solar PV projects.
- The biggest role in increasing the share of RES in the Polish electricity balance was played by private energy companies and prosumers, which together built 81% of all renewable capacities installed in 2013-2019. The share of the public sector and state-controlled energy companies in the construction of renewable energy sources in 2013-2019 did not exceed 15%.
- The dominant role in financing low-emission technologies is played by capital coming from the private sector, primarily commercial banks. In 2013-2019, it was responsible for a total of approx. 83% of all funds allocated to renewable projects. The remaining 17% came from public financing sources, in which the main role was played by European funds – EU Structural Funds and debt instruments of the European Investment Bank and the European Bank for Reconstruction and Development.
“The data we have collected clearly show that the regulatory environment has had the greatest impact on the development of renewable energy sources in Poland. Public funding played a tertiary role. Decision-makers should therefore abandon the belief that direct subsidies from the state budget and EU funds play a key role in the success of the energy transition. It is much more important to ensure conditions conducive to the mobilization of private funds and guaranteeing investors a stable operating environment.” – emphasizes Maciej Bukowski, president of WiseEuropa, co-author of the report. The report also indicates that direct investment support should be directed to technologies complementing the generation of energy from solar and wind, such as biogas plants, biomass CHP plants or small hydropower plants. – “Easing the regulations blocking investments in wind farms, maintaining the rapid pace of development of photovoltaics and the development of stable support systems for biogas plants, biomass and small hydropower would fully fit into the logic of the EU recovery plan” – emphasizes Maciej Bukowski.
The report prepared by the team of WiseEuropa analysts not only provides a synthetic diagnosis of the historical financial flows generated by the RES industry, but also provides information necessary to determine the future financing needs of the zero-emission transformation of the Polish energy sector.
“In the report, we compare the financial flows from 2013-2019 with the scenario of a rapid restructuring of the energy sector, assuming coal exit by 2035. It turns out that even in this variant, the required financing does not differ from Poland’s experience in previous years.” – points out Zofia Wetmańska, WiseEuropa analyst. “In fact, maintaining the current assumptions of the National Energy and Climate Plan would mean almost halving the energy sector investments. This would be a strategic mistake in the face of the economic crisis caused by the pandemic and Poland’s international obligations to reduce emissions, especially as wind and solar energy is cost-competitive and still getting cheaper, interest rates are low, and the grants and loans are provided by the EU recovery fund”– emphasizes the expert.