By 2036, the coal resources needed to operate the Belchatow coal-fired power plant in Poland will run out.
By the way, this is the largest coal-fired power station in Europe, which means that it is not a trivial question.
So lawmakers and analysts are now trying to figure out what to do when, in less than 15 years, there won’t be enough coal left to keep the plant operational.
Unsurprisingly, renewable energy may be the solution.
According to a new Bloomberg report, this power plant could actually replace most of its coal-fired generation with renewables and batteries, and do so in a way that would reduce overall power system costs in the region where the plant is located while now energy security.
Here are some highlights from the report:
- The war and the energy crisis have boosted demand for lignite production, but the medium to long term outlook for this fuel is bleak. The mines that serve Belchatow are expected to be depleted by 2036, but BloombergNEF predicts that lignite production in Poland will fall well before that. Lignite is a carbon-intensive fuel, and lignite production in Poland drops by 85% over the period 2021-2030 in the BNEF baseline scenario outlook for Poland. A 75% decline is seen even as high gas prices persist, due to rising carbon prices and renewable capacity additions.
- Much of the production at Belchatow could be replaced by new production capacity before 2030, although some lignite units remain as back-up capacity. Belchatow is located at a major grid connection point, which could be repurposed to support up to 6 GW-11 GW of wind and solar plus 1 GW-1.5 GW of new firm capacity.
- Freeing up part of Belchatow’s existing grid connection before 2030 to new technologies has the potential to maintain Polish energy security and create new economic opportunities in the region. Some 2.5 GW of solar capacity and 1.5 GW of wind capacity could use the connection by 2030 following the retirement of 1.8 GW of lignite capacity. Like lignite, solar and wind generation are not dependent on global commodity markets once built. These technologies can provide a cheaper electricity mix and reduce emissions, without compromising energy security.
- New capacities developed elsewhere in Poland will weaken the economics of lignite production in Belchatow. A total of 6 GW of offshore wind is expected to come online by 2030 and 4 GW of gas-fired power plants are under development. However, a large part of it is built in northern Poland, far from the centers of electricity demand in the south.
- Belchatow is located in central Poland, and the new capacity built there could reduce the pressure on the Polish network. Up to 80% of Belchatow’s generation could be replaced by 5.7 GW of onshore wind and 5 GW of solar located within a 20 km radius–Radius of 30 km from the current factory. Such a new generation would also mitigate the risk of the valuable network infrastructure around Belchatow being blocked.
- Proven clean technologies, combined with batteries and a smaller power plant powered by gas, biomass or waste, would offer the most economical and energy-secure replacement. Solar and wind power are the cheapest available technologies and when co-located can achieve a stable generation profile, given local resources. By 2036, 6.4 GW–10.7 GW of wind and solar power including 1 GW–1.5 GW of firm capacity could replace 80% of lost production at Belchatow.
- A local wind and solar power build would also not preclude potential investments in emerging energy technologies in the region. This could include a small-scale nuclear reactor, a hydrogen power plant or new forms of energy storage. These technologies are not mature enough to be available today and are unlikely to contribute significantly to Poland’s energy security by 2030, but they do present long-term opportunities for the local economy as the lignite production declines and eventually stops.
The transition to renewable energy will not only provide environmental benefits, but also economic and security ones.
As an investor in the energy sector, this naturally arouses my interest, as such a transition could offer the opportunity to earn a few dollars from companies that are already building and operating renewable energy installations in Poland.
Here are some renewable energy companies currently operating in Poland:
- Northland Power (TSX-NPI)
- Acciona (OTCBB:ACXIF)
- EDP Renovaveis SA (OTCBB: EDRVF)
- Iberdrola SA (OTCBB: IBDRY)
- Nordex SE (OTCBB: NRDXF)
- Ørsted A/S (OTCBB: DNNGY)
- Siemens Gamesa Renewable Energy SA (OTCBB: GCTAF)
- TotalEnergies SE (NYSE: TTE)
- Vestas Wind Systems A/S (OTCBB: VWDRY)
While the threat of climate change may not be enough to drive a transition from fossil fuels to cleaner energy, supply constraints are. And that is why, dear reader, Europe’s largest coal-fired power plant will eventually be replaced by renewables and energy storage.
And by ultimately, I mean in less than 15 years.
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