Poland is experiencing a pivotal moment in its energy transition. In 2024, the country emerged as Europe’s second-largest market for Power Purchase Agreements (PPAs), with 2.95 GW contracted, representing 288% year-on-year growth. Furthermore, the government has increased its offshore wind energy support target from 5 GW to 12 GW in the second round of incentives.

Irina Peltegova, Senior Green Power Market Analyst at Veyt, states, “Renewable energy growth is undeniable, but Poland needs to strengthen its infrastructure and financing to sustain it in the long term.”

The country has adopted support mechanisms such as Contracts for Difference (CfD) to ensure competitive prices and attract investment. However, the investment deficit in the electricity system and the lack of gas generation capacity make the transition to a more flexible and sustainable energy mix challenging.

The Infrastructure and Financing Challenge

One of the main obstacles to achieving these ambitious goals is the modernisation and expansion of the electricity infrastructure. The Polish Wind Energy Association (PSEW) warns that urgent action is needed to build and upgrade transmission lines connecting offshore wind farms in the Baltic Sea, strengthen interconnections with other Baltic countries, streamline permitting processes, and expand port infrastructure, which is crucial for offshore wind farm logistics.

“Reducing bureaucracy and accelerating permitting processes are fundamental steps to ensure that projects move forward within the expected timelines,” says Peltegova.

The Evolution of Support Mechanisms: CfD and PPAs Drive the Market

Poland’s market has seen a significant rise in corporate PPAs, making it Europe’s second-largest market in 2024. These agreements allow companies to secure renewable energy at stable prices, boosting private sector investment.

The government has also strengthened its Contracts for Difference (CfD) programme, a support scheme that guarantees minimum electricity prices for renewables. However, there are concerns about the long-term sustainability of this model.

“The CfD has been crucial in attracting investors, but it is essential to ensure that the market design remains sustainable as renewable capacity expands,” Peltegova explains.

The Impact of New Tariffs on Offshore Wind Competitiveness

Poland has set maximum tariffs for offshore wind energy, which could impact the sector’s competitiveness compared to more developed markets such as the UK and Germany. However, the country remains confident that its approach will attract investors.

The government has planned three 4 GW auctions in 2025, 2027, and 2029, with a final auction in 2031 to support an additional 2 GW. So far, 11.5 GW of projects have been identified for these auctions.

“The level of government support is competitive and will attract strong interest, although infrastructure remains a significant bottleneck,” notes Peltegova.

19 Offshore Wind Projects Underway: Poland’s Baltic Ambition

Poland currently has 19 offshore wind projects in development, split into two phases. The first phase includes seven projects already backed by CfD contracts. The second phase involves twelve projects that will compete in future auctions for incentives.

Notable projects include Baltica 3, with 1,050 MW and a planned start date of 2030; Baltica 2, with 1,500 MW set for 2027; Baltic Power, with 1,200 MW for 2026; and MFW Baltica II and III, ranging from 720 MW to 1,200 MW each, scheduled for 2027. OWF Baltica I, with 1,560 MW, remains in the planning stage.

These initiatives will position Poland as a leader in offshore wind energy in the region, but their success depends on effective execution and the ability to attract private investment.

KUKE’s Role in Financing the Energy Transition

Poland faces an investment shortfall in its energy transition, with the Ministry of Climate and Environment estimating costs of PLN 800 billion by 2030. To address this need, Poland’s credit agency KUKE has launched a new green investment guarantee programme to support environmentally friendly projects and reduce banks’ lending risks.

“Poland needs clean and affordable energy to sustain its rapid economic growth and ensure that domestic companies remain competitive in global markets,” says Jacek Tomczak, Deputy Minister of Development and Technology.

KUKE’s green guarantees cover up to 80% of loan values, enabling banks to increase their lending capacity up to fivefold for sustainable projects. In 2023, KUKE-backed loans totalled PLN 2.5 billion, with up to PLN 10 billion expected in 2024.

Janusz Władyczak, President of KUKE, highlights that “green investment guarantees are an innovative solution that will help modernise Poland’s economy and strengthen the competitiveness of domestic businesses in a completely new sector.”

Eligible projects include offshore wind farms, energy storage, biogas production, sustainable mobility infrastructure, and modernisation of transmission networks.

Decarbonisation Strategy: How Will Poland Reduce Its Coal Dependence?

Poland still relies on coal for over 70% of its electricity, but steps are being taken to accelerate decarbonisation.

Key strategies include expanding renewable energy, particularly wind and solar, investing in energy storage to handle renewables’ intermittency, offering green financing and credit support, such as the EUR 5 billion fund from BGK Bank for offshore wind projects, and leveraging KUKE’s new guarantees for climate investments.

“Energy storage will be crucial for ensuring the stability of Poland’s power system as the share of renewables increases,” says Peltegova.

The government has prioritised batteries and other storage technologies, but challenges remain in hard-to-electrify sectors such as transport and heavy industry.

A Renewable Future with Challenges Ahead

Poland is progressing in its energy transition with ambitious targets but faces significant challenges. The combination of private investment, support mechanisms such as CfD and PPAs, and improvements in infrastructure will be critical to the success of its renewable energy sector.

“Poland’s path to decarbonisation is underway, but the key will be ensuring efficient planning and sufficient financing to sustain growth,” concludes Peltegova.

With new offshore wind farms coming online and government incentives strengthening, Poland has the potential to become a leading renewable energy player in Eastern Europe. However, only time will tell whether the country will achieve its ambitious goals.

List of offshore wind farm projects implemented in Poland along with their progress measured according to key decisions or contracts: