Offshore wind farms will transform the image of the Polish energy sector, generating inexpensive, clean energy and providing the impetus to build a new industry in the national economy.
Development of offshore wind farms
Strategic target:
Baltica project
In February 2021, PGE Polska Grupa Energetyczna and Ørsted signed an agreement to establish a 50/50 joint venture to develop, build and operate two offshore wind projects in the Baltic Sea with a total capacity of up to 2.5 GW. The estimated investment is up to PLN 35 billion.
In May 2021, the agreement was finalised and the partners now each hold a 50% stake in the Baltica 2 and Baltica 3 projects, which make up the Baltica offshore wind farm – the largest offshore investment in the Polish part of the Baltic Sea.
Baltica 2 and Baltica 3 will significantly contribute to Poland’s transition towards green energy, accelerate the development of the local supply chain and stimulate economic activity for years to come. Both phases have already received environmental permits and signed grid connection agreements, and on April 7, 2021 received contracts for difference from the Energy Regulatory Office. Depending on the final investment decisions of Ørsted and PGE Group, Baltica 3 (1 GW) could be put into service in 2026 and Baltica 2 (1.5 GW) before 2030. The next phase of PGE’s offshore wind project, Baltica 1 with a capacity of 0.9 GW, is scheduled for completion after 2030.
In April 2021, the Energy Regulatory Office granted Baltica 2 and Baltica 3 the right to cover the negative balance (the so-called contract for difference) ensuring a price not higher than 319.60 PLN/MWh in accordance with the Regulation of the Minister of Climate and Environment and the Act on the Promotion of Electricity Generation in Offshore Wind Farms, the so-called Offshore Act. The award of the contract for difference is subject to the final approval of the European Commission.
In July 2021, PGE and Ørsted selected the consortium of Geoquip Marine and MEWO S.A. to carry out a geotechnical survey of the seabed. Surveying the seabed subsoil is one of the key elements in preparation for the construction of an offshore installation. The scope of work includes the drilling of deep boreholes, surveys to determine the sequence and depth of geological strata (CPT soundings), shallow boreholes, as well as conducting laboratory tests offshore and onshore. The performance of the subsoil investigation work is necessary to obtain the final investment decision and to start the construction of offshore wind farms.
In August 2021, PGE Polska Grupa Energetyczna selected a financial advisor for the construction of the Baltica 2 and Baltica 3 farms, comprising the Baltica offshore wind farm – the largest investment of its kind in the Polish part of the Baltic Sea. PGE’s advisor in securing financing for the construction of offshore wind farms in the Baltic will be Société Générale.
PGE and Ørsted have also notified the individual price in the contract for difference for both phases of the Baltica offshore wind farm project being carried out together – Baltica 2 and Baltica 3. After verification of the documentation by the Energy Regulatory Office and the Office of Competition and Consumer Protection, this has been forwarded to the European Commission and is awaiting a decision.
The Baltica project has also launched tenders:
- for the supply of wind turbine generators
- for the hiring of offshore wind turbine installation vessels
- for the execution of the third stage of geotechnical research (analysis of the geological structure of the seabed and its strength for offshore wind turbine foundations)
- for the general contractor for the land connection
Other offshore projects
In January 2021, PGE, Tauron Polska Energia and Enea signed a letter of intent to work on future offshore wind farm projects. In the letter of intent, the companies expressed their willingness to establish strategic cooperation related to future offshore wind energy investment projects in the area of the Polish Exclusive Economic Zone of the Baltic Sea. The motivation for the cooperation is to achieve synergy effects when undertaking joint investments in the offshore field.
In November 2021, PGE Polska Grupa Energetyczna signed conditional agreements with Tauron Polska Energia and Enea for the sale of shares in four SPVs tasked with obtaining location permits for the construction of offshore farms in the Polish Exclusive Economic Zone in the Baltic Sea. These are conditional agreements. The approval of the Office of Competition and Consumer Protection was the only condition precedent for both preliminary agreements. The application to the President of the Office of Competition and Consumer Protection for the concentration between PGE S.A. and ENEA S.A. was submitted on July 5, 2021, and the concentration consent was issued on December 23, 2021. An application to the President of the Office of Competition and Consumer Protection for the concentration of PGE S.A. with TAURON Polska Energia S.A. was filed on October 28, 2021. The concentration consent was issued on January 10, 2022.
Location permits
The processes for obtaining location permits for offshore wind farms – for the construction and use of artificial islands – are in progress. PGE has submitted seven such applications to the Ministry of Infrastructure (November 2021 – 2 applications; 26 January 2022 – 3 applications; 2 February 2022 – 1 application, 9 February 2022 – 1 application).
We implement our investments in offshore energy based on a well-considered strategy and economic calculation. We are interested in prospective areas in the Baltic Sea that will allow us to develop offshore in the near future. As planned, we are consistently applying for location permits for our wind farms in additional areas.
We are building the offshore industry in Poland
PGE’s investments in offshore wind farms are pioneering projects on the Polish market – therefore PGE Group is contributing to the formation of a new sector of the economy in our country. The construction and development of the offshore wind energy sector on the Polish coast will have a positive impact on the development of the national economy, particularly in a regional dimension – the whole area of Pomerania. Local companies will be able to benefit from orders from general contractors, and the existing infrastructure on the coast provides opportunities for the development of Polish port and transport logistics.
A similar idea of increasing the share of local content and building added value in the Polish economy is guiding the Sectoral Agreement for the Development of Offshore Wind Energy in Poland, of which PGE is one of the signatories.
We also continuously engaged in dialogue with suppliers and subcontractors as part of Suppliers Days. In April 2022, we conducted such online presentations, which were attended by around 800 representatives of companies interested in cooperation, including more than 500 from Poland, indicating strong interest from Polish companies. In June, we held a workshop for suppliers with an emphasis on QHSE standards. During the events organised for suppliers, we not only highlight possible fields of cooperation, but also indicate the requirements for potential subcontractors.
Our efforts are paying off, as the first domestic contractors are already taking part in our offshore investments. In August we selected the contractor for the construction project for the offshore part of the Baltica offshore wind farm: it will be a consortium of the Polish branch of Denmark-based Ramboll and the Gdańsk design office Projmors. We are announcing further major tenders – in the spring we announced procedures for the general contractor for the onshore part of the Baltica offshore wind farm, and in August for the contract engineer for the onshore part.
As part of its activities related to the development of the offshore sector, PGE also cares about the development of human resources. Experts in many areas related to the offshore wind sector are already being sought, including the design, construction, operation and maintenance of offshore wind power plants. The investment preparation process also requires managers who will be able to manage it efficiently and later supervise the proper operation of offshore wind farms. Preparing strategies for offshore projects, creating and handling financial instruments for emerging investments, risk management or crisis management – these are just a few examples of career opportunities in the promising offshore wind industry emerging in Poland.
That is why PGE Polska Grupa Energetyczna has joined forces with Łazarski University to prepare a postgraduate program called “Offshore wind energy: management, preparation and implementation of investments,” based on the teaching staff from this renowned university in Poland and expert practitioners with experience in the offshore industry, which will be launched from October 2022 and is addressed to anyone interested in professional development in the offshore wind energy field. It will be the first course in Poland to prepare experts to manage investment processes in offshore wind energy.
In cooperation with the Maritime University of Gdynia, a major entitled “Risk Management in the Offshore and Wind Energy” has been created under the auspices of PGE. The studies are intended for managerial and technical staff of companies operating in the entire offshore industry and its component sectors. Both OO&G (Offshore Oil&Gas) and OWE (Offshore Wind Energy) professionals can benefit from this offering. Graduates will acquire knowledge and skills primarily related to effective and safe risk management in offshore projects. This will be ensured by qualified staff consisting of experts in shipping, safety, law, as well as experts-practitioners from the offshore wind energy sector.
The construction of the installation and the accompanying infrastructure is preceded by a number of studies. We cannot imagine the implementation of PGE Group's offshore program without cooperation with Polish scientific institutions, especially from Pomerania. The knowledge possessed by the scientists of the Institute of Hydroengineering at the Polish Academy of Sciences will be a valuable asset in the course of our further cooperation. I am certain that Polish science will make a sizeable contribution to offshore wind energy projects and that this contribution will grow.
Building a new sector of the economy also means working with scientific centres:
- In autumn 2021, the Institute of Fluid-Flow Machinery at the Polish Academy of Sciences completed a research project for PGE Baltica to investigate the wind flow blockage effect of large offshore wind farms. As a result of the work, an advanced model of airflow through offshore installations was created,
- In June 2022, PGE Baltica, a PGE Group company, and the Institute of Hydroelectric Engineering at the Polish Academy of Sciences signed a letter of intent paving the way for cooperation to develop the offshore wind energy sector. The letter of intent includes, inter alia, subject-matter and operational consultation during the design work developing offshore wind farm projects in the Baltic Sea, and particularly concerns cooperation in studies related to port infrastructure.