Poland, a nation of 38 million, is home to some of Europe's most polluting power plants and therein poised for a sweeping energy system transformation.

The war in neighboring Ukraine has focused minds on how renewables might help down costs and support energy independence, and with an election on the horizon, clean power could be in for a boost in the coming years.

"The end of coal in Poland is happening, whether the government likes it or not," said Paweł Czyżak, senior energy and climate analyst at think tank Ember.

"The question is if the country now takes advantage of its strategic location and access to renewable resources, painting a clear pathway from fossil fuel dependence to a cleaner and cheaper, renewables-based power system," the analyst said in an email.

Located in east-central Europe, Poland draws around 70% of its electricity from coal, and wants to bring this down to 35% by the end of the decade. Clear communication on a firm phaseout date is lacking, making investments in areas like grids or energy storage difficult, according to Czyżak.

Recent political rhetoric will not have helped. In August, Environment Minister Anna Moskwa announced Poland was suing the European Union over its "Fit for 55" climate plan, mainly due to reductions in emissions certificates under the EU's carbon trading system.

Climate change not a motivation for green policy

Poland is set to hold a general election in the fall, with a centrist-liberal faction vying to take the reins from an incumbent government led by the right-wing Law and Justice party.

While the outcome is difficult to gauge from recent polling, a change in leadership would likely tilt policy more in favor of renewables, said Piotr Czopek, director of regulatory affairs at the Polish Wind Energy Association. That said, the current government's position on renewables has already changed significantly in the past two years, Czopek said in an interview.

That is because of high prices for coal and emissions, the comparably low cost of renewables, and to some extent concerns around energy security in light of the war in Ukraine. Asked if climate change factors into decision-making, Czopek said, "Rather not."

According to press reports, the government is planning to spin off coal assets from producers such as PGE Polska Grupa Energetyczna SA and Tauron Polska Energia SA into a separate state-owned entity as part of its energy transition plans. Details on this are scant, however, and Czyżak does not expect a firm decision to be made before the election.

Still, in some areas of the energy transition, Poland has already delivered on ambitions.

From 2010 to 2020, the amount of electricity generated from renewables nearly tripled, and renewables grew from 7% to 18% of the power mix, according to the International Energy Agency. The growth was driven mainly by onshore wind generation and the use of solid biomass, while solar photovoltaic grew tenfold, the organization said.

Among renewables technologies, solar remains in favor among Poles. The country boasted the third-largest capacity increase in Europe in 2022, at 4.9 GW, according to industry group SolarPower Europe. Much of these additions were rooftop solar.

Wind has a more challenging market backdrop due to Poland's long-held and controversial turbine distancing rule known as 10H, which mandated that developers could only build machines that were a distance of 10 times their height away from residential buildings.

This limited the available land for new projects and stunted onshore wind deployment. To facilitate more construction, lawmakers had initially proposed a 500-meter distance rule.

In March, lawmakers made a final decision that meant that if locals supported a project, new wind farms could be as near as 700 meters away, which will unlock more space for new projects.

According to Ember, this means Poland's onshore fleet is expected to reach 12 GW to 14 GW by 2030, as opposed to the over 18 GW that would have been possible under a 500-meter law.

Low supply in Poland's PPA market

The development of onshore wind in Poland remains "extremely time-consuming and complex," according to a spokesperson for Germany's RWE AG, with project development taking up to seven years to reach construction.

A spokesperson for Polish developer Orlen SA, which is targeting 9 GW of installed renewables by 2030, said solar projects take around two years to process, while the procedure for wind farms takes around four years.

Because not enough projects are available, there are many more buyers than sellers in the market for wind and solar power purchase agreements (PPAs), Czopek said.

Orlen, which is not currently in a position to sign PPAs, said it has observed growing interest from potential buyers. RWE also noted a visible increase in demand from industrial customers, retailers and data center operators.

Compared to other European markets, Polish PPAs are expensive. According to data from marketplace LevelTen Energy Inc., the average price for such deals is currently near €90/MWh, topped only by the UK. Deals in Spain, the cheapest market, average around €45/MWh.

Poland's renewables drive is also limited by grid buildout delays.

"Compared to other markets, the waiting times are significantly longer," with capacity not keeping up with grid connection demand, the RWE spokesperson said.

SolarPower Europe also named a lack of grid connection points for new projects as a key constraint for Polish renewables. "This exacerbates the delay on project completion, which is already experiencing trouble derived from the current supply chain disruptions and price hikes," the trade association said in a report.

Offshore wind drive

Orlen on Aug. 14 made a tentative investment decision for Baltic Power, a 1.2-GW offshore wind project that is set to be part of Poland's 10-GW offshore wind plan in the Baltic Sea by 2040. Poland is on track to reach over 7 GW in the early 2030s, Czyżak said.

Other developers pursuing projects are state-owned PGE, Polenergia SA, Denmark's Ørsted A/S, RWE, Equinor ASA and Ocean Winds SL. Despite higher costs, Czopek said there is scope for optimism that projects remain in the money and the government is committed to supporting them.

Being a late mover in Europe, Poland is currently building out supply chain facilities such as ports and manufacturing hubs to support the offshore wind drive.

While the country is also facing renewables-related skills challenges, Czopek said it has a competitive workforce base already, accounting for 50% of the workers on Europe's offshore wind farms.

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