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2023

Global Onshore Wind Market Report

Key Regional Markets

Poland

Onshore Wind Capacity

15.3 GW

GDP (Current Prices) USD (2022)

688.30bn

GDP Growth Forecast (constant prices) (2023-2027)

2.6%

Currency

PLN

Country Credit Rating (S&P)

A-

Renewable Energy capacity (2022)

21.2GW

Onshore Wind Share in Renewables (2022)

38%

Renewable Energy Target

Targets to include 74% of zero-emissions sources for the installed capacity by 2040 and cover around 73% of Poland’s electricity demand

Poland has made significant progress in its renewable energy sector in recent years. According to IRENA, the country has seen a 29% increase in its cumulative renewable installed capacity between 2021 and 2022, one of the highest in the last decade. This is due to the installation of about 4.8GW of solar PV and onshore wind, which has taken the renewable installed capacity to 21GW as of 2022 (IRENA, 2023). These positive developments are the result of supportive legislative policies and infrastructural advancements. 

The ambitious targets set forth under the 2040 Energy Policy of Poland to phase out coal and reduce greenhouse gas emissions have further encouraged the transition to a renewable-based energy system (ITA, 2019). The onshore wind sector, in particular, has the potential to contribute substantially to this transition thanks to recent amendments to the 10H distance rule and the various incentives and supports offered by the Polish government to developers and investors. 

Pros

  • The Government’s steps to amend the 10H turbine distance rule to 700 meters

  • Regulatory initiatives to extend the two-way CfD auction from 2021 to 2027 acted as a significant catalyst

Cons

  • Increased competition from solar PV and offshore with specific policies solely curated for the two technologies

  • Non-withdrawal of about 99% land restrictions in the advent of streamlining 10H distance rules reflects uncertainty

Renewable Energy Mix

Source: IRENA Renewable Capacity Statistics July 2023

Over the past ten years, onshore wind has been the primary source of renewable energy in Poland. However, in 2022, solar PV surpassed onshore wind by adding more annual capacity (a 12% increase compared to the previous year), which led to solar PV becoming the leading renewable energy source (IRENA, 2023). Due to the restrictions imposed by the turbine distance rule and the growing significance of solar PV and offshore projects, onshore wind’s share in the renewable energy mix decreased by 7% in 2022. Despite this, onshore wind added over 1 GW of new capacity, bringing its cumulative capacity to about 8 GW. In contrast, offshore wind did not have any presence but is expected to grow between 2023 and 2027, with a projected capacity of 2 GW. The government plans to hold four competitive support auctions and aims to achieve a target of 12 GW by 2040. The Polish authorities also have plans to hold a series of auctions between 2023 and 2027 to boost onshore wind capacity and have revamped distancing rules to help it regain its lost stature (Recharge News, 2023).

Installed Capacity: Status and Trend

Trend in Installed Onshore Wind Capacity

Source: Preqin Global Report 2023: Private Equity

Onshore wind capacity additions have risen after a historic drop during 2017-2018. In 2022, approximately 1GW of new capacity was installed, the highest in the past six years (IRENA, 2023). This is mainly due to the auctions scheduled by the government and positive investments from public and private institutions. It is worth noting that recent onshore wind installations have remained insignificant due to legislation restrictions on land ineligibility for wind farms, alongside competition from solar PV and offshore wind development. Nonetheless, the industry can rebound following the forecasted 2.2GW of new installations to be commissioned between 2023-2027 (Wind Europe, 2023).

Demand Drivers

Poland has set stringent targets for decarbonisation in its Energy Policy until 2030 and Energy Policy 2040. The policies include a commitment to reduce greenhouse gas emissions, eliminate conventional energy sources, and increase the share of renewables in final electricity consumption to at least 23% by 2030 (IEA, 2021). However, Poland’s onshore wind industry has struggled due to the 2016 10H distance rule for turbine installation. This rule has been liberalized, reducing the distance to 700 meters and allowing developers to access 4-5% more of Poland’s land for onshore wind (Wind Europe, 2023). This change will help Poland achieve its target of 20GW of installed wind capacity by 2040.

The 2016 Renewable Energy Act of Poland, amended in 2018, established an auction system for renewable development (IEA, 2016). Between 2016 and 2022, the auction system helped award about 5.34GW to onshore wind, following a two-way CfD scheme (Energy Regulatory Office, 2023). The Polish government has extended the scheme from 2021 to 2027 to facilitate the installation of large-scale onshore wind capacities and ensure a quicker transition. The government plans to auction 13GW of renewables between 2023 and 2027, with 3GW allocated for onshore wind and the maximum allocation for solar PV. The government has an estimated budget of PLN142.38 billion for auctions to be held in the next four years, creating a positive outlook for developers and investors (PV Magazine, 2022). 

Market Opportunity

The Polish renewable sector’s long-term growth potential is evident from the increase in investment activity. In June 2022, the European Commission approved EUR35.4 billion for the Polish National Recovery and Resilience Plan (NRRP) to support green and digital transition for dealing with the aftermath of the pandemic (European Commission, 2022). Additionally, the European Investment Bank (EIB) granted a Green Loan of PLN304 million for the construction and maintenance of six onshore wind farms in Poland with a total nominal capacity of 150MW in Q12022 (IEA, 2022). Iberdrola, KGAL Investment, Octopus Renewables, and INKA group are some of the corporates that are ramping up their investment activities to increase Poland’s onshore wind capacity figures in their sustainable portfolio.

Apart from funds, contracts for difference (CfD) have long been deployed as an opportunity and support for developers in the Polish onshore wind industry (Energy Regulatory Office, 2023). However, the price differentials between conventional power and renewable energy generation have recently caught the attention of corporations and energy developers.

In February 2023, UK-based energy investment firm Renewable Power Capital (RPC) announced the construction of a 1GW onshore wind farm in a joint venture with Polish renewable energy company Tundra Advisory (Power Technology, 2023). At the end of 2022, Eolus mentioned acquiring an 86MW wind farm in Poland, expected to be commissioned by 2028 (Renewable Energy Magazine, 2022). Corporate PPAs are also expanding in Poland without subsidies since its first-ever PPA in 2018. The segment has significantly grown with recent deals announced and signed by Qair Polska, RWE, and Ecoz in 2023.

Post the liberalisation of old laws and the scheduling of new auctions, large-scale projects are expected to show significant traction. In this regard, the energy storage industry has substantial opportunities as storage utilities will scale up. In July 2022, the Polish State-owned power company PGE mentioned constructing an 800MWh BESS in Poland by 2030 (Energy Storage News, 2022). At the end of 2022, Claritas and system integrator Hynfra Energy Storage (HES) signed a framework agreement to install 500MW of utility-scale BESS in Poland to assist grid management (Energy Storage News, 2022). Therefore, by balancing the effects of intermittent generation, the increase in energy storage capacity is anticipated to promote the expansion of onshore wind and play a critical role in balancing a grid that must adapt to intermittent output.

Outlook

Source: BNEF Global Wind Market Outlook

According to BNEF’s projections, onshore wind installation will remain below 1GW between 2024-2027. However, this forecast may no longer be valid as it was made before the announcement of the easing of restrictions on wind farms and the scheduling of new wind auctions. The Polish Wind Energy Association’s target of reaching 20GW of onshore wind capacity by 2030 requires elevated contributions of about 1.7GW annual capacity additions (PSEW, 2022).

Poland’s onshore wind sector has several challenges affecting its expansion. Following the exemption of excise duty on coal and gas for residential usage, Poland’s non-renewable industry began to dominate its energy sector with a 63% share. Renewable contributions are insufficient against the rising energy demand, leading to the resurgence of coal-fired generation and the expansion of nuclear energy. Concurrently, solar PV and offshore wind have become stiff competitors as several policies and funds are solely developed to support these segments. This is evident from the competitive auctions designed to reach a target of 18GW of offshore wind by 2040 (Recharge News, 2023).

Despite these challenges, Poland’s land-based wind has a strong outlook as the merchant and PPA segment flourishes in the advent of declining costs for onshore wind development compared to conventional sources.

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