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Main conclusions

• 2022 was a year of an energy crisis triggered by Russia’s aggression against Ukraine and a decline in electricity generation in Europe from hydro and nuclear sources. Combined with fluctuations in supply, demand, and commodity prices caused by the COVID-19 pandemic, EU wholesale markets witnessed a steep rise in energy prices of up to 400 EUR/MWh.
• In Europe, including Poland, imports of energy raw materials from Russia have been radically reduced, which was and is important for cutting the Kremlin’s revenues, which are used to finance the invasion of Ukraine. However, imports of raw materials from other directions have increased.
• Poland’s dependence on energy imports is growing and hit a record of 43% in 2021 (10 years earlier, it was 31%). The cost of fossil fuel imports in 2022 reached a record high of PLN 193 billion (PLN 102 billion in 2021).
• As a result of the decline in domestic steam coal production, imports of steam coal reached a record high of 16.9 million tonnes. Supply constraints on coal, its rising price and high operating cost, as well as the declining availability of coal-fired power plants, resulted in a 4.7 TWh (-6% y/y) decline in coal-fired power generation.
• Unprecedented gas prices also forced a cut in the production of gas-fired power plants by 4 TWh (-25% y/y). The reduced output of conventional power plants was also due to an increase in output from renewable energy sources – from photovoltaics by 4 TWh (+102% y/y) and wind farms by 3 TWh (+19% y/y).
• Energy system security is deteriorating year after year. In 2022, the lowest capacity of centrally dispatched generation units (JWCDs) in more than a decade and the highest capacity losses were recorded, which translated into the lowest capacity reserve in 7 years at 1.4 GW (about 6%).
• Last year, Poland’s greenhouse gas emissions (GHGs) increased by 0.3% from 2021. The country now ranks 7th in the world in terms of specific emissions of the entire economy (2.84 tonnes of CO2/toe).
• Specific emissions of electricity generation amounted to 750 kg CO2/MWh in 2021, placing Poland in penultimate place in the EU. The decrease in the sector’s emissions between 2005 and 2022 is only 12%.

Chapter 1. Energy in Poland

• 85% of Poland’s final energy consumption is covered by fossil fuels.
• 45% of the energy consumed comes from coal: 36% from hard coal and 9% from lignite.
• Renewable sources provided 10% of energy, with as much as 8% coming from biomass (wood). Waterpower, photovoltaics, and wind power; geothermal and ambient heat covered 2% of energy needs.
• Over the last decade, a decline in the share of coal (-8 p.p.) and crude oil (-2 p.p.) is observed, while the share of natural gas (+3 p.p.) and renewable energy (+6 p.p.) has increased.
  
  

• Polish reductions in greenhouse gas emissions relative to 1990 are 15.7%. However, since 2005 (the year the emissions trading scheme began), it is only 1%.
• The EU average reduction from 1990 to 2021 is 29%. Relative to 2005, the decrease was 23.8%.
• Over the previous three decades, Germany has reduced GHGs by 38.7%. Even better (relative) results are observed in Czechia (-39.8%) and Slovakia (-44.4%).
  
  

• An increase in total energy consumption in the Polish economy has been observed for years. Over 10 years, domestic consumption has increased by 12% (495 PJ).
• At the same time, a reduction in the domestic supply of primary energy has been observed, mainly through a decline in the extraction of energy resources and slow RES development. In the previous 10 years, the supply dropped by 14% (-410 PJ).
• This means increasing dependence of the economy on energy imports from abroad.
  
  

• Import dependency is defined as the ratio of imported energy to final energy consumption.
• For years, the greatest import dependence has been observed in the case of crude oil: 96-97% of the crude oil consumed in Poland has been imported.
• In 2022, the estimated import dependency for natural gas was 78%, 4 p.p. lower than in 2021. Nevertheless, it increased by 8% (6 p.p.) over 10 years.
• 19% was the import dependence for hard coal in 2022 (Forum Energii estimate). This represents a decrease of 1–2 p.p. relative to 2021. However, it has increased by 18 p.p. over 10 years.
• The total dependence of the Polish economy on energy imports was 43% in 2021. In 2013, it was 32%.
  
  

• In 2022 Polish imports of energy raw materials amounted to PLN 193 billion. Relative to the previous year, this represents an increase of 117% (PLN 104 billion).
• Nearly half (48%) was the cost of importing natural gas (PLN 93 billion), 38% was crude oil (PLN 74 billion). The cost of coal imports amounted to PLN 26 billion, accounting for 13% of raw material import expenditures.
• In 2022, the value of raw material imports from Russia decreased by PLN 9.2 billion relative to 2021, and the country’s share of total import expenditures also decreased, from 57% to 25%. Despite this, Russia remained the biggest beneficiary of Poland’s dependence on imports, receiving revenue of PLN 48.6 billion in 2022.
• 14% of the revenues from imports flowed to Germany (PLN 27.1 billion), 14% to the US (PLN 26.4 billion), 12% was taken by Saudi Arabia (PLN 23.6 billion), and 35% was transferred to other countries, mainly Qatar, Norway, Kazakhstan, the UK and Australia combined.
  
  
  

Chapter 2. National Grid System

National balance

• Gross electricity production was 178.8 TWh in 2022 – 0.5% less than a year earlier and 8.7% more than 10 years ago.
• Gross electricity demand was 177.1 TWh – 1.9% less than in 2021 and 10.7% more than in 2013.
• For the first time in 7 years, Poland was a net exporter of electricity, with exports amounting to 1.68 TWh.
  
  

• For years, Poland has been importing electricity from Germany, the north (Sweden, Lithuania) and Ukraine, while exporting south, to Czechia and Slovakia.
• The highest average annual cross-border exchange capacity was observed from Germany (923 MW) to Czechia (995 MW).
• Through DC links (with Sweden and Lithuania), an average of 400–600 MW has been imported over the years.
• Average annual exports amounted to 105 MW in 2022.
• The highest average import capacity in recent years was observed in 2020 and amounted to 1,466 MW. This value is equivalent of the capacity of about one and a half of the output of the newest unit at the Kozienice power plant.

• Winter peak power demand in 2022 was 27.3 GW, around 0.3 GW less than the previous year. Summer power demand also declined, dropping to 23.8 GW, down more than 0.7 GW from 2021.
• The decline in peak demand, despite the increase in number of heat pumps, air conditioners and electric cars, can be partly explained by electricity savings due to its high price, especially for industry.
• Increasing prosumer self-consumption (summer peak) and the shift of some households to non-electric heating (winter peak) are also reasons for the declines.
  
  

• 2022 marks the fifth-lowest level of power reserve in the electricity system, at 1.4 GW. It is also the lowest in 7 years.
• The system’s achievable capacity rose to as much as 60 GW in December, averaging over year 57.4 GW.
• On average, unavailable capacity accounted for 52% of the achievable capacity – 13.5% was unavailable from centrally dispatched generation units (JWCDs), while the remaining 38.5% was unavailable from non-JWCDs and non-working RES.
  
  

• The available capacity of JWCDs fell to its lowest level in at least 10 years, to 20.4 GW. This means that the share of JWCD capacity in the system’s available capacity has fallen from 56% in 2013 to less than 36% in 2022.
  
  

• Gross electricity consumption amounted to 177.1 TWh in 2022; consumption by end users was 15.5% lower, at 149.6 TWh.
• The remaining 27.5 TWh includes consumption for power plants’ own needs (15.9 TWh, 9% of gross consumption) and losses in transmission and the distribution grid (10.1 TWh, 5.7%).
• Pumped storage units required 1.5 TWh of electricity in 2022 (0.8% of gross domestic consumption). These units produced 1.1 TWh, so the efficiency of these energy storage units was 70%.
  
  

Generation capacity

• 60.0 GW was the achievable capacity at the end of 2022. This is 5.4 GW more than a year earlier.
• The share of RES capacity increased to 38.3% (from 32%).
• At the end of 2022, the capacity of RES exceeded that of coal-fired power plants. The significance of this fact is symbolic, due to the different operating characteristics and functions provided in the system of these sources.
• Photovoltaics (53%) is responsible for more than half of RES capacity. 40% is wind power.
• No JWCD (centrally dispatched unit) was terminated in 2022, despite the notification of two units in Rybnik for closure.
• The decline in the capacity of coal and lignite power plants is due to a reduction in the achievable capacity of existing units.
• Achievable capacity in natural gas plants increased in 2022 by 0.5 GW, mainly due to commercial CHP.
• The largest increase in capacity, by 5.5 GW, was in RES, particularly in solar power (4.4 GW). The increase in wind power capacity is mostly due to the realization of investments concluded in RES auctions in earlier years.
  
  

• The achievable capacity of conventional sources has fluctuated in the 32-35 GW range for years, with a decrease in the last year of 0.1 GW to 35.2 GW.
• Over the 10-year period, the total achievable capacity increased to 60 GW – an increase of 21.4 GW, or 55%.
• The capacity of conventional units increased by 4.1 GW (+13%), most of it from gas sources (by 2.8 GW, +254%). Lignite-powered capacity decreased by 1.2 GW (-13%).
• RES capacity increased by 18.1 GW over the decade, from 4.9 GW to 23 GW (+372%).
  
  

• At the end of 2022, the capacity of microinstallations exceeded 9.2 GW. This represents an increase of more than 52% y/y.
• This capacity consists of more than 1.2 million prosumer installations (+41.7% y/y) – 99.98% are photovoltaic installations.
  
  

• Estimated total electricity production from microinstallations is about 7.4 TWh.
• Thanks to the development of community energy, about 1.8 TWh of electricity (about 1% of national production) did not have to be sent through the grid.
• 5.5 TWh of electricity was fed into the grid by prosumers. This corresponds to 3.1% of national generation.
  
  

Electricity generation

• 70.7% was the share of coal in gross electricity generation in 2022 (1.7 p.p. less than in 2021).
• For the first time, production from RES exceeded 20% of the mix and amounted to 20.6%, thanks to record production of 36.8 TWh and reduced (by 1.9%) demand for electricity.
• Production from natural gas reached its lowest level since 2017, due to record high gas prices on global exchanges.
• Production from photovoltaics doubled relative to 2021, to 8.0 TWh.
• Gas and coal-fired capacity recorded the lowest-ever capacity factors.
• Production from natural gas fell by 4 TWh (-25% y/y), and from hard coal by 4.7 TWh (-6% y/y). This is a result of high prices for these fuels and increased production from RES, with reduced electricity consumption.
• Production from lignite increased by 1.3 TWh (+3% y/y).
• Among renewable sources, photovoltaic power generation grew most rapidly (+102% y/y, +4 TWh), while biomass sources recorded the largest decline (-11% y/y, -0.5 TWh), due in part to the cutoff of fuel supplies from Belarus.
• Production from wind farms increased by 19% y/y (+3.1 TWh), or 7 p.p. more than the capacity increase alone, thanks to more favorable wind conditions in 2022.
• Pumped storage power plants were used at record levels, 38% more than in 2021.
  
  

• Gross domestic electricity production amounted to 178.8 TWh, 0.5% less than a year ago.
• Over a 10-year period, electricity generation increased by 8.7%, from 164.4 TWh in 2013.
• Production from conventional sources fell by 4%, from 146.9 TWh in 2013 to 140.9 TWh. Production declines were recorded from hard coal (-0.9 TWh, or -1%) and lignite (-9 TWh, or -16%), while production from gas sources increased (by 7.3 TWh, or 169%).
• Generation from renewable energy sources increased by 117%, from 17 TWh in 2013 to 36.8 TWh.
  
  

• In 2022, 36.8 TWh of electricity was produced from RES – 20% more than in 2021.
• Wind power was responsible for more than half of the production from RES (53%) in 2022, solar PV accounted for 22%, and biomass for 12%.
• The largest increase, aside from solar PV, was in wind generation – up 222%, from 6 TWh in 2013 to 19.4 TWh in 2022. Declines were recorded in biomass co-firing, down 57%, and hydro generation, down 19%.
  
  

• The year 2022 was the most expensive ever on European electricity exchanges.
• In the third quarter, prices were boosted to record levels by panic caused by the tense situation in European power systems. The drought in France further reduced the already low generation from nuclear reactors due to repairs, an embargo on Russian coal was imposed, 3 of the 4 lines of Nord Stream were destroyed, which, combined with the earlier shutdown of the Yamal gas transmission line, pushed gas prices on the TTF to more than 340 EUR/MWh.
• The decline in exchange prices at the end of 2022 is mainly due to the drop in European exchanges for natural gas, which sets electricity prices in most EU countries. The decline was made possible by a record high filling of gas storage facilities before the winter season.
• Poland, with a smaller share of gas-fired power generation in its mix, despite the high price of CO2, proved to be a cheaper market than most of its neighbors, apart from Sweden, which has an electricity mix based on nuclear and hydro sources.
  
  

Chapter 3. Energy raw materials

• In 2022, steam coal imports totaled 16.9 million tonnes – 7.9 million tonnes more than in 2021.
• 34% (17% each) of the imported coal came from Kazakhstan and South Africa; 15% came from Colombia, with only 13% coming from Russia. As much as 37% came from other countries, mainly Australia and Indonesia.
• In 2022, 2.1 million tonnes of steam coal were exported. The main customers were Czechia (55%), Ukraine (18%), Germany (12%), and Slovakia (8%).
  
  

• According to Forum Energii estimates, hard coal consumption in 2022 amounted to about 66 million tonnes, down about 4 million tonnes (-5.9% y/y) from the previous year.
• Net imports increased by 8.5 million tonnes (up 143.2%; to 14.5 million tonnes), mining fell by 2.5 million tonnes (down 4.4%; to 52.8 million tonnes), so according to estimates, about 1 million tonnes were put on the heap (increased stocks).
• Over the 10-year period, hard coal consumption fell by 13 million tonnes (-16.4%), mining fell by 24.2 million tonnes (-31.4%), and net imports increased by 14.8 million tonnes.
  
  

• Nearly half (49.6%; 28.9 million tonnes) of steam coal was used in 2021 for electricity generation. A quarter (24.4%; 14.2 million tonnes) was used to produce heat.
• Households consumed in 2021 9 million tonnes (15.4%).
• Estimated consumption of steam coal fell by about 9% y/y (about 5.5 million tonnes) to about 53 million tonnes in 2022.
• In 2021, relative to 2020, the consumption of steam coal increased by 12.1% (6.3 million tonnes), but the share of each category followed a similar pattern. Only the share of electricity production increased, by 3 p.p.
• Compared to 2013, hard coal consumption fell by about 13 million tonnes (-19%) in 2022.
  
  

• 44.8 million tonnes of hard coal were consumed by power plants, CHP, and heating plants in 2022. This is a decrease of 1.8 million tonnes against 2021, or -3.7%.
• In 2022, the commercial power industry consumed 36.5 million tonnes of coal, of which 29.7 million tonnes were used for electricity generation. Industrial power generation consumed 3.4 million tonnes (mostly for heat – 2.8 million tonnes), and heating plants consumed 4.9 million tonnes.
• Coal consumption fell in every category of consumption, but the most for heat production in commercial units (-9.1%; -0.7 million tonnes).
• About a third of the hard coal (32.4%, or 14.5 million tonnes) was used for heat production. The remaining 67.6% (30.3 million tonnes) was used to produce electricity.
  
  

• In 2022, natural gas imports (both via pipelines and LNG) amounted to 15.4 bcm, 3.1 bcm (-17% y/y) less than in 2021.
• 29% of imported natural gas came from Germany. Other significant import destinations were the US (23%), Russia (19%), and Qatar (15%).
• Imports from the US rose by 118% from the previous year, while those from Russia fell by 72%.
• In 2022, 0.6 bcm of natural gas was exported. More than two-thirds (67%) flowed to Ukraine. The remaining 23% flowed mainly to Germany (15%) and Czechia (12%).
• LNG imports accounted for a record 40% (6.2 bcm after regasification) of gas fuel imports. The main suppliers were the US (55%) and Qatar (37%).   
  
  

• According to Forum Energii estimates, in 2022 natural gas consumption fell by 3.6 bcm from the previous year (-17% y/y), to 17.4 bcm of high-methane gas equivalent.
• Net imports fell by 3.4 bcm (down 19.4%; to 14 bcm), extraction is estimated to have remained unchanged (4.4 bcm), so inventories increased by 0.5 bcm. By the end of 2022, the storage level reached a record 96.55%.
• Over the 10-year period, natural gas consumption increased by 1.4 bcm (+8.6%), production decreased by 0.6 bcm (-11.2%), and net imports increased by 2.3 bcm (+19.6%).
  
  

• The largest consumer of gas in Poland is industry, which in 2021 was responsible for 41% of domestic consumption For years, the sector has been responsible for 41-48% of demand.
• Households were responsible for a quarter of Poland’s natural gas consumption in 2021, at 191.2 PJ.
• The largest increase in gas consumption in 2021 relative to 2020 was in households (by 30.3 PJ, +19% y/y) and in other customers (by 17.7 PJ, +24% y/y).
• Estimated consumption of natural gas fell by about 12% (about 88 PJ) to about 630 PJ in 2022.
• Compared to 2013, natural gas consumption increased by about 55 PJ (10%).
  
  

• 117.3 PJ of natural gas was consumed by CHP and heating plants in 2022. This is a decrease of 32.4 PJ from 2021, or 21.7%.
• 55.3% (64.9 PJ) was used for heat production. The remaining 44.7% (52.5 PJ) was used to produce electricity.
• Relative to 2021, when the share of electricity to heat was close to a 2:1 ratio, this means a decline in electricity production, a byproduct of CHP, while covering thermal needs.
• Most of the reduction in gas consumption in the electric power and district heating industry took place in electricity generation in commercial CHPs (-40% y/y) and industrial CHPs (-19% y/y), mainly for heat (-27% y/y).
  
  

• In 2022, Poland’s crude oil imports amounted to 25.1 million tonnes, 1.8 million tonnes (+8% y/y) more than in 2021.
• Despite a 15% y/y decrease in imports from Russia, it remained the dominant import destination at 47% (11.7 million tonnes) of imported raw material. The rest came from Saudi Arabia (28%; 7.1 million tonnes), Norway (11%; 2.8 million tonnes) and the UK (6%; 1.5 million tonnes).
• Poland exports almost no crude oil. The only flow in 2022, an insignificant stream (0.2 million tonnes), was to Germany.
  
  

• In 2022, every energy commodity, on every exchange, scored multiple corrected records.
• Natural gas on Europe’s TTF exchange (and therefore on Poland’s correlated TGE) was most affected. Smaller increases (but still record high) were recorded on the US Henry Hub.
• The European market has been hit hardest, due to the highest import dependence on raw materials from Russia, dynamically reduced by the change in attitude towards this partner and the sanctions imposed on Russian crude oil, gas, and coal.
• Unpredictable factors, such as the breeching of 3 of the 4 Nord Stream pipelines, also had a major impact on market sentiment.
• Relative to the end of 2021, in December 2022, Polish coal (PSCMI1) was 106% more expensive, while European coal (ARA) was 143% more expensive.
• Relative to the (already very expensive) price in December 2021, at the end of 2022 natural gas on the Polish exchange (TGE) had become 39% more expensive, the European exchange (TTF) was 27% more expensive, and the US exchange (Henry Hub) was 106% more expensive.
  
  

Chapter 4. Impact on climate. Emissions

• In 2021, specific emissions of electricity generation Poland were 750 kg CO2/MWh, one of the highest in the European Union.
• Such a high carbon footprint has and will continue to have an impact on the industry due to the increasing importance of monitoring the carbon footprint in production, which must be reported. High CO2 prices also significantly increase the cost of electricity generation, which may translate into high electricity prices on the wholesale market.
  
  

• Despite a 40.6% reduction in GHG emissions (relative to 1990), Poland’s energy sector is and always has been one of the most carbon-intensive in the European Union.
• The EU average reduction from 1990 to 2021 is 45%. Denmark boasts the greatest success, with reductions in GHG emissions from the power industry reaching 81%. However, it should be noted that due to Denmark’s size, location, and connection to its neighbors, it is not a reference country for Poland.
  
  

• In 2021, most GHG emissions came from electricity and heat production: 152.3 million tonnes of CO2eq, or 37.7% (+2.6 p.p. y/y) of total gross emissions.
• Transportation and industry were responsible for 68.2 (16.9%; n.s.) and 63.4 Mt CO2eq (15.7%; -0.8 p.p. y/y), respectively.
• Households emitted 34.4 million tonnes of greenhouse gases (8.5%; -0.5 p.p.).
• Emissions from agriculture amounted to 33.7 million tonnes of CO2eq (8.3%; -0.8 p.p.).
  
  

• According to Forum Energii estimates, gross emissions in 2022 increased by 0.3% relative to 2021 and remained above 400 million tonnes of CO2eq. About 403 million tonnes of CO2eq were emitted in 2022.
• Land use, land use change and forestry (LULUCF) was responsible for absorbing about 21 million tonnes of CO2 equivalent, reducing net emissions to about 381 million tonnes of CO2eq.
• Relative to 1990 (the reference year for the European Union), gross emissions fell by 15.4%.
• Relative to 2005 (the year the ETS began), gross emissions fell by 0.7%.
  
  

• Hard coal comprised 64% of CO2 emissions from the power and heat industry in 2022 (95.5 million tonnes CO2; -4% y/y).
• Lignite was responsible for 32% of emissions (48.2 million tonnes CO2; +10% y/y).
• Production of electricity and heat from gaseous fuels was associated with emissions of 6.5 million tonnes of CO2 (-22% y/y).
• In 10 years, emissions related to electricity and heat production fell by 12%.
• During the decade, emissions from lignite fell by 20% (-12.4 Mt CO2) and from hard coal by 12% (-12.7 Mt CO2). CO2 emissions increased, however, from gas by 142% (+3.8 Mt CO2).