Innovation in the energy sector relies on a coherent national framework of cooperation and competition. Poland’s pursuit of universal low prices stunts energy innovation. First, it short changes innovation by preventing companies deploying practices and technologies to lower energy costs and second rewards static and established generation technologies due to the lack of competition. These were my main points in the panel discussion, ‘The climate policy, innovations and the RES – strategy of the future of energy utilities’ at the Energy21, Energy Futures Week, in Poznan, Poland, May 10 – 13, 2016. Very simply, innovation is not maintaining and investing in coal fired power plants that operate beyond 2050.
My pointed comments came after a morning focused on efforts in Poland to continue and renew Poland’s fleet of coal fired power plants. Gasification and liquefaction of coal were viewed positively, while integrating renewable energy into the grid was viewed as a threat to the energy system. In opening up my remarks, I appealed to the Hungarian and Polish friendship – allowing me – as a resident of Hungary, to speak directly to Poland’s perceived direction towards more coal in the energy mix. (If you don’t know about this special Hungarian-Polish friendship, we’ll just say it is a brotherhood of eastern Europeans, influenced by the Russians, Germans and Turks – so still relevant today).
The Polish government perspectives, as expressed in the morning by the Energy Minister Krzysztof Tchórzewski, as I previously wrote about, holds coal as an innovative energy source. Labeling technological advances in coal as innovative and propelling the Polish energy system forward, as I stated, only ends with continuation of an old technology that does not match with global changes in both the environment and social change. This is important because if Poland wants to keep coal as the main component of electricity and heat production then it will crowd out other technologies that offer wider spread economic and social benefits. It also goes against the technological trend of dropping prices and wider uses for renewable technologies – it’s hard to see that coal is still more competitive than renewable technologies in 30 years-time (for a similar view with price comparisons see this report). The larger companies, like PGNiG, made a point to state they needed to realize the full investment lifetime of their coal fleet. But as I pointed out, it was not regulation that phased out the steam locomotive, but the superiority of the diesel engine that created the transition away from coal powered trains.
Innovation in Poland’s energy sector
Polish efforts to foster technological innovation belie an active sphere of researchers and even politicians set on moving Poland forward. This is very good news. While the main political party in power pushes coal, Poland researchers, progressive policy makers pursue Poland 2.0. I was very impressed by the words, and the understanding of Michal Kurtyka, Deputy Minister of Energy, as he outlined the relationship of regulation and innovation. He stated a new regulatory framework needs to spur innovation and renewable energy sources, with an eye on global and EU innovation efforts, regulation and innovation are interlinked.
In other presentations at the four day conference, I became more familiar with the companies and researchers who are actively working on projects like energy storage in Poland. The technical progress, and even investment by Polish companies all demonstrate the latest trends in energy research and technologies – there are some who are ‘doing’ the innovative research. The country has a clear choice; it can pursue innovative clean technologies, it does not have to transform itself into an innovative powerhouse for coal technologies, as outlined by Minister Tchórzewski.
Unfortunately, it is this disconnect that keeps Poland ranked fifth from the bottom in the European Commission’s Innovation Scoreboard. Despite deployed research projects in innovative spaces of energy, pursuit of the wrong macro-energy strategy can prevent the wider use of Polish created technologies. There were consistent complaints against Germany and Danish wind and solar power – crowding out Polish coal. It is these countries , condemned by the politicians and business managers who are the most innovative. If Poland could unify its macro-energy strategy with its own R&D and industrial base – outside of coal – a lower cost transformation could occur.
The Polish government pursues a low cost energy policy to justify the continued use and renewal of the coal power sector. However, it over accounts for how much a transition towards a more environmentally sustainable energy system would cost. This division can be seen in the differing cost assumptions published by the International Renewable Energy Agency in the country report, “Remap 2030: Renewable Energy Prospects for Poland.” The projected costs by the Polish government are over twice the amount IRENA estimates. In particular, the doubling of the cost is assessed in industry and buildings.
Let the Innovation Out!
Regulation is best used to open up spaces for innovation. This was my concluding comment on the panel. There was a decidedly slanted view of Brussels regulations as a punishment mechanism against Poland, I took the opposite view. I stated, instead of seeing regulation as punishing and a source of uncertainty, EU Directives and the price drop in renewable technologies should be viewed as inevitable. I controversially stated, the idea that a coal fired power plant can get a 30-year price guarantee is simply impossible in today’s market environment (an assumption supported by this report). Regulatory targets in Poland should be used to spur Polish companies to innovate for the Polish and EU market. From the companies and people I met at the conference, I’m convinced holding onto coal only deprives a more innovative country from emerging.
Panel IIIA – The climate policy, innovations and the RES – strategy of the future of energy utilities
Moderator: Dorota Dębińska-Pokorska (Moderator) – PwC
- Maciej Burny – Dyrektor Biura Regulacji, Biuro Regulacji, PGE Polska Grupa Energetyczna S.A.
- Artur Stawiarski – Dyrektor Departamentu Rozwoju Przedsiębiorstwa / M&A w RWE Polska S.A.
- Marek Woszczyk – Dyrektor Generalny PGNiG Upstream International
- prof. dr hab. inż. Tadeusz Skoczkowski – Zakład Racjonalnego Użytkowania Energii, Instytut Techniki Cieplnej Politechniki Warszawskiej
- Dr Michael Carnegie LaBelle – Assistant Professor at Central European University Business School and CEU Department of Environmental Sciences and Policy