The pandemic, followed by Russia’s aggression against Ukraine, the energy crisis as well as the high inflation rate all have contributed to the destabilised market of resources used in energy, electricity and heat, and the higher cost of investment finance. In the shorter timeframe, the energy market will be stabilising, with greater diversification of supply channels and more focus on their security. Climate-oriented decarbonisation and the rising energy security of both Europe and Poland combine to further reinforce the trend towards a higher stake of RES and the revival of nuclear power initiatives.

Short-term perspective

European and domestic regulations will support the development of renewable energy sources, at the same time pushing for decarbonisation and the diminishing role of fossil fuel. Increasingly stringent environmental requirements, high prices of resources, the required diversification of gas supplies with the aim of eliminating the Russian source, very high prices of carbon dioxide emission allowances, as well as the Taxonomy-related measures introduced by financial institutions are preventing the development of coal-fired power generation and hindering the natural gas power generation, as well. As such, they favour RES, with the effect being increasingly shorter operating intervals of conventional energy sources every day, which further accelerates their technical and economic deterioration.

Regulatory measures (governmental shields), technical solutions and technology are being implemented and expected to stabilise the market in the coming years, however suffering from much higher cost of energy production than before the energy crisis. Support continues for the legacy RES systems, with a particular focus on offshore wind farms and biogas plants. Any further growth of RES sector, and especially large PV and wind farms, will only be possible with the simultaneous expansion and upgrading of the energy supply grid. New RES connections have already been facing market entry barriers of technical and financial nature, such as long lead times and high costs of establishing the grid connection.

The HV and MV lines require major investment in order to absorb energy from the new and scattered plants. The increasing share of sources that lack any production adjustment leads to the instability of the overall energy system and higher price volatility that may depend on the weather and result in forced shutdowns of RES sources from time to time, in favour of conventional plants which guarantee the stability of supply. These issues can be solved only in the mid-term perspective.

Another challenge is the decarbonisation of the heat sector, including district heating systems in towns and cities. It will be rolled out by developing sources that use gas, alternative fuels, renewable sources or electrified heat generation.
Looking ahead to 2025, the distributed production model will become an evident trend also in the area of district heating. Its optimisation and decarbonisation will involve decentralised sources of heat.

In the coming years, the energy industry will also need to invest in digitised management of the distribution as well as its greater flexibility, for example development of more energy storage facilities. In addition, the wider use of remote meter technology will require high investment. By the end of 2025, there will be 35 % meters with remote readings implemented, with a further increase in next years. The technology is a breakthrough permitting a more flexible approach to energy management and it will enable new products and services to be offered on the electricity market.

The recent pressure towards decarbonisation of the energy industry is gaining momentum yet coal is going to be the primary fuel domestically until 2025.

Mid-term outlook

The increasing capacity and share of RES sources require the development of systems that will be capable of compensating for changes in RES production while sustaining the system during periods of shortage. This role will be performed by peak-demand gas sources, pumped storage hydroplants and energy storage facilities featuring electrochemical technology. Over the coming years these components of the overall energy system will be improving in terms of their capacity and volume. The first nuclear systems that use the small modular unit (SMR) technology are also expected to appear in the horizon of next 8 to 10 years.

Looking ahead to 2035, the use of coal in the energy system is expected to be nearly eliminated and replaced by nuclear facilities. By this time also the coal-fired district heating and cogeneration will have been eradicated and replaced with biomass sources or, temporarily, gas. This task will require the expansion of the gas network and gas storage facilities. High energy prices will naturally favour improvements in energy efficiency. Keeping the competitiveness in production and services, combined with the rising cost of energy will translate into increasingly modern and energy-efficient technologies, equipment and consumer behaviour.

In this timeline, further expansion and upgrading will be needed in transmission and distribution networks. More generation from distributed sources, including ‘prosumers’, will demand a grid that is adaptable to meet greater variability and bi-directional flows.

In the mid-term horizon, wind capacity in the Baltic Sea will be developed further as it is a relatively stable source of energy, further impacting the process of transitioning the domestic transmission grid.


Long-term horizon

In 2035 to 2050, solutions leading to full climate neutrality will have been implemented across all sectors of the economy. The backbone of the energy system will be nuclear power and RES sources, with heating based on biomass and heat pumps. E-mobility will be developing further and the use of hydrogen is also expected, especially in heavy transport and industrial applications. During overcapacity, hydrogen will be produced in systems that will be linked to RES sources. Energy storage, pumped storage hydroplants and hydrogen storage facilities will become essential features of the overall system security.

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