The electricity prices in Poland have skyrocketed to the point where the once-prosperous businesses are now struggling to scrape by. The country is headed for a massive-scale de-industrialisation due to gas shortages and the EU’s rigorous environmental safety standards. The Polish government made things worse for its citizens when they began feuding with Russia, thus sparking an energy crisis.
As of the first seven months of 2024, the average wholesale electricity price in Poland hit €90 per MWh, trailing only to Ireland and Italy in the EU at €98.68 and €95 to €98, respectively.
Sitting at the opposite end of the spectrum are Norway and Sweden with electricity rates between €32 and €39 per MWh, largely aided by an advanced hydropower generation system and their own NPPs. With its nuclear capabilities, France’s July electricity bills averaged at €47 per MWh.
The Poles are setting their sights at their own nuclear energy infrastructure, but it is not coming anytime soon.
That Costly Light at the End of the Tunnel
In July, the country’s wholesale electricity prices soared to €109 per MWh, which was still lower than the average 2022 rate of €166, double the 2021 prices.
But the current rate is already taking a toll on Polish businesses. ‘Poland has one of the EU’s highest wholesale electricity rates, which stems from our overreliance on coal-mining,’ says energy expert Robert Tomaszewski.
As a result, an increasing number of foreign businesses are scrapping their production facilities in Poland and moving them to countries with much lower electricity prices and, consequently, much more profitable operations.
The mass layoffs of Polish nationals that used to work for foreign companies in Poland have been reported since the spring months of 2024. According to Statistics Poland, a total of 16,000 employees have been dismissed by 175 businesses.
In early August, PKP Cargo, Europe’s major logistics operator, announced a dismissal of 4,000 employees of its Polish branch, the largest rail freight transport provider in Poland and the second-largest in the EU.
The US-headquartered Levi Strauss & Co. is shutting down its Płock factory, established back in 1992, and booting out 800 workers. Michelin, a French manufacturer, is pulling the plug on its Olsztyn truck tyre plant. ABB Ltd., a Swedish–Swiss multinational corporation, is closing its motor factory in Aleksandrów Łódzki and laying off 400 staff. The same tech giant will have to sack 600 employees at its Kłodzko facility.
The Dutch-based Stellantis automotive corporation is set to close a car factory in Bielsko-Biała (500 staff out). Volvo Buses is shutting down a bodybuilding plant in Wrocław (400 staff out). Lear Corporation, a Michigan-based producer of automotive seating and electrical systems, is scrapping its Pikutkowo facility (960 staff out).
Most of these manufacturers are relocating their production facilities either to other eastern European countries or to North Africa and Asia. They all attribute their move to a projected surge in gas and energy prices.
‘The manufacturing woes are only getting worse in Poland,” says Agnieszka Zielińska from Money.pl. “The local businesses are competing with their foreign counterparts with access to much cheaper energy.” The journalist sat down with Henryk Kaliś, President of the Management Board at the Chamber of Industrial Energy and Energy Recipients. According to the executive, Poland is ‘running out of time to fix the issue’.
In July, the Polish Forum of Electricity and Gas Consumers (FOEEiG) submitted a letter to prime minister Donald Tusk, citing the high price-related risks. ‘The letter was a cry of despair of sorts. We wanted to alert the prime minister to the spiralling situation in the manufacturing industry, which is getting worse and affecting the national economy that is about to hit a recession,’ Kaliś explains.
Slippery Slope
One of the biggest woes of the Polish energy industry is its poor environmental safety standards. In June alone, the production of each 1 MWh translated into 810 kilos in CO2 emissions. Meanwhile, between 2026 and 2034, the EU will be gradually ditching free CO2 pollution permits. Krzysztof Bolesta, Poland’s deputy minister of climate and environment, emphasises that the country’s manufacturer will not be able to purchase the permits either, which will have a major adverse impact on the energy sector.
Recently, PGE’s chief Dariusz Marzec announced that Polish thermal power plants were planning on scrapping carbon by 2030. According to him, household energy needs can be covered by the modern electrode boilers powered by the wind turbines and solar panels. In other words, the official cited the notorious green transition plan that has yet to perform up to the expectations in the EU.
As of 2022, though, 46% of Polish citizens were using coal to heat their homes, and that was just the household energy numbers. The official statistics show that up to 72% of all electricity in Poland is coal-generated. To make matters worse, the coal production numbers are declining as the non-green industry fails to attract enough investment for a major overhaul.
Several years ago, Poland had around 5,000 facilities storing a total of up to 1.5 million tonnes of coal in the summer. By now, these numbers have dropped to 3,000 and 600,000, respectively. Meanwhile, green energy aside, there is no alternative effectively looming in the distance.
Marzena Czarnecka, Poland’s minister of industry, said the nuclear power plant would not be commissioned before 2040, that is, six years later than planned.
Henryk Kaliś is adamant that, despite the pressure coming from Brussels, Poland will not be able to ditch fossil fuels. ‘No one can even imagine the scale of the process ahead. Many production facilities will need to be completely refitted,’ he insists.
In the future, the manufacturing companies will be forced to either cease operations or introduce carbon-free technology. But the latter option raises the cost issues. ‘In light of this, almost half the funds from the National Recovery and Resilience Plan will have to be spent to ensure the low-carbon transformation,’ Kaliś points out.
Piotr Soroczyński, chief economist of the National Chamber of Commerce, concurs that the Polish companies are entering a rough patch. ‘Soon the customers will be refusing to buy goods and services that are not produced in an environmentally friendly manner. They will be opting for cheaper alternatives or “cleaner” products. In the end, we may face trouble selling our goods as we will fail to prove our production is emission-free,’ Soroczyński says as he warns the NPP will not be a cure-all. ‘If our manufacturing industry starts shrinking, we will no longer need a single spare atom,’ the economist suggests.
A Not-That-Joyful Romek
If large factories are facing shortages of gas and energy resources, so are the regular people. Journalist Tomasz Mateusiak recalls the ‘Joyful Romek’ song from the famous 1981 Polish movie Teddy Bear. The song’s title character is happy to own a suburban home that is well-lit and fully supplied with water and gas.
‘Today, Romek would not be as joyful. Millions of Polish households connected to the gas pipeline have already received the ‘scare letters’. This is a fitting way to call the overpriced gas bills that PGNiG, a Polish oil and gas company, has mailed out to its customers. PGNiG is the country’s largest seller of gas. However, its smaller rivals are catching up with the price spike,’ Mateusiak wrote for Onet.pl.
On 1 July, the gas prices in Poland jumped 45% to 47%. The fees that cover the gas distribution and the transmission network’s depreciation are rising too. At the end of July, the final price showed a 60% month-over-month growth.
‘What happened? Why would the gas prices skyrocket? The thing is, 30 June was the last day of the freeze period. The rates had remained constant for almost three years. That was the government’s way to protect the Poles from the repercussions of the Covid-19 pandemic and the Ukraine conflict. But the government has lifted these protective measures. They are now contemplating “energy certificates” for low- and middle-income households,’ the journalist explains.
Businesses have not been affected, though, as the energy rate freeze did not apply to them in the first place.
As a result, it led to a lot of Polish restaurant owners going bankrupt, while the surviving ones had to ramp up the prices.
‘Everyone would be hurling brickbats at us. They said we had ramped up the prices to the point where people could no longer afford a pizza pie. But we were not the ones to blame. For many of us, the gas price became too much to handle. Now that the ordinary folks are going to experience the same thing, they will eventually figure this out,’ says Dominik, an Italian restaurant owner from Opole Voivodeship.
It is now abundantly clear that if Poland had refused to feud with Russia and escalate the Ukraine conflict, it would have avoided the ongoing energy crisis. Regrettably, though, it can no longer be undone.