Cheaper renewables would increase energy security and lower household bills

LONDON, February 10 — Poland is planning a new generation of gas power plants which will undermine EU climate targets and only be viable because of subsidies that could cost taxpayers nearly $4.5 billion, warns a new report from the financial think tank Carbon Tracker launched today.

It calls on Poland to replace polluting coal plants with renewables not gas, revealing that it is already cheaper to produce energy by building new solar farms and onshore wind than new combined cycle gas turbine (CCGT) units. By 2025 solar and onshore wind supported by battery storage will be cheaper than gas.

Polish taxpayers will subsidise the construction of five new gas plants due to begin operation between 2023 and 2027 through guaranteed 17-year capacity market payments that will cost nearly $4.5 billion. The report finds that the plants are only economically viable because these payments are much more generous than capacity payments in other European countries.

The five plants will have a combined capacity of 3.7GW, more than doubling Poland’s gas power capacity. But the report finds that for Poland to achieve net zero emissions by 2050 they would have to close after an average of just seven years, costing developers more than $200 million.

Poland’s Energy Dilemma warns that pursuing gas threatens the country’s energy security and could lock consumers into high prices. “With wholesale gas market prices having reached record highs over the past 12 months and rising political tensions in Europe increasing the threat that supplies could be weaponised or placed under international sanctions, now is not the time for nations to be increasing their dependence on gas,” it says.

Senior analyst and report co-author Jonathan Sims said: “Costs of clean technology continue to fall and by mid-decade solar and wind farms backed by battery storage will be able to provide flexibility services comparable with a gas peaker plant at lower cost. Pursuing gas will cost taxpayers billions in subsidies and higher energy bills, undermine EU climate targets and expose the country to pressure from foreign gas suppliers.”

Carbon Tracker’s latest report Poland’s Energy Dilemma assesses five CCGT units: due to open in the next five years: Dolna Odra 1 and 2, 2023; Ostrołęka C, 2025; Rybnik, 2026; and Grudziądz, 2027. It analyses each unit’s financial viability and compares projected investment costs to those for new renewable projects.

It calculates the levelised cost of energy (LCOE) – the average cost of each unit of energy generated over the lifetime of each plant – for new renewables and for the five gas projects. It finds that all five projects will be more costly investments than either new onshore wind, offshore wind, or solar farms, as shown in Figure 1 below.

Renewables supported by battery storage will be able to respond to peaks and troughs of demand, providing flexibility services comparable with a gas peaker plant. Solar with storage will be cheaper than gas from 2024 and onshore wind with storage from 2025.

Falling costs of clean technologies and rising costs of gas mean that the 750MW Grudziądz project will be uncompetitive from the day it opens in 2027. By then even offshore wind with storage will generate electricity more cheaply.

Figure 1: LCOE New Gas in Poland vs. LCOE of New Renewables 

Source: Carbon Tracker analysis

Associate Power Analyst and report co-author Lorenzo Sani said: “This note aims to dispel the notion that Poland has little choice but to switch from the use of one fossil fuel to another for its power supplies. It attempts to persuade policy makers to grasp the immense opportunities available to the country in the lower cost and lower risk renewables sector. We highlight the extreme risks to investors of long-term gas plant investment.”

The report calls on policymakers to cancel new gas plants. If they run for planned 30-year lifespans it will be impossible for Poland to meet net zero by 2050. If they are retired early in line with climate targets developers will face heavy losses and could launch compensation claims against the government.

It warns that overly generous capacity payments are distorting the market and plants would not be built without them. Taxpayers should not be locked into subsidising projects that may struggle to run their full lifetimes, and funding would be better spent to accelerate investment in renewables.

It says the role for gas within the European power system should be to provide backup power supporting renewables. This is better served by smaller scale peaking units than large CCGT plants.

The Polish government last year acknowledged the country’s capacity for offshore wind development in its energy policy plan for the next two decades. It identified potential for just under 6GW to be built by 2030, if the first projects can launch by 2026 as planned, rising to 11GW by 2040[1].


  • The report performs a project finance analysis for five of the large-scale non-CHP combined-cycle gas turbine (CCGT) units Poland is planning and compares it with the cost of developing new renewables projects.
  • The analysis modelled short-run marginal costs, long-run marginal costs (including fuel, carbon, operations and maintenance and financing costs) and future revenues for all the units, including wholesale electricity market and capacity payments. It used CTI’s Gas Economics Model which is based on the Global Energy Monitor plant database, data from Bloomberg, ENTSO-E and numerous other sources.
  • The report analysed the capital costs and financing costs for developing new projects in Poland.
  • The renewables costs are based on CTI’s recently updated LCOE model that now includes a cost assessment for solar, onshore and offshore wind, and battery storage.
  • It performed a sensitivity analysis on some key inputs to understand the impact of market volatilities and changes in regulations.
  • It modelled a phase-out of gas-fired plants based on the International Energy Agency’s Net Zero 2050 scenario. This does not include regional projections of gas demand so Carbon Tracker interpolated these from the IEA’s Beyond 2 Degrees Scenario.

Once embargo lifts report can be downloaded here:

To arrange interviews please contact:

Stefano Ambrogi                    +44 7557 916940

Joel Benjamin                        +44 7429 637423

About Carbon Tracker

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future.

[1] Energy Policy of Poland Until 2040 – Polish Ministry of Climate and Environment, page 63