Poland Baseload Price Evolution: Coal Transition Scenarios

Poland Baseload Electricity Price Evolution

Analysis of Three Coal Transition Scenarios (2025-2040)
Impact of Post-2028 Coal Decommissioning on Generation Adequacy & Pricing
€102
Current 2025 Baseload
(PLN 440/MWh)
8 GW
Coal Capacity at Risk
Post-2028
12 GW
Capacity Gap by 2035
(PSE Estimate)
56%
RES Target by 2030
(from 30% today)
Scenario A: Coal Continues Post-2028
Scenario B: Coal Replaced by Gas
Scenario C: Coal Exit, No Gas Support

⚠️ Critical Generation Adequacy Alert

Without new capacity investments, PSE projects Loss of Load Expectation (LOLE) could reach 1,796 hours (~2.5 months) by 2030 and 4,559 hours (~half year) by 2035, indicating severe supply shortages that would drive extreme price volatility.

Scenario A: Coal Extension

Market Dynamics: Requires EU derogation beyond 2028. Coal plants operate with high CO₂ costs (€50+/tonne), keeping baseload prices elevated but stable.

Price Trajectory: Gradual decline from €102 to €85-90/MWh by 2035 as RES deployment accelerates. Limited volatility due to dispatchable capacity maintenance.

Key Risks: Regulatory uncertainty, stranded assets, competitiveness loss versus neighboring markets with cheaper clean power.

Scenario B: Gas Replacement

Market Dynamics: New gas capacity (like 1.4 GW Dolna Odra) replaces retiring coal. Gas provides flexibility for RES integration but at higher marginal costs.

Price Trajectory: Initial spike to €110-120/MWh (2028-2030) during transition, then stabilization around €95-105/MWh as gas-RES balance establishes.

Key Benefits: Better RES integration, lower emissions, maintained adequacy. Risks include gas price volatility and import dependency.

Scenario C: No Gas Support

Market Dynamics: Capacity shortage drives extreme scarcity pricing. System relies heavily on imports and demand response during tight periods.

Price Trajectory: Severe price spikes to €150-200+/MWh during shortages (2029-2032), followed by volatile decline as emergency measures and accelerated RES deployment respond.

System Impact: Frequent load shedding, industrial competitiveness crisis, accelerated demand destruction and energy efficiency investments.

Generation Adequacy Analysis

Critical Timeline: First wave of 8 GW coal retirements post-2025, second wave of 6 GW in 2029-2030, final wave by 2035.

RES Growth: Solar already exceeds 2030 targets (14+ GW vs 5-7 GW target). Wind constrained by grid connections and 10H rule relaxation timing.

Grid Investment: 6x increase in transmission/distribution spending 2026-2030 essential for RES integration and adequacy maintenance.

Market Structure Evolution

Capacity Market: PLN 90 billion spent, mainly supporting old coal. Post-2028 mechanism needs redesign for new technologies.

Storage Deployment: First storage contracts awarded in 7th auction. Critical for managing increasing RES variability and price volatility.

Interconnection: Regional hub potential, but requires strengthened cross-border capacity to manage adequacy challenges.

Investment Implications

PV Development Risk: Capture prices declining as solar share grows. Storage co-location becoming essential for project viability.

Timing Sensitivity: 2025-2028 window critical for capacity decisions. Post-2028 coal phase-out creates massive investment opportunity but also adequacy risk.

Policy Dependencies: EU state aid rules, capacity market redesign, and grid investment acceleration determine scenario probability.