What is NABE?
The National Energy Security Agency (Polish acronym: NABE) represents a total of over 70 coal units that produce about 70 per cent of Poland’s energy. PGE GiEK will be the process integrator, a separate entity independent of the PGE Group, and will ultimately be transformed into the National Energy Security Agency.
The mission of NABE is to secure energy supplies for Polish industries and households during the transition period, until nuclear energy and energy storage facilities that will stabilise generation from renewable energy sources have been developed and deployed in Poland. With the launch of NABE, energy companies PGE, Tauron, Enea and Energa will focus on the development of RES. This will help reduce the share of coal in the Polish energy mix below 56 per cent by 2030.
Why is NABE being created?
NABE is created to accelerate the energy transition in Poland and to ensure Poland’s energy security and independence until nuclear power is developed and electric energy storage technologies become more widely available.
Currently, financial institutions are reluctant to do business with companies that own coal assets. This creates obstacles for new projects, including RES projects, and increases the cost of developing renewable energy sources. The transfer of coal assets from energy companies to NABE will help utilities gain easier and faster access to project finance for new investments in renewables, which will contribute to energy transition across the EU.
Once NABE is operational, the main tool for increasing revenues of power companies in the generation segment will be to expand the renewable generation capacity. The growing RES capacity will over time replace the electricity generated from coal by NABE.
Until nuclear energy and energy storage facilities are developed, NABE’s coal-fired power stations will stabilise the energy system based increasingly on weather-dependent RES. Polish coal-fired power stations use almost 100 percent of the raw material extracted from domestic lignite and hard coal mines, which gives the country independence from foreign supplies. NABE’s role as a system stabiliser will ensure the independence of the Polish economy from imports of energy resources, in particular EU-sanctioned coal from Russia.
How will NABE affect the Polish electricity sector?
With about two thirds of Poland’s installed capacity, NABE will initially play a crucial role for the security and stability of the energy system. Once it has taken over the coal assets, it will produce about 70% of the electricity and will use almost all the domestically mined lignite and hard coal.
NABE’s share in power generation will be decreasing year by year, along with the development of new RES capacity, which will replace, one by one, the most obsolete conventional units. In the longer term, NABE’s leader role in the energy system in Poland will be taken over by nuclear power. Ultimately, nuclear energy will become the main pillar of the national energy sector, providing stability over much less predictable renewable energy sources, which are dependent on atmospheric conditions.
According to the Energy Transition Plan adopted by the Polish government, low- and zero-emission energy sources, such as wind and photovoltaic farms, nuclear energy and energy storage, will eventually fully replace conventional power plants concentrated in NABE. The process will drive the implementation of the 2040 Polish Energy Policy and its three pillars: just transition, zero-emission energy system and good air quality.
When will NABE be created?
NABE was first proposed in 2020 and legislative work began in April 2021. On 2 March 2022, the Council of Ministers adopted a just transition programme for the energy sector in Poland.
The transfer of coal assets from PGE, Tauron, Enea and Energa to PGE GiEK and the spin-off of PGE GiEK from the PGE Group is planned for late 2022 or early 2023. NABE will be established as the next step based on assets accumulated by the Integrator.
As the launch of NABE results in a transfer of existing power stations into a new entity, how will this affect the transformation of the Polish energy sector and energy security?
The transfer of assets alone will not immediately affect the energy mix in Poland. However, it will make it easier for energy companies to obtain financing for renewable energy development projects. Companies listed on the Warsaw Stock Exchange wishing to grow their revenues in the power generation segment will only have one choice – they will have to develop RES.
While developing RES, the Polish energy sector needs a stabiliser, a reliable source of electricity that will ensure supply regardless of the weather conditions unfavourable to RES production. Ultimately, this function will be played by nuclear energy and energy storage facilities. In the interim, the system will be stabilised by energy coming from coal from Polish mines, which is a reliable raw material available in the country, without the risk of disrupted imports. Consumers and industries will be assured to receive energy supplies in Poland, regardless of atmospheric and geopolitical factors.
I am an employee of a power plant to be part in NABE. How will my situation change?
Talks are ongoing between representatives of the government and energy companies and the social partner to develop a social contract for the whole sector in connection with the transition. Details will be agreed and made public after the completion of the negotiations. The establishment of NABE is not expected to radically change the status of power plant employees and just transition measures will apply.
I am a consumer of electricity. Am I now going to have to sign a contract to buy energy from NABE?
NABE will be a producer and not a distributor or seller of electricity. Interaction patters will change in the wholesale market leaving the retail sector directly unaffected. Consumers will be able to continue buying from their current distributors, or make a switch, in line with the terms set out in the contract. Electricity distributors will be committed to customer care and attractive product portfolios, which in practice may entail distributors purchasing some energy from power stations owned by NABE.
How will the energy trading market be organised in Poland after the establishment of NABE, which will initially take a dominant position on the generation market?
NABE will generate electricity and sell it at the wholesale energy market. Stripped off their coal assets that generate energy and supply it to consumers, PGE, Tauron, Enea and Energa will invest in the development of their own capacities, but only in low- and zero-emission energy sources.
The domestic renewable energy potential will increase over time to gradually displace the conventional energy concentrated in NABE. Consequently, NABE’s market share will gradually decrease over the years, in proportion to the increase in installed capacity of low- and zero-emission sources. Ultimately, the output of all coal-fired power plants is to be completely replaced by cleaner RES and nuclear.