Energy from coal: Poland's contribution to Ukraine

In recent months, Poland has significantly increased its production of brown coal-derived energy, as well as its exports. A portion of this additional energy is flowing to Ukraine. Poland is not only supporting its war-torn neighbour but also offloading some of its surplus coal stocks. This is positive news for the Polish economy.

At the beginning of July, Donald Tusk revealed that efforts are underway to establish a form of energy assistance for Ukraine. “We are working to be able to burn Polish coal, of which we currently have plenty, so that we do not incur costs for burning this coal and for emissions, and instead send the electricity generated by Polish power plants using Polish coal, funded by European money, through the existing energy bridge to Ukraine,” stated the Prime Minister.

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Production and export on the rise?

Reports published by the Energy Market Agency ( Agencja Rynku Energii S.A. ) indicate that these plans are being put into practice. In July (the latest available data), Poland produced approximately 12.97 terawatt-hours (TWh) of energy, representing a 3.5% increase compared to the previous year. Additionally, in July, we exported 1.23 TWh of energy abroad, a substantial increase of 71.5% compared to the same period last year.

Statements from Donald Tusk suggest that part of the energy being sent abroad could be destined for Ukraine. This theory is corroborated by information regarding production structure. In July 2024, power plants fuelled by brown coal produced 3.6 TWh of energy, a significant increase of 17.5% compared to the previous year. It is worth noting that previously, the operation of these plants during the summer was limited to a necessary minimum, with any shortfall in energy being compensated by photovoltaics.

However, this summer was different. The increased activity of brown coal power plants would have been unjustifiable if electricity could be generated from solar energy due to the associated massive costs. A staggering 59% of the average energy price is attributed to the cost of CO2 emission allowances arising from the EU's climate policy, while only 25% accounts for actual production costs. The emissions from coal combustion, necessitating the purchase of additional allowances in the European ETS, cost Poland tens of billions of zlotys annually, with around 33 billion zlotys spent in 2022.

Nonetheless, coal-fired energy production would make sense if Poland had negotiated an exemption from these charges with Brussels, allowing electricity generated from coal to flow to Ukraine, which is in dire need. This is precisely the solution that Prime Minister Tusk discussed in July, and it appears that this arrangement may have indeed taken place, although details have not been disclosed to the media.

Reduced Stocks of Hard Coal: Less Trouble for Mining?

ARE’s reports also indicate that, in addition to brown coal power plants, hard coal-fired combined heat and power plants increased electricity production by 7.7% year on year in July 2024. On the surface, this seems absurd, as these plants typically operate at half capacity during the summer months. However, in the context of assisting Ukraine, the increased activity makes sense. These plants primarily utilise lower-grade coal, including coal dust, for their operations. Meanwhile, hundreds of thousands of tonnes of this fuel had been stockpiled at coal mines and combined heat and power plants as recently as spring this year. This situation exacerbated the difficulties already faced by the beleaguered mining sector.

Due to the heightened activity of the combined heat and power plants, these stockpiles have been reduced, which was also one of the objectives announced by Donald Tusk in July. Data from ARE indicates that in July 2024, stockpiles of hard coal at combined heat and power plants decreased to 2.1 million tonnes, down by 16.9% compared to July 2023. Meanwhile, stocks of hard coal at conventional power plants dropped by 6.3% to 4.4 million tonnes.?

In contrast to the brown coal power plants and combined heat and power plants, traditional hard coal-fired power plants exhibited reduced activity. In July 2024, they generated 3.6 TWh of electricity, which is an 8.1% decrease year on year, while burning 7.8% less coal than in the previous year.

Support for Ukraine

The July statistics from ARE clearly indicate that by increasing electricity production in power plants and combined heat and power plants, Poland not only supported Ukraine but also alleviated some of its surplus coal stockpiles. It can be assumed that by consuming relatively more brown coal and coal dust, we have also improved the balance of hard coal stocks, which will be necessary in the upcoming winter season. Assuming that exports to our eastern neighbour represented the entirety of this year’s surplus (in comparison to last year’s exports), this would amount to over 510 gigawatt-hours (0.51 TWh) in just one month. This quantity of energy is statistically sufficient for approximately 1.37 million four-person Polish households.

For Ukraine, however, such an amount of electricity meets the needs of a significantly larger population due to energy rationing. According to the International Energy Agency (IEA) , just after the outbreak of the war, energy consumption in Ukraine fell by 30% year on year between March and October 2022, and in October 2022, the whole of Ukraine controlled by the authorities in Kyiv consumed approximately 7 TWh of electricity. However, since then, due to massive attacks by Russia on critical infrastructure, the state of the Ukrainian energy sector has considerably deteriorated, and Ukrainians are managing their electricity use even more sparingly.

In 2022, Ukraine generated approximately 113 TWh of energy (for comparison, Poland produced 179 TWh). Currently, estimates suggest a loss of 80-90% of the energy system’s capacity. Ukraine cannot fill this energy deficit through imports due to insufficient transmission infrastructure. The issue is that there is only one energy bridge connecting Poland to Ukraine: the Rzeszów-Chmelnytsky line.

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