How to maintain Belchatow's energy future
Europe is going through its biggest energy crisis ever. The attention of decision makers is focused on ensuring energy and heat supplies in the coming months. Meanwhile, long-term challenges and problems in the energy sector that have not been solved before are only accumulating. One of them is the future of the largest power plant in Poland.
The lignite-fired Belchatow power plant is the heart of the Polish power system, the largest generator of electricity, but also the largest emitter of greenhouse gases in Europe. Belchatow urgently needs a transformation plan that focuses not on closure, but rather on replacement of generation capacity. The idea of a post-lignite Belchatow is critically important to Poland's energy security and essential if Poland is to meet its climate goals.
With a capacity of 5.1 GW, the Belchatow power plant is the sixth largest coal-fired power plant in the world and supplies one fifth of Poland's electricity. In Bełchatów, the end of mining is on the horizon as the lignite deposits are running out. The official date for the end of mining is 2036. Despite the temporary economic boom and high electricity prices, the crisis will be over in a few years and lignite-fired generation will become unprofitable. According to BNEF and Forum Energii analysis published in October, energy production from lignite in Poland will fall by 75% in the years 2021-2030, and the trend would not be reversed even under an assumption of high gas prices or lower CO2 prices.
For the preservation of the energy functions of the region and the energy security of Poland, as well as this part of Europe, a plan for replacement of the power plants with clean sources is crucial. It needs to take into account the existing resources in this particular location, build-out time and the potential of the grid infrastructure.
What are the possibilities of building new generation sources? The analysis of BNEF and the Forum Energii shows that the construction of new generating units should start as soon as possible in order to be able to start reducing the production of electricity from lignite by 2030. Renewable sources will play a key role. The report indicates that, from a land-use perspective, 11 GW of wind and solar capacity could be installed locally. Renewable energy sources are cheap, improve energy security and are possible to build in the Belchatow region. Wind, solar and batteries can replace more than 80% of the current production from lignite by 2036.
In addition to the RES potential, the report analyses investments in thermal power plants: gas-fired, biomass or waste-to-energy plants. For example, a solution that would have a similar effect of replacing Belchatow's current output could be 6 GW in wind and solar, combined with a gas, biomass or waste power plant. However, new low-carbon thermal capacity can only partially replace lignite; fuel availability limits the size of these projects. Gas-fired power plants are constrained by raw material prices and the lack of transmission infrastructure to Belchatow.
Nuclear power plants, due to their long investment period, will not replace the phased-out lignite units in time, even if their location was planned in the region. And so far, it is not. Small Modular Nuclear Reactors (SMRs) could be considered, but betting on this technology now is risky―there are no such reactors operating anywhere in the world yet.
Meanwhile, very little new generation capacity is currently planned in the Lodz region. The owner of Elektrownia Belchatow, the PGE Group, in the process of preparing the Just Transformation Plan, declared investments in PV of 600 MW and wind power plants of 100 MW. These would replace only 4% of the electricity produced from lignite in Belchatow in 2021. The scale of the plans thus falls far short of the region's potential and does not allow for replacement of the existing capacity. Moreover, the lack of plans for new capacity will disable the use of valuable transmission infrastructure. Although there are many arguments in favour of building new generation in the Belchatow region, a scenario in which new capacities will be built elsewhere in Poland cannot be ruled out. Therefore, it is necessary to start planning the energy future of Belchatow, irrespective of whether the investor will be the current owner of the power plant or whether others will also be involved in the process of construction of new sources. Belchatow, although currently crucial for the security of electricity supply, may unfortunately cease to play that role.
The transformation of a region matters first and foremost to its people. It has to be planned in such a way as to guarantee the use of human capital and highly qualified staff and reduce the risk of losing the livelihood of the region's inhabitants. The Belchatow mining and power generation complex employs over 6,000 people. Economically, the local economy benefits from the activities of the complex. It has roughly a decade of operation ahead of it. That is why the transition of the region has to start right now, especially that the Board of the Lodzkie Voivodeship already prepared a Just Transition Plan, which confirms that in the perspective of 2030, the extraction of lignite and production of electricity from this raw material will be reduced by three quarters. The Lodzkie Voivodeship now has a chance to benefit from the EU's Just Transition Fund, which has a pool of EUR 3.5 billion for Poland. It is these non-repayable funds which are supposed to allow for the preparation of a just transition―for economic diversification, keeping jobs in the region and changing the energy mix.
The Lodzkie Voivodeship, where the Belchatow power plant is located, has a chance to carry out a safe, fair and well-planned transformation towards a sustainable and low-carbon economy. The successful implementation of this process in Belchatow may become an example to be followed by coal regions around the world. Poland has a chance to move from coal to renewable energy sources without over-investing in gas. This plan may become a roadmap for the transition globally.
The Belchatow power plant plays an important role in the Polish power system. We can see it now, when the production from lignite (domestic and locally available raw material) increased by 7% year on year . This will be an important part of energy security this winter. But the outlook for lignite is bleak. Poland, in order to maintain the security of electricity supply, must prepare for a post-lignite future. These measures must be taken now, otherwise the region will lose its energy significance, the valuable grid infrastructure will turn into an stranded cost, and the Lodz Voivodhip will face the threat of another failed transition.
Aleksandra Gawlikowska-Fyk PhD, Joanna Maćkowiak-Pandera PhD
Date of publication: 15 November 2022