Poland’s 1000-page energy plan: big ambition, challenging to deliver

Opinions Opinion by Leszek Kasek and Rafal Benecki Poland’s 1000-page energy plan: big ambition, challenging to deliver 09:26 Poland The Polish government has finally adopted an updated energy strategy to 2030-40. The plan sets out an ambitious decarbonisation path, with the future energy mix based on renewables and nuclear. This will require investment in grids, electrification, and energy efficiency.

We broadly share this vision, but see a number of implementation risks Government adopts update to National Energy and Climate Plan At the beginning of June, the Polish government adopted the updated Energy and Climate Plan (NECP). This was prepared by the Ministry of Energy; previously, it had been handled by the Ministry of Climate and Environment. This update, required under EU procedures, is around two years overdue.

In October 2025, the European Commission referred Poland to the CJEU over this issue; perhaps it will now withdraw the case. Reading the plan with its seven annexes is very demanding; the whole document runs to 996 pages and is based on advanced sectoral modelling, especially energy modelling, as well as economic modelling. The document reflects a huge intellectual effort and contribution by officials from the ministries, analysts from the National Centre for Emissions Management (KOBiZE) and Energy Market Agency (ARE S.A.), and other institutions, as well as extensive consultations.

We appreciate this effort. The document distinguishes between two decarbonisation scenarios. The “baseline” WEM scenario – with existing measures – is based on policies already in place.

The more “ambitious” WAM scenario – with additional measures – also includes additional policies that envisage greater investment in zero-emission technologies by 2040. Under the WEM scenario, the NECP projects a 52% share of renewable energy sources (RES) in the electricity mix in 2030 and 66% in 2040. Under the "ambitious" WAM scenario, these shares are higher, at 53% in 2030 and 69% in 2040, respectively.

The projected energy transition extends beyond the power sector and electricity grids, although this is the key element, in our view. Other sectors on the energy supply side are also expected to decarbonise, including heating (both production and distribution), the gas sector (notably biomethane), liquid fuels and mining. Demand-side sectors will also need to invest, particularly in electrification, including industry, transport, households, services and agriculture.

Under the ambitious WAM scenario, total greenhouse gas emissions in 2030 are expected to fall by 36% compared with 2005 (the base year in the EU ETS) and by 63% in 2040. Emissions from installations covered by the EU ETS system (power generation and heavy industry) are expected to fall by 51% in 2030 compared with 2005 and by 84% in 2040. Emissions in sectors not currently covered by the ETS (non-ETS) are expected to fall by 19% in 2030 and 40% in 2040, respectively.

In the baseline WEM scenario, projected emission reductions in ETS and non-ETS sectors are significant, but smaller. Greenhouse gas emissions under baseline and ambitious WAM scenarios in EU ETS-covered sectors and other sectors (non-ETS), million tCO2e Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026). ING calculations "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026).

ING calculations The plan assumes that the ETS2 system, which is to cover emissions from transport, buildings and small industrial and district-heating installations, will enter into force in 2028. The ETS is a key instrument for reducing emissions in the EU. The NECP assumes that in 2028 the price of emission allowances in ETS2 will be lower than in ETS1 (€48 in 2024 prices per tonne of CO 2 e in ETS2 vs around €96 in ETS1, the latter calculated as the average for 2025 and 2030).

From 2030, allowance prices in ETS1 and ETS2 are to be unified and are assumed at €120 in 2030, €144 in 2035 and €300 in 2040, all in 2024 euros, ie in real terms. Compared with €17 in 2010, this means a sevenfold increase by 2030 and an almost eighteenfold increase by 2040. The NECP covers five dimensions, within which a total of 166 specific actions are set out , with a lead institution and a list of cooperating entities, including other ministries and public institutions, as well as development institutions and commercial banks.

While the plan specifies who does what, it does not say when individual actions will be completed. Perhaps the assumption is that all actions should be undertaken without delay. The penultimate action, #165 in the NECP, is “preparing a financial plan for the actions proposed in the NECP”, but again no date is given for when such a plan should be prepared.

The document states, however, that a report on NECP implementation will be prepared every two years, with the first report due in 2027. In 2028, the plan is to be reviewed and, if necessary, updated. The five dimensions of the plan are : Decarbonisation Energy efficiency Energy security The internal EU energy market and social aspects of the transition Research, innovation and competitiveness.

Our main conclusions from the ambitious WAM scenario The plan assumes an almost textbook approach to effectively reducing greenhouse gas emissions in Poland, which, with the economy still growing solidly over the long term, is to be based on: Improving energy efficiency (reducing the energy intensity of the economy) Electrification (an important way of reducing emissions in transport, industry and buildings, and one that will require investment in modernising and expanding electricity grids) Changing the energy mix to a low-emission one (requiring investment in new RES capacity and the construction of nuclear power plants). Improving energy efficiency The plan contains many indicators showing the expected improvement in energy management (including primary and final energy consumption), but they present a consistent picture. In the case of final energy consumption under the WAM scenario, the largest decline (-7.2%) is expected in the five-year period to 2030; in subsequent periods, energy consumption is expected to continue falling, although somewhat more slowly.

Based on historical experience, final energy consumption fell by only 1% in 2025 compared with 2020, while in the previous period it rose by more than 15%. This means that the improvement in energy efficiency required by EU regulations has been pushed into the future (backloading). Final energy consumption, level and period-on-period change under the ambitious WAM scenario Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario Electrification and a step-change increase in electricity-grid investment The NECP assumes that annual electricity generation will increase by more than 50% in 2040 compared with 2025, from around 180TWh to 270TWh.

Higher electricity generation volumes, alongside the growing role of unstable wind and solar sources and the withdrawal of conventional units, will also require investment in stabilising the power system (including gas units) and electricity grids. Electricity generation, level and period-on-period change under the ambitious WAM scenario Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario In the National Power Grid Operator’s (PSE S.A.) multi-year grid investment plan, published six months ago, we saw a huge increase in grid investment, and this is also confirmed in the WAM scenario. We wrote about this in an article in 2025 and in March this year .

The projected increase in the scale of grid investment in the current five-year period (2026–30) is impressive (€35bn in total at constant prices), which would mean a sevenfold increase compared with the previous period (2021–25). This comparison also shows the scale of underinvestment in grids at that time. In the case of distribution grids, investment in the current period is expected to be almost nine times higher than in the previous one; these are precisely the grids that determine the effective and secure integration of renewable energy, mainly from solar PV, into the power system.

Projected investment in electricity grids, €bn 2024 prices Source: NECP, 2026. WAM scenario. ARE S.A. estimates "> Source: NECP, 2026.

WAM scenario. ARE S.A. estimates Changing the energy mix to a low-emission one The NECP indicates that Poland will become a vast construction site for new power generation capacity, mainly in renewables and nuclear energy. In 2022–2040, cumulative commissioning of new capacity under the WAM scenario is expected to amount to 130.6GW.

In 2030, net available capacity is expected to reach almost 99GW, and in 2040 almost 156GW, compared with 75GW in 2025. The largest increase in capacity over the 15 years to 2040 is expected in solar PV, energy storage, onshore and offshore wind installations, other RES (e.g. biogas and biomass), gas installations and nuclear energy. Of course, this ranking of the largest capacity increases in GW does not correspond to the projected increase in electricity generation volumes in TWh.

RES installations will account for the largest share of the increase in capacity. Net available electricity generation capacity by technology under the WAM scenario, in GW Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario. DSR – demand-side response, ie electricity demand management "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario.

DSR – demand-side response, ie electricity demand management Although RES installations will also account for the largest share of the increase in electricity generation in 2026–40, this share will be smaller than in the case of new capacity additions. By 2040, the largest increase in generation by source is expected to come from offshore wind, followed by onshore wind, nuclear energy, storage and solar energy. According to the NECP, 16% of electricity generation in 2040 will come from nuclear energy, thanks to installed capacity of 5.9GW, covering both large nuclear power plants and SMRs (small modular reactors).

The plan does not provide a breakdown of energy generated by these two types of installation. The first nuclear units are expected to be commissioned in the second half of the 2030s. Electricity generation by source under the ambitious WAM scenario, in TWh Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario The ambitious WAM scenario points to a complete phase-out of coal-fired electricity generation by 2040.

Already by 2030, coal’s share in generation is expected to fall sharply to 23%, compared with 49% in 2025. Net capacity in coal-fired units would have to be reduced by almost 22GW over 15 years, which will be a major political and social challenge. In our view, the coal exit by 2040 in the WAM scenario is driven by the assumption of high EU ETS allowance costs.

European Commission guidelines for the preparation of NECPs by EU Member States assume that the real EUA price will reach €300 in 2040, 2.5 times more than in 2030 and, at the same time, 10 times more than in 2020. Prices of greenhouse gas emission allowances in the EU ETS under the WAM scenario, € 2024 prices Source: NECP, 2026. European Commission guidelines for NECPs "> Source: NECP, 2026.

European Commission guidelines for NECPs Investment needs: large but feasible Implementing the ambitious decarbonisation scenario will require a significant increase in investment spending. The NECP estimates that investment related to energy production and use will increase in real terms by 25% in 2036–40 compared with 2021–25. The scale of the investment effort in this scenario differs significantly from the baseline WEM scenario, in which this investment would be 1% lower in the second half of the 2030s than in the first half of the 2020s.

Total investment on the energy supply and demand sides, accumulated over the 15 years from 2026 to 2040, is estimated at €684bn at constant 2024 prices. The largest share of this amount is accounted for by investment in electricity generation (34%), transport (16%), electricity transmission and distribution (15%), investment in households, services and agriculture combined (13%), energy sectors outside power generation (11%), heat (7%) and industry (5%). Total investment under the WAM scenario in 2026–40, by sector, €bn 2024 prices Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario Although total investment needs are high, spreading them over time and benchmarking them to the size of growing GDP suggests that the ratio of these investments to GDP is declining, from around 5.8% of GDP annually in the first half of the 2020s to 4.9% of GDP in the second half of the 2030s.

In each of the five-year sub-periods, supply-side investments make up the largest share. Energy-related investment under the WAM scenario in 2021–40, energy supply and demand sides, % of GDP Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario. Own calculations using GDP forecasts from the NECP as the average of two adjacent five-year periods "> Source: National Energy and Climate Plan to 2030 with an outlook to 2040 (NECP, 2026), WAM scenario.

Own calculations using GDP forecasts from the NECP as the average of two adjacent five-year periods Electricity generation costs The modelling results prepared for the NECP point to a 7% real decline in the total unit cost of electricity generation in 2030 compared with 2025. At the same time, however, this cost is 63% higher than in 2020, although that was a period of weaker economic activity during the pandemic. In the structure of unit electricity-generation costs, capital costs rise significantly, which is understandable given the scale of new energy investment described above.

Fixed costs also increase slightly. By contrast, variable costs, fuel costs and the cost of emission allowances decline, which is consistent with the assumption of a gradual phase-out of coal, completed in 2040. Structure of unit electricity-generation costs, € 2024 prices Source: NECP, 2026.

ARE S.A. estimates "> Source: NECP, 2026. ARE S.A. estimates Local content An important element distinguishing the current version of the NECP from previous ones is the emphasis on so-called local content, i.e. the participation of domestic producers in investment projects, which will provide an impulse for the development of the domestic economy in the coming decades. The plan states that energy efficiency is an important area for the development of local content and assumes the following levels of local content in energy investments: 60% for onshore wind power, 40% for offshore wind farms (today it is around 20%), 40% for the construction of the first nuclear reactor, 45% for the second and 50% for the third reactor.

Main implementation risks We appreciate the enormous effort that went into preparing the NECP and its final adoption by the government. We broadly share the vision of a low-emission future and believe that it is time to act, and to do so consistently over the next 15 years. The energy transition is an area that should be based on a broad political and social consensus.

However, we see risks related to the implementation of this long-term plan. The magic of large numbers, but total energy-related investment costs are falling as a percentage of GDP. The estimate of investment needs, especially in cumulative terms over 15 years - almost €700bn at constant 2024 prices - is high.

But when set against forecasts of rising real GDP, this estimate declines across five-year periods, from around 5.8% of GDP per year in 2021–25 to 4.9% of GDP in 2035–40. This investment effort is therefore not excessive relative to historical data. And Poland must undertake it, because in the long term it needs relatively cheap and available electricity, conventional units are outdated, and energy-related investment creates an opportunity to raise the low investment rate, which was only 17% of GDP in 2025.

Excessive investment conservatism would be undesirable, and here the ambitious WAM scenario has an advantage over the baseline WEM scenario. We have seen similar conservatism in private investment in Poland for many years. The electoral calendar : The current government needed almost three years to adopt the update to the energy strategy, which suggests that different visions of Poland’s energy transition and its pace were probably competing within the government.

It remains an open question whether a new government after the autumn 2027 elections will “buy into” the ambitious WAM scenario, lean more towards the baseline WEM scenario, or perhaps propose another scenario. The issue of exiting coal in power generation by 2040 remains open: coal-fired power plants will not be shut down by an assumption of a €300 price for CO 2 emission allowances in the EU ETS, but by a government decision agreed with workers and social partners. A further significant political risk to the implementation of the plan is the entry into force of ETS2 from 2028, which will push up fuel prices (we wrote about this in an article at the end of 2025 .

Uncertainty for the largest state-owned energy companies : Energy Minister Miłosz Motyka described the NECP as a compass with goals and directions for state action, which will require joint action by the government, local authorities, businesses and citizens. However, political uncertainty may affect the pace of investment decisions by the largest energy companies controlled by the State Treasury. Holding back on energy investment would be undesirable given the relatively long delivery times for these projects.

No financial plan for implementing the NECP and no demarcation line between public and commercial financing : As mentioned above, preparing a financial plan for implementing the NECP is included as one of its 166 actions. The entire Annex 5 to the plan related to the financing of the climate and energy transition and lists as many as 62 instruments or sources of financing to be used over the next decade. However, the authors do not recommend adding up the financial allocations shown there.

In our view, the plan does not specify clearly enough which investment needs on the supply or demand side will be met from public sources, whether domestic or EU, and which from commercial or private sources. A lack of such clarity may encourage delays in investment decisions. Such practices have occurred in the past, as suggested by the results of our surveys among companies.

The energy cost forecasts presented in the Plan should be treated with caution . Given various external constraints, such as geopolitics, and internal constraints, such as the election campaign, in our view, stabilising real electricity costs in Poland over the long term would already be a major achievement. On the one hand, a system based to a greater extent on RES should ultimately be cheaper than one based on fossil fuels, because variable fuel costs and EUA allowance costs do not occur with RES.

In addition, we assume that unit investment costs for RES technologies such as solar PV, wind technologies and energy storage will continue