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Coal Market in Poland

Coal is the primary fuel used for power generation in Poland. As evidenced by PSE’s data, total electricity output was 152,308 GWh in 2020, of which 71,546 GWh (47%) were produced by hard coal-fired power plants and 37,969 GWh (25%) by lignite power plants. The remaining 42,793 GWh (28%) were contributed by commercial power plants, wind farms, gas fired power plants and hydropower plants.
 

The structure of fuels used in electrical energy production in Poland in 2020 [GWh]

 

Source: PSE SA, www.pse.pl

 

 

In 2020 domestic power plants generated 4.1% less electricity versus the same period in 2019. The highest increase in electricity output (15.1%) was achieved by gas-fired power plants and water power plants (10.0%). Production for hard coal power plants decreased, by about 8.5%. The deepest decline, by 8.5%, was suffered by lignite power plants.

 

 

Year-over-year change in fuel consumption for electricity generation in Poland in 2020

Source: PSE SA, www.pse.pl

 

The dynamics of energy production in 2020 reached a negative result (-4.1%), the demand for energy from hard coal decreased by approximately (8.5%).


Average price of BASE contracts on TGE S.A. 2018 - 2020 [PLN/MWh]

Source: TGE SA

 

In 2020 the foreign trade balance was dominated by imports of electricity, totalling 13.2 TWh. Higher imports lead to a lower domestic production of electricity.

 

Production and Sale of Thermal Coal in Poland

 

Poland is a major producer of hard coal globally and the largest one in the European Union. However, a steep fall has been observed for several years. The declining trend of thermal coal production in Poland was triggered by the restructuring of the hard coal sector, the restrictive climate policy of the European Union, including obtaining energy from renewable sources in order to reduce greenhouse gas emissions.

In 2020, the production of thermal coal amounted to about 42.1 million tonnes, which represents a decline of 15.1% y/y.
Sales in 2020 amounted to about 41.0 million tonnes, including about 26.7 million tonnes of thermal fine coal sold to commercial power plants. Sales of thermal coal decreased by about 12.2% in comparison to 2019.
As at the end of 2020, coal inventories were 5.3 million tonnes, which represents an increase in comparison to the level recorded in December 2019 – 0.7 million tonnes. Higher inventories result from lower hard coal consumption in power plants due to warm winter and higher wind energy production, as well as from lower energy demand in the country related to the restrictions introduced in connection with the coronavirus pandemic, which resulted in a slowdown in economic processes.


Production, sales and inventories of thermal coal 2018-2020 [million tonnes]

Source: ARP SA

 

Thermal Coal Prices


In 2020, the average annual price of fine thermal coal for commercial power plants was PLN 11.62 per GJ, the change dynamics was ca. 1.1% y/y

In 2020, the average price based on the PSCMI index was approx. PLN 11.92 per GJ, which compared to the average price in 2019 (PLN 11.99 per GJ) represents a decrease by approx. 0.6%.

 

Average thermal coal price in Poland and PSCMI in 2018-2020 [PLN/GJ]

Source: ARP SA



Thermal Coal Imports and Exports


Imports of coal are the main source of that fuel for EU Member States. By 2008 Poland was one of the largest coal exporters to Europe. However, since 2008, it has become a net importer, as a result of changes taking place in the coal market. The key reason was the restructuring of Poland’s coal mining sector, which resulted in a significant reduction of coal production, while internal demand remained stable. Coal is imported to Poland mainly from Russia (73% of total coal imports). Coal is mostly delivered by rail via terminals in Braniewo, Terespol, and Małaszewicze. In 2020 the largest importer of Polish coal were the Czech Republic.


Hard coal imports and exports in 2018-2020 [million tonnes]

Source: ARP SA