Poland

Poland

'Local knowledge key' in Poland

State-controlled utility PGE Group and oil refiner PKN Orlen's understanding of their domestic market will be crucial if they are to be successful in developing their combined 3.7GW of offshore wind farms in the Baltic Sea.

The two companies knowledge of Polish firms' competences and expertise will be crucial
The two companies knowledge of Polish firms' competences and expertise will be crucial

The firms agreed to cooperate on developing four projects, sharing knowledge, collaborating on design and construction, and finding synergies to drive down costs.

They also want to maximise the share of local companies in the supply chain.

PGE subsidiary PGE Baltica wants to build three projects with a combined capacity of 2.5GW by 2030, while PKN Orlen’s Baltic Power is in the early stages of planning a 1.2GW site.

Both companies will also continue to look for other strategic partners as they develop these projects, they added.

Track record

Neither PGE or PKN Orlen has any experience in offshore wind.

"Naturally, that will be a disadvantage," Wood Mackenzie Power and Renewable’s senior offshore wind analyst Søren Lassen told Windpower Monthly.

"However, they have a deep understanding of the market, its resources and how to access, and eventually mobilise it.

"It’s not only important to have an understanding of how the market is today, but also what it could be."

Poland currently has no operating offshore wind projects, but the Polish government’s energy policy envisages 10GW of capacity by 2040.

Under the country’s Renewable Energy Act, offshore wind is eligible to compete at auction against hydro, biofuels and geothermal projects, but no wind farms were entered into a tender in 2018 as none were sufficiently advanced.

Developers are also waiting for an offshore wind act with a technology-specific support mechanism.

This will give would-be developers like PGE and PKN Orlen a route to market in Poland, Lassen said.

The Polish Wind Energy Association (PSEW) said the act is due to be announced shortly after the forthcoming parliamentary elections.

It added that they expected the government to "remain more or less the same as now" after the elections, meaning there should be little disruption to the act.

Key questions surrounding the act include: What will offtake contracts look like? How stringent will local content requirements be? And, overall, will it make the Polish sector attractive enough compared to other markets?

"Offshore wind is already quite a consolidated market," Lassen said.

"For example, you have three or four OEMs who are expanding their global footprint and making important strategic decisions in order to capture the global growth.

"Poland is, in this case, one of many growing and global emerging markets. OEMs need to see where the demand is and whether they can expect it to continue."

Competition

In any future tender, PGE and PKN Orlen would face stiff competition from developers with more obvious offshore wind credentials. 

Equinor is developing three projects with a combined capacity of 2,760MW in a 50:50 joint venture with Polish energy company Polenergia (see below), while Portugal's EDP Renewables is also developing a 400MW project.

Lassen expects more companies — including experienced offshore wind developers — to target the nascent Polish market.

"The playing field has not been defined," Lassen said.

"There are a lot of uncertainties now, but when there is more certainty about the upcoming tenders, we will see more of a push from players coming into the market — both through acquisitions and greenfield projects."

PGE Baltic has some permits for its Baltica 1, 2 and 3 projects off the coast of Leba in the north-eastern Pomerania province. It is currently working to obtain environmental permits for Baltica 2 and 3, it added.

PKN Orlen’s Baltic Power, meanwhile, began environmental tests and wind resource measurements for a potential 1.2GW site in early 2019.

The partnership is part of a growing trend — a response to increasing globalisation and competition within offshore wind, Lassen said.

"Alliances bolster the competitiveness of the participating parties as it allows for synergies, and enables the parties to tap into a greater pool of resources and capabilities."

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