Poland poised for renewable energy awakening shows report

The past year has seen rapid progress on decarbonisation and renewable energy generation in Poland, with coal now accounting for 57% of electricity generation, down 11% in one year and down from 87% in 2015.

This was one of the key findings from the latest report from LevelTen Energy, Poland's Renewable Energy Awakening.

The report also highlights that wind and solar generation reached 26% of total electricity generation in 2024, and the country is poised to accelerate its green transition further, with clean energy developers and corporate sustainability generations pushing the electricity system forward through PPA transactions.

Also, Poland has done away with previous regulations which made it extremely difficult to site wind turbines in the country. The so-called “Wind Act” has nearly doubled the land available for wind development in the country.

The report focuses on: renewable development conditions in Poland, the country’s PPA market and renewable assets M&A and is based on data garnered from the LevelTen Energy Platform.

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Renewable development conditions in Poland

Easing regulations offer hope that Poland can continue to accelerate towards a decarbonised electricity system.

Other headwinds remain, including Poland’s outdated grid, which is struggling with an increasingly diversified generation mix including more intermittent renewable generation. In December 2023, record wind generation threatened to overload the grid, meaning power had to be exported to neighbouring countries.

Features of the market include:

• Grid connection woes: Poland’s primary Transmission System Operator (TSO) Polskie Sieci Elektroenergetyczne, or PSE, has been refusing grid connection requests in growing numbers. Securing grid connection capacity is time-consuming and complex: between 2015 and 2021, 6,000 connections were refused by operations, preventing as much as 30GW of new capacity from coming online.
• Additional development obstacles: Other obstacles have served to slow Poland’s energy transition, including difficulty obtaining permits, challenges securing financing for renewable energy projects and in particular restrictions around wind power meaning a large pipeline of wind power projects waiting for changes in the law. The Polish government now aims to install 30 to 70GW offshore capacity by 2040. The solar sector is also growing rapidly, becoming the fourth-largest in Europe.
• Uniqueness of Poland’s CfD scheme: One notable element of Poland's CfD (Contract for Difference) programme is the ability to participate developers to bid some of their projects' capacity into the CfD scheme, while also contracting with a PPA counterparty for some or all of the remainder. This is a unique provision not common in other European markets, providing developers with additional flexibility around offtake. An ability to combine a CfD with a 10-year power purchase agreement PPA or three-year financial hedge (at a higher price) ultimately places downward pressure on CfD strike prices, allowing developers participating in auctions to bid in at prices that are sometimes below their projects' LCOE (Levelized Cost of Electricity).

This dynamic is important to bear in mind when looking at Polish auction results, the most recent of which occurred in December 2024.

• Utility-scale solar projects received a minimum price of €57,50 ($66)/MWh and a maximum price of €78,60 ($90)/MWh, while wind projects received a minimum price of €35 ($40)/MWh and a maximum of €41,10/MWh.
• In Q4 2024, LevelTen Energy's PPA Price Index revealed a P25 (25th-percentile) PPA price for Polish solar offers of €78/MWh, while for Polish wind, Q4's Index showed a P25 PPA price of €94,50 ($108)/MWh.
• These figures show that there can be substantial differences between Polish auction prices and PPA offer prices. The dynamic interplay of prices and available capacity that occurs between Poland's auction and PPA space means auction results in Poland can often provide a price benchmark for PPA negotiations.

Poland’s PPA market

While Poland’s policy and grid-management environment has room to improve, the country also presents a compelling opportunity.

A lower degree of clean energy penetration compared to many neighbouring markets mitigates concerns around price cannibalisation, and PPA counterparties may be able to capitalise on a first-mover advantage.

The most impactful motivator for buyers, however, is Poland's dirty generation mix — which means PPAs there have the potential to remove much more CO2-per-megawatt than PPAs in, say, Sweden. At the same time, Polish CfDs may act to decrease the volume available for PPAs, potentially contributing to upward pressure on PPA prices. Overall, Poland’s economy is growing and its PPA sector is poised to grow with it.

• Corporate leaders stepping up: Corporate sustainability leaders are eager to contribute to Poland's energy transition by procuring renewable energy through PPAs. Renewable PPAs present an ideal option for securing large amounts of clean power at solid prices. Poland hosts a large number of companies in the energy-intensive industrial and manufacturing sectors, and telecoms and tech. Major players in the tech, automotive, and retail spaces have also been vocal in applying pressure to politicians in Warsaw, encouraging them to support the clean energy transition.
• The role of utilities: Utilities represent another crucial segment that can play a central role in unlocking the country’s PPA sector even more. Aurora Energy Research has estimated that just one-quarter of Polish corporations interested in buying clean power are creditworthy enough to stand alone. Utilities can bridge this gap by entering PPAs themselves, and then reselling that clean power to smaller buyers who can aggregate their load or enter into sleeved PPAs.
• Polish PPA considerations, especially lack of AIB membership: With a complex outlook for offshore wind development and an onshore wind segment that is regaining its footing, solar PPAs may grow to become more readily available. Another well-known but important consideration is Poland’s current lack of Association of Issuing Bodies (AIB) membership, which limits the country's ability to become a hub for cross-border PPAs. Demand will likely remain largely limited to local buyers, although Poland has been taking steps towards becoming an AIB member. Overall, a robust manufacturing sector and a dirty grid makes Poland an obvious target for international corporates looking to make meaningful decarbonisation impacts.

Polish M&A deep dive

As Poland strives to reach its ambitious clean energy buildout goals, asset M&A will play an increasingly critical role.

The Polish M&A space is poised to benefit from regulatory forces including the EU’s Green Deal and Fit for 55 package, as well as funds granted by the European Commission’s Nation Recovery Plan (NRP), which will make projects more feasible and attract more M&A activity as a result.

In general, Poland provides a number of compelling opportunities for M&A players looking to push the country’s decarbonisation plans forward, finds the report. While M&A transactions declined substantially after strong years in 2020 and 2021, they recently rebounded, and there is good reason to believe this will continue. LevelTen expects a wave of M&A deals driven by investors seeking to exit or diversify their portfolios through 2025, and likely beyond.

• Poland’s M&A market drivers: Electricity demand in Poland is increasing, which should increase liquidity in the PPA market and drive M&A activity to help meet this growing need for clean power. As Poland strives to reach its ambitious clean energy buildout goals, asset M&A will play an increasingly critical role.
• M&A market challenges: As hopeful as many are about the direction of Poland’s clean energy regulations, the fact remains that the overall regulatory landscape remains uncertain. The speed of reforms and the adoption of new laws has been slower than many wish, making for an unideal regulatory environment. Another substantial obstacle to renewable development is the current state of the Polish grid, which faces high costs to upgrade and regulatory hurdles, making it difficult to integrate solar generation onto the power system. For offshore wind specifically, requirements are in place that oblige investors to use at least 50% of Polish goods and services, which may mean added costs for developers and investors.

Poland’s M&A space is poised to expand rapidly, helping push the country’s important climate and energy independence goals forward. While challenges exist and further regulatory clarity and support will be essential, the country is evolving quickly in ways that will help unlock its clean energy future. With so many elements that make it unique, the Polish market represents an attractive opportunity for clean energy sellers, buyers, and investors.

“Poland’s renewable energy market is transforming rapidly,” said Pieter van der Meulen, senior manager, developer engagement at LevelTen Energy. “As regulatory barriers to clean energy growth continue to fall, opportunities for renewable developers and corporate buyers in Poland can be expected to abound. All in, regulatory shifts, government support mechanisms, and a growing PPA market are all supporting a new era of investment activity for Poland’s renewable energy sector.”