Renewable-energy developments in Poland to 2020

Renewable-energy developmentsin Poland to 2020

A. Oniszk-Pop�awska, M. Rogulska*, G. WisniewskiEC Baltic Renewable Energy Centre (EC BREC/IBMER) 02-532 Warsaw, ul. Rakowiecka 32, Poland

Accepted 26 January 2003

Abstract

The Polish ‘Development Strategy for Renewables’, approved by the Council of Ministersin 2000 and by Parliament in 2001, called for a 7.5% contribution of renewable energy to totalprimary-energy production in 2010, and 14% in 2020 as development targets for renewables.

The purpose of this project was to investigate further what this Strategy meant in terms of thetypes and amounts of renewable-energy (RE) systems that would need to be installed and thesupport mechanisms that would need to be put in place to enable this to happen. Develop-

ment scenarios for RE to 2020 were elaborated and their financial, environmental and socialimplications were calculated with the Strategic Assessment Framework for the Implemen-tation of Rational Energy (SAFIRE) computer model, devised by Energy for Sustainable

Development Ltd (ESD, UK).# 2003 Elsevier Ltd. All rights reserved.

Keywords: Renewable energy; Development strategy; Simulation; Externalities

1. Introduction

The Polish government’s ‘Development Strategy for Renewables’, approved bythe Council of Ministers on 5 September 2000 and by the Parliament on 23 August2001, called for a 7.5% contribution of renewable-energy to total primary-energyproduction in 2010, and 14% in 2020 as development targets for renewables. Thesetargets were based on an analysis of European Union documents concerning thedevelopment of renewable-energy sources, including the EU White Paper ‘Energyfor the Future—Renewable Energy Sources’ and the ‘EU Campaign for take-off’, as

Applied Energy 76 (2003) 101–110

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E-mail address: [email protected] (M. Rogulska).

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well as on an analysis of available technical potential for renewables in Poland andthe ever-changing political, legal, tax and financial environment.There was a level of uncertainty in the analysis of the initial stages of the devel-

opment of renewable-energy sources in Poland due to a lack of steady economicdevelopment trends. Planning and forecasting difficulties were aggravated by thelack of appropriate tools in the form of proven models and simulation frameworks.

2. Aim of the project

The purpose of the project was to prepare development scenarios, for renewable-energy sources in Poland to 2020, in detail for specific technologies, and to evaluatetheir financial, environmental and social implications. The need to prepare thedevelopment scenarios is a consequence of the requirement to take them intoaccount in the programmes for implementation of the following government strat-egy documents: ‘Development Strategy for Renewables’,1 ‘Second State Environ-mental Policy’,2 ‘Sustainable-Development Strategy for Poland until 2025’3 andperiodical updates of ‘Notes to Poland’s Energy-Policy until 2020’.4

3. SAFIRE model

This is an engineering-economic bottom-up model for the assessment of first-orderimpacts of renewable and new non-renewable energy technologies at a national,regional or local level against a background of different policy measures and sce-nario assumptions. SAFIRE is a framework that consists of a database and a com-puter model that provides users with a tool to evaluate the markets and impacts ofnew energy technologies and policies. SAFIRE permits the balancing of the supplyof energy from various sources with the energy-demand requirements in the varioussectors of the economy. On that basis, energy supply-and-demand may be analysedat a local (a company, village, town), regional (city, local authority) and nationallevels.SAFIRE, software developed by Energy for Sustainable Development Ltd (ESD)

of the United Kingdom, has been used many times for the forecasting of the devel-opment of renewables in the European Union (e.g. TERES II—The EuropeanRenewable-Energy Study, CEC Altener). Based on the results of the TERES IIstudy, a 12% contribution of renewables to the energy balance in 2010 was proposedin the EU (White Paper ’97). SAFIRE was also used to a very limited extent for theforecasting of development of renewable-energy sources in Poland in 1995 (using1993 as the base year).

1 Ministry of Environment. 2000. Development Strategy for Renewables.2 Ministry of Environment. 2000. Second State Environmental Policy.3 Ministry of Environment. 1999. Sustainable-Development Strategy for Poland to 2025.4 Ministry of Environment. 1999. Notes to Poland’s Energy Policy to 2020.

102 A. Oniszk-Pop�awska et al. / Applied Energy 76 (2003) 101–110

In the present situation, there was a need to use SAFIRE again to generatedevelopment scenarios for individual renewable-technologies, using the assumptionscontained in the ‘Development Strategy for Renewables’ and in ‘Notes to Poland’sEnergy Policy until 2020’.There was also a need to investigate the implications of the harnessing of renew-

ables for social and economic development of Poland.Due to data availability, the base year data to be used with the SAFIRE model was

1997. To enable forecasts to be made by SAFIRE, macro-economic assumptions basedon an analysis of existing political and strategic documents were used. The earlierassessment ‘Economic and Legal Aspects of Utilisation of Renewable Energy Sourcesin Poland’ was a basic source material. The assessment was developed by the EC BalticRenewable-Energy Centre (EC BREC) for the Ministry of Environment towards theend of 1999/beginning of 2000 [1]. Macro-economic assumptions and political criteriawere based an the analysis of existing government documents. Simulations anddevelopment scenarios were generated by ESD and EC BREC, and the results wereverified by EC BREC in agreement with the Minister of Environment.The scenarios include additional factors, such as the creation of new jobs, reduc-

tion of emissions into the atmosphere, investments and necessary public expenditurefor the implementation of the scenarios. The results may be used directly in strategicplanning and may permit active and rational support of the development of renew-ables in Poland. Output data from SAFIRE may be included directly and utilised inmore general macro-economic models used for the examination and forecasting ofeconomic phenomena in a broader context of socio-economic development.The SAFIRE model consists of three separate modules.

� A database which allows a large number of base data and scenario data to beintroduced into the model.

� The SAFIRE calculation algorithm, which manipulates the data and pro-duces the scenario results.

� An output module, which allows a wide range of outputs to be generated.

The Input data concerning renewable technologies includes resources, installedpower, process parameters and capital costs.

� The resources recognise technical potentials of individual technologies, i.e.the amount of energy which could be generated in the absence of any marketconstraints.

� Installed capacities contain information on installations in operation in thebase year 1997 and on projects planned for the next few years divided intocentralised and decentralised : a centralised installation means a large facilitygenerating electricity and feeding into the grid, designed solely for electricitygeneration.

� Technological parameters include a plant utilisation factor in the case ofexisting installations, power curve, length of the heating season; other processparameters are covered by data for individual scenarios.

A. Oniszk-Pop�awska et al. / Applied Energy 76 (2003) 101–110 103

� Investment information contains unit costs per kW of installed power,operating costs (fixed and variable), heat and electricity selling prices as wellas the life of the system.

Input data concerning traditional technologies comprise information on capitalcosts, installed power and technological parameters. As was the case with renewabletechnologies, traditional installations are divided into centralised and decentralised.The latter include new technologies (fuel cells, heat pumps and cogeneration of fossilfuels). An additional category, namely data concerning district heating, is intro-duced. Centralised installations include: coal-, gas-, and oil-fired and nuclear-powerplants; new technologies: pressurised-water reactors, coal gasification power units,gas and steam power units. The process parameters and investment data contain thesame information as for renewable technologies.Fuel-sector data contain fuel prices and each fuel’s share in the individual sectors:

family households, industry, trade and services, agriculture and transport.Data referring to demand sectors present energy consumption by sector: domestic,

industry, commerce and institutions, agriculture and transport. The domestic sectoris characterised by the following data: consumption of hot water, consumption ofenergy for space heating, number of apartments and an average number of personsin one apartment, single house to multi-family house factor, the kind of fuel andmethod of energy supply. The data concerning trade and services are split into twocategories: the kind of services and surface area occupied. In addition, commerceand institutions are divided into: shops, offices, warehouses, canteens, hotels,schools, hospitals; surface area is classified into categories from 200 to 2000 m2.Industry and agriculture are divided into sectors with reference to the classifica-

tion used in Polish statistical yearbooks [3,4]. The number of plants, amount of heatand power used, hours worked in a year, and plant load factor were given. The fol-lowing information is also given for all the categories (with the exception of trans-port): energy consumption (space heating and cooling, hot water, powerconsumption, high- and low-temperature process heat). In the case of transport, theconsumptions of petrol and diesel oil are used.To enable scenarios to be modelled a second group of data is required; this sets

forth assumptions with respect to individual development alternatives of renewablesin Poland.The data for the scenarios are more difficult for the user to define than the base

data as certain assumptions are required to be made at a national level for thefuture. Scenario variables include the predicted energy-demand growth during thenext 20 years, fuel price and capital cost increase, energy contribution by technol-ogy, contribution of imported technologies, energy selling price and level of sub-sidies. Energy-market development simulations, carried out by SAFIRE, require alarge amount of detailed data to be introduced. The main sources were the publica-tions of the Chief Statistical Bureau and of the Energy Market Agency as well asarticles published in the ‘Rzeczpospolita’ national daily. Another source of infor-mation is government documents, for example ‘Notes to Poland’s Energy Policyuntil 20200 developed by the Ministry of Economy (2000) [2]. The assessment of


‘Economic and Legal Aspects of Utilisation of Renewable-Energy Sources inPoland’ developed by the EC Baltic Renewable-Energy Centre was a valuablesource of information too. Using data from established official sources links thescenario predictions from SAFIRE to existing plans and forecasts.The calculation procedure in SAFIRE allows, via the use of input data, the

assessment of a number of parameters, which in this report are as follows:

� production of renewable energy, GWh/year,� additional installed power, MW/year,� employment effects of additional installed power of renewable technologies,� carbon-dioxide emission reduction due to additional installed power ofrenewable technologies,

� total capital investment in order to attain the goals set forth in the scenario.

4. Selection of scenarios

The data collection and SAFIRE modelling activity looked at four scenarios:Reference, reflecting the present situation, Renewable-Energy Strategy, reflecting asubsidy based support structure for renewable energy, Obligation, modelling the useof premium electricity prices to support renewables in a market based system, andEnvironment Driven, using carbon taxes, subsidies and premium electricity prices tocreate a high growth renewables scenario.The selection of scenario assumptions was driven by existing information on the

social and economic situation, on the fuel and energy market, on a discussion ofopportunities for the development of renewables in Poland, and on the developmentanalysis of the sector in the European Union member states. The scenarios presentfour possible development directions of the renewable energy sector in Poland(Table 1). Comparison of the scenarios aims at the selection of an optimum devel-opment direction. Table 2 presents the summary of supporting mechanisms used formodelling of individual scenarios.The results show that, under the Reference scenario, there is little growth of

renewable energy; reaching only 3.5% of primary energy by 2020.The Renewable-Energy Strategy scenario shows steady growth in renewable

capacity, but does not hit the 7.5% renewable primary-energy or electricity targetsby 2010; achieving only 5.6% of primary energy and 6.1% of electricity. By 2020this scenario achieves 8.7% primary energy and 8.7% renewables.The Obligation scenario keeps pace with the Renewable-Energy Strategy scenario

in terms of primary energy, but does better in promoting renewable electricity hit-ting 7.7% by 2010 and 9% by 2020. This shows that the targeted obligation supportmechanism, favoured by the Ministry of Economy, should have the desired effect.The Environment-Driven scenario demonstrates the kind of support that is needed

to reach and exceed the targets. The primary energy and electricity targets for 2010are exceeded (8.5 and 10.8%, respectively are achieved). Renewable development


Table 1

Description of scenarios

Scenario
Assumption Aim
Reference (Ref)
Support of renewable technologies
remains at the level of the year 2000

(the date when this report was written);

no additional stimulating mechanisms

exist. It reflects the assumptions of the

‘‘Notes to Energy Policy to 2020’’ by

the Ministry of Economy

Show how renewables will develop without

additional support-mechanisms; this will

help answer the question whether

additional support-mechanisms are

necessary in order to attain the goals set

forth in the Strategy. This scenario served

also as a basis for calibration of the model

Renewable-Energy

Strategy (RES)

Steps, as in the Strategy are taken,

such as bigger subsidies, soft loans,

technology promotion

If analysis of the reference scenario shows

that current support mechanisms are

insufficient for the goals of the renewable

strategy to be attained, the RES scenario

can specify steps to be taken in order to

achieve the goals of the renewable strategy

Obligation (O)
A number of steps are taken to attain
the goals set forth in the renewable

strategy, but via an obligation on

power companies to purchase a

particular amount of energy from

renewables, as per the Ordinance of

the Minister of Economy dated

December 2000a

Compare results with RES scenario.

Find out which of two approaches

presented in the two scenarios is better

for development of renewable-energy

sector in Poland

Environment-

Driven (ED)

High environment priorities and

much greater funds for development

of renewables. Combines the

approaches of the RES and O

scenarios

Shows how the sector will develop with

strong financial support from the state

and private sector. Shows how the

renewable-energy sector could develop

if its promotion was made a priority and

resources applied

a Journal of Laws 2000 number 122 item 1336. Ordinance of the Ministry of Economy on the Buy-back

Obligation of the Electricity from Renewables and Cogeneration. dated 15 December 2000.

Table 2

Mechanisms supporting RE development in different scenarios

Mechanisms
Reference
scenario

Renewable-Energy

Strategy scenario

Obligation

scenario

Environment-

Driven scenario

Increase financial support from central

budget

p
p p p
Higher level of subsidies
p
p

p

p

p

p

p
Buyback obligation of electricity from
renewables for power companies

Higher selling price of electricity from

renewables to grid

p
p
Increased environmental charges
p
p

p

p

p

p
Promotion aiming at wider
utilisation of energy crops


continues to be maintained up to 2020 with 12.6% of primary energy and 13% ofelectricity coming from renewables.It must be stressed that the purpose of the analysis was to define the necessary

action which may be taken in order to increase the primary-energy contributionfrom renewables. Realistic assumptions were selected for Polish conditions. Neitherthe RES nor the Obligation scenario met the objectives of the Strategy. The RESScenario reached 5.6% and the Obligation one 5.9% contribution to primaryenergy. Only the Environment-Driven Scenario permits the goals of the Strategy tobe achieved (see Fig. 1).Usage of renewable energy which supports energy generation locally, is a job

creator, particularly for rural areas. The number of new jobs to be created due todevelopment of the renewable energy sector varies from 25,000 in 2010 under theRES Scenario to 40,000 under the Environment Driven. The following trends mustbe stressed:

� a great number of jobs is created in solid biofuel preparation, harvesting andtrading,

� investment facilities for Polish manufacturers of renewable energy plant maycreate another few thousand jobs.

Jobs are created both during construction of installations, later during operationof existing facilities as well as during biomass growing and harvesting. The resultsquoted in this document do not take into account a shrinking number of jobs inindustry utilising traditional energy-sources. As a greater number of jobs is createdduring construction of installations than during operation, certain technologies are

Fig. 1. Renewables as a percentage of primary-energy supply.


lesser creators of jobs during the latter period. These include solar, wind powersystems and small hydro-electric power plants which require a relatively low man-ning level during operation. Compared with utilisation of conventional energysources, renewable technologies are more labour-consuming. For example, whilstfor a traditional coal-fired power plant a factor 0.01–0.1 job /GWh is taken, this isfrom 0.1 to 0.9 jobs /GWh for renewable technologies. The greatest number of jobsis created by the utilisation of biomass, first of all of energy crops.SAFIRE also calculates environmental impacts resulting from implementation of

renewable technologies. The most important parameter is the reduction of carbon-dioxide emissions as a result of renewable technologies replacing traditional ones,with construction and installation, operation and maintenance of equipment inmind. There is also a net reduction in carbon dioxide emissions and percentagechange in those emissions on total emissions in Poland (see Fig. 2).Reductions in emissions of CO2 are rapidly becoming tradeable commodities. The

Kyoto Mechanisms allow for the valuing and trading of greenhouse-gas emissionsunder Joint Implementation projects and Emissions Trading.Implementation of renewable technologies will reduce greenhouse-gas emissions in

Poland by ca. 40 million tonnes per year in 2020, depending on the scenario chosen(Fig. 2). The advantages of such a reduction are not only environmental but alsofinancial. Every tonne of carbon dioxide not emitted to the atmosphere may gen-erate additional profit for the state from emission trading charges. Poland signed the

Fig. 2. Net reduction in annual carbon-dioxide emissions.


Kyoto Protocol, under which it undertook to reduce CO2 emissions by 6% to 2012.Since 1988 was taken as a base year with Poland’s economy being extremely energy-consuming at that time, Poland will achieve the assumed reduction even if no actionis taken to develop renewables. Consequently, when emission trading is introduced,Poland will be able to sell its emission reduction to countries exceeding their limits.

5. Conclusions

Renewable-energy issues were mentioned many times in documents formulated bycentral administration. There are however many discrepancies in them, both con-cerning the available potential of renewable energy, its importance for the entireenergy sector for the future as well as implementation methodology for Poland.Actions taken to date by national institutions, aiming at the development of renew-ables, have been inconsistent. The purpose of this report was to verify informationand projections contained in various government documents and the submission ofsimulation results. The latter may be used as a starting point for making moredetailed documentation, so that the Government will have a coherent vision of thedevelopment of renewables in Poland. So far, the most important governmentdocuments discussing renewable energy issues have been the Development Strategyfor Renewables and Notes to Poland’s Energy Policy until 2020.SAFIRE provides the strategy with more detailed information concerning the

required funding from the state, number of new jobs, carbon-dioxide emissions andamount of energy generated in particular years. The simulations confirmed that thestatements in the Development Strategy for Renewables were reasonable. They alsodefined quantitative benefits and the level of necessary support for the implemen-tation of the Strategy.As was shown by the simulations under the Renewable-Energy Strategy and

Environment-Driven scenarios, support mechanisms such as:

� subsidies,� soft loans,� higher price of energy exported to the grid,� formal and legal facilities,� active promotion of renewable technologies,

cause the renewable-energy contribution to total primary-energy to go up only pro-vided they are introduced in parallel. Their introduction in isolation does not bringabout any significant changes in the renewable-energy contribution to the totalenergy generated in the country. Lack of a systematic and comprehensive approach,as well as haphazard steps aiming at supporting the renewable sector, will not leadto dynamic growth of the market. Neither will they cause the sector to become anindependent competitive force in the energy market even in the long term.SAFIRE points to the technologies contributing the most energy at the initial

stage of implementation of renewable technologies. These include wind-power


engineering, utilisation of waste wood, industrial waste wood and solid agriculturalwaste (mainly straw). The simulations also show which technologies should befinancially supported in order to be developed. At a later stage of development ofrenewable technologies in Poland, after 2015, utilisation of the most economically-viable sources, such as biomass, will gradually peak at its market potential. At thatpoint in time, other, more expensive technologies will become more competitivefrom an economic viewpoint. These include geothermal and solar energy as well asthe utilisation of agricultural biogas.SAFIRE simulations showed that the state expenditure may be limited to a con-

siderable degree by the utilisation of the joint implementation (JI) and emissiontrading (ET) mechanisms, due to income earned by selling carbon-dioxide reduc-tions. A sizeable gain, not shown in the state profit and loss account, may be gen-erated by the introduction of a carbon tax on fossil fuels.

Acknowledgements

The research has been supported by the British Government Department forInternational Development ‘Know How’ Fund within a framework of a project co-ordinated by Energy for Sustainable Development Ltd, and ordered and approvedby the Polish Ministry of Environment. The authors are grateful the ESD Ltd teamfor their patience during long discussions and consultations concerning the SAFIREmodel application.

References

[1] EC BREC: Legal and economical aspects of renewable energy utilisation in Poland. Expert

apparaisal for the Ministry of the Environment, Warsaw 1999 [Polish].

[2] EC BREC, ESD Ltd: Usage of SAFIRE model for elaboration of renewable-energy development

scenarios in Poland till 2020. Report ordered by Ministry of the Environment, founded by British

‘Know-How Fund’, Warsaw, January 2001. 63 p.

[3] Statistical Yearbook of Poland. Central Statistical Office, 2000 [in English].

[4] Statistical Yearbook of Poland. Central Statistical Office; 1998 [in Polish].


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Renewable-energy developments in Poland to 2020