Interview | Zbigniew Gryglas, Undersecretary of State, Ministry of State Assets

11 March 2020

The Ministry of State Assets came into being in late 2019, after the Ministry of Energy was closed down. The energy department covers matters of energy, energy resources and fuels. Zbigniew Gryglas is primarily responsible for offshore wind development.

Mister Gryglas, you recently joined the Ministry of Assets with a mission to support offshore wind development in Poland. What is your vision for this sector?

The ambition is to have almost 20% of our future energy production coming from offshore wind farms by 2040. This translates into thousands of wind mills that would generate 10 GW of electricity - maybe more, given how quickly technology is improving. It is a huge endeavor as you can tell. According to our calculations the investment will be as high as PLN 120 billion (~ EUR 40 billion).

 

The vision extends way beyond production, we have an opportunity to develop a new branch in our economy. We are yet to install any wind mills on the Polish coast and even so we have hundreds of companies that are producing goods for this sector - be it foundations, cables, towers etc.

 

One thing we are missing is turbine assembly, but I am confident that world wide leaders will consider opening up a factory locally, given the massive volume of units we will need.

It is indeed impressive how robust the local supply chain is - do you have any intention to bind developers to source components locally?

We do not want to force investors, local or international, to use a particular source for their components. Foreign investors are welcome and appreciated here, as is the case with Orsted (cooperating with PGE Baltica), or Equinor (working with Polenergia).

This being said, I am sure that Polish products are an excellent option. First off, our companies can deliver great quality - Telefonica Kable for instance holds 40% of the European market share for offshore cables, a testament to their good work. Secondly, it makes sense to source components locally rather than transport them from far away places like Asia - the costs increase and the transport itself is often not eco-friendly.

 

 

Do you expect the supply chain to develop organically or are you planning financial incentives?

The Offshore Bill will require every investor to present a local content plan and we will analyze the performance for each. Some may want 50% of deliveries to come from Poland, other maybe more - we will see how this pans out when the times comes.

One other direction we have in mind is to join forces between companies that are part of the supply chain. Some of them are under state control, others are private - regardless, it is always better to prepare production for final products rather than deliver them separately.

The Offshore Bill draft has been submitted for public consultation in the beginning of this year. How did the industry react to it?

I am confident that the process will be finalized before the summer of 2020 - it is now up to the Parliament to accept it and, as a final step, to be signed by the President.

 

Before preparing the offshore law we had numerous talks with industry members and investors, so the draft takes into account the needs they expressed. The feedback so far has been positive - generally speaking they accept the underlying idea of the law, the support mechanism proposed and the preference towards a local supply chain. 

 

Poland recently opted out of EU’s goal to achieve carbon neutrality by 2050. How far do you think Poland can go during this time, what is a realistic expectation in your view?

Listen, our starting point is different from many western countries. France gets the majority of its energy from nuclear, whereas we still rely on coal for about 80% of our needs. 

 

Ultimately our desire is in line with that of the European Union in the sense that we want to move away from using coal. However, the process itself will not be easy. Offshore, photovoltaics, maybe nuclear - they will all become more relevant in our mix but coal will continue to play its role, likely around 40%.

 

From our European colleagues we expect understanding towards the fact that we are in an extremely different and difficult position. We will need time and money, and we count on their support.

What type of support you expect from the European Union more specifically? Do you have any thoughts on the Just Transition Fund that wants to mobilize over EUR 100 billion?

It is difficult to calculate the costs of this transformation. Of course we will engage our own resources, local and international investments, but surely we will need substantial support from the Union.

This EUR 100 billion fund is good news, and various other mechanisms are being explored (aside from direct financing) to help regions in transition. One critical point for us is that fundamental policies, like those concerning agricultural and restructuring reforms, remain untouched - we still need support in these areas to finalize the work we have started.

You briefly mentioned nuclear energy, a topic that divides opinions among industry members. What are the main arguments considered by the Government to make this decision?

Our master plan does include nuclear energy as of now, but personally I am rather skeptical about this possibility. If we are to move forward it will likely be with small modular reactors because old technology that is used presently in France, Germany, Japan will come to an end. The issue is that the technology for small reactors is not fully available yet. Several 200 MW power plants that burn coal will need to be replaced in Poland in the near future - these small reactors may be the replacement solution.

What about onshore wind? Can we expect the distance rule to be adjusted this year to allow new developments?

 

We made faulty decisions at times. The rules we had in place initially were too flexible, investors could build farms almost everywhere. It is easy to understand why local communities responded with dissatisfaction, and the 10H obligation is a consequence of this.

 

Drawing lessons from this experience is absolutely crucial, as we want to fully avoid such conflicts for offshore. We are choosing the zones with great care, far from transportation routes, beaches, fishing areas etc.

How is the Government tackling this issue of social acceptance nowadays? 

Poles are actually enthusiastic for renewable energy, take the example of solar panels and how quickly their number is growing. The issue was caused by inconvenient locations, this is what we need to sort out in reality.

Do you have a final message for international investors that are eyeing opportunities in Poland?

International investors are needed and welcome here. We have tremendous development perspectives to offer, a stable business environment and overall, a very safe country. 

 

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