A solar counterrevolution in the Sejm

The transmission system operator complains that the boom in PV panels in Poland threatens the stability of the power grid. However, prosumers are installing them by the dozen, because they want to protect themselves against the hikes in energy prices that may reach over 10 percent. Perhaps a compromise solution would be to subsidize energy storage that would stabilize PVs? – writes Wojciech Jakóbik, editor-in-chief BiznesAlert.pl.

The photovoltaic revolution continues

At the end of July 2021, the installed capacity of solar energy in Poland reached 5.6 GW, according to the Agencja Rynku Energii think tank. In July almost 31 thousand new PV installations were added to the system, which is an almost 100 percent increase in new renewable energy sources in our country. Onshore wind farms could be one of the alternatives, but this sector cannot develop because of the distance law, which is still waiting to be liberalized.

The new renewable sources may help to achieve the 31 percent EU target for Poland in 2030, and to increase energy supply in a situation where conventional energy is increasingly unreliable due to the advanced age of coal-fired power units, whose life span will end around 2025. Meanwhile Poles want to achieve the RES share target of 15 percent in 2021, although they had until 2020 to do so. However, in fact the surge in new PV installations results from the fact that households as well as companies want to cushion themselves from the hikes in power prices in the coming years, and from the news that energy companies will apply to the Energy Regulatory Office for an approval to increase the electricity prices by several percent. It has been speculated that the prices may surge by 40 percent, but that guess is probably way off the mark, as it doesn’t take into account the inevitable political pressure on the state-owned companies that generate power.

“Poles have fallen in love with generating energy for their own needs, and this generation contributes, as I said at the beginning, to improving the energy mix in Poland. It also gives rise to some problems and this is one of the reasons behind this amendment proposal, which I would like to discuss at this moment,” said Jadwiga Emilewicz, former Minister of Development, on July 20 in the Polish Sejm, when presenting a parliamentary bill on this issue. “What is the purpose of the proposed changes? Firstly, we would like, and this is my intention, to introduce some modification into the existing system of support for the presumption of individual recipients, because after almost 2 years, we have identified some shortcomings, problems in how the system operates, ” she explained.

“The parliamentary bill introduces a 1:1 system of settlements for prosumers throughout the year. The Ministry of Climate and the Environment accepts this solution as a transitional one, and proposes that it be valid until 31 December 2023. This is linked to the mandatory entry into force of the market directive. This is a Directive of the European Parliament and of the Council, no. 2019/944, which in article 1, point 4 requires the implementation in the above deadline of a separate system to settle the energy fed into and received from the electricity grid,” said Deputy Minister of Climate and Environment Ireneusz Zyska in response to Emilewicz’s demands. “Therefore, the Minister of Climate and Environment proposes to include in the draft law a solution consisting in the implementation of a new system of prosumer settlements in accordance with the market directive, known as net-billing, from 1 January 2024. It is based on separate billing of the energy input into the distribution network and the energy input from the electricity grid, based on the value of a unit of energy fixed at the quoted market price, the current price, and now you can even say the hourly price,” the deputy minister explained.

The prospect of lowering energy bills has convinced Poles to invest in photovoltaic panels, and the solutions presented above serve this purpose. However, other stakeholders have a different point of view.

The solar counterrevolution

The transmission operator, supervised by the minister, is concerned about safety. There is a conflict of interest between these priorities.

“If I were to say in general what I think about this parliamentary project, it comes down to the fact that if it were to be introduced in the form it is at the moment, it would be a source of great problems for the National Power System and for the distribution systems. This is my first point, ” Piotr Naimski, the Government Plenipotentiary for Strategic Energy Infrastructure, replied to Jadwiga Emilewicz. “It is worth saying that the electricity system here is treated physically as a virtual warehouse. In other words, the energy produced by prosumers is stored in networks. The capacity of the network is limited. It’s not a bottomless pit. You can’t stretch it too far. I can tell you what the outcome will be. This will result in the need to deny or limit connections. If the high chamber at the Sejm and the Senate, decides that this should be mandatory, then the national power manager will have to limit the energy production in these units, which means they will have to get paid for this. The fee that will be associated with this will be paid by all other users of the electricity system. It’s worth considering, because that’s what this system looks like. Having said that, it seems to me that it is worth considering this whole project from this side, from the context of developing the prosumer electric power industry. If we consider it in this way, it will turn out that it requires very significant modifications, ” he warned.

Tomasz Sikowski represented Polskie Sieci Elektroenergetyczne, the transmission grid operator, in the debate and spoke about the challenges posed by PVs. “After exceeding a certain level of installed capacity in photovoltaic sources, negative side effects appear. This applies both to the operation of the system and to the operation of conventional power plants, which are still needed to meet the demand and will continue to be. As far as the electricity system is concerned, we are in the process of achieving this level. At the moment, photovoltaics are helping us a lot with the demand that we have, but if they continue to grow at this rate, we will reach the limit of absorbing energy from energy sources, which will result in what minister Naimski was talking about: we will have to reduce renewables. This is not in the interest of national consumers, as there will be sources of generation that have benefited from substantial support schemes, and these sources will not produce energy. In such circumstances, further development of renewable sources must be based on economic considerations reflecting the benefits and technical conditions of the operation of these sources in the system,” Sikorski said.

He also argued that photovoltaics should now be developed on market-based rules, and that the discount system that causes a spike in demand should be abandoned. “For this reason, such stimulation is a very dangerous stimulation, as it can lead to energy deficits,” he stated. He also criticized the idea of a virtual prosumer. “This type of solution is completely inadequate for the functioning of the electricity market for the simple reason that it interferes with the mechanism of concluding commercial transactions on the electricity market,” he said in the Sejm. He also opposed the exemption from distribution fees. “In our opinion, this is unacceptable, because it violates the rights and interests of those recipients who are not prosumers. This simply leads to subsidies, ” he added. “The bill needs to be updated in the areas I mentioned, plus a few smaller ones. These changes are necessary so that the new regulations create the conditions for the development of renewable energy prosumers that take into account the interests of all consumers. On the other hand, I wanted to emphasize that the implementation of this amendment is urgent, because the current system already has a flaw and can no longer be continued, because it will create the same problems as the proposed amendment, ” Sikorski concluded.

“While appreciating all the challenges associated with the technical difficulties, with the distribution of energy, it seems that this project mitigates risks and limitations, democratizes, as I said, and above all gives the opportunity to supply and receive cheap and clean electricity in a way that is not overcapacited and where it is needed,” Emilewicz answered.

Compromise to facilitate energy security?

We are therefore faced with a classic dispute over the two tips of the energy security triangle. Those are: safety, affordable price and environment. Minister Naimski focuses on the security, while Minister Emilewicz focuses on the price. It is worth reconciling these two points of view.

One solution would be to link support for photovoltaics with the obligation and support for energy storage to stabilize such sources. Such a solution would mean doubling the cost of support, because a PV installation can cost PLN 15-50 thousand and the cheapest energy storage costs roughly the same. However, it may also be worth investing in a stable development of sources that provide the energy price reductions needed by households and companies in Poland.

The basic conditions are sound investments in PVs that will not be overcapacitated and badly adapted to the capacity of the system. On the other hand, further investments are needed to expand the distribution system, which has not prepared for the renewable revolution yet, as Katarzyna Szwed-Lipińska, head of the Renewable Sources Department at the Energy Regulatory Office, stated at the European Economic Congress in Katowice. The Poles missed this revolution and now have to catch up in a way that ensures complete energy security, according to the three tips of the triangle in its definition.

Work is under way on the fourth increase of the budget of the Mój Prąd program. The National Fund for Environmental Protection and Water Management is again increasing the pool, allowing to subsidize more than 20 thousand installations currently on waiting lists. Poles are investing in the sun, and the war between politicians over how to respond to this need should end with a constructive solution. This revolution can no longer be overlooked, we have to learn to live with it.

Chamber of tor-Turów

“Poles are going through the torture of negotiating with the Czechs on the dispute over the Turów mine. In reality and despite the emotional frenzy, the talks are nearing the end, and an agreement is within reach,” writes Wojciech Jakóbik, editor-in-chief BiznesAlert.pl.

Poland and the Czech Republic agree that the compromise is close, and its draft is soon to be presented to the prime ministers of these countries for a final decision. However, another round of talks in Prague ended on the last day of September without a breakthrough. Still, a watershed moment should finally arrive in October, especially in view of the fact that the parliamentary election in the Czech Republic is scheduled for October 8-9. However, we warned on BiznesAlert.pl that the hard-line prime minister Andrej Babiš could be replaced by the even more intransigent Pirate Party politicians if they gain sufficient influence over government policy.

Despite the prospect of the lignite dispute at the Turów mine ending, the conflict over the duration of the agreement persists. The Ministry of Foreign Affairs has warned that the attitude of the Czechs was “irrational”, because they demanded that the agreement be valid indefinitely. Deputy Minister for Foreign Affairs Paweł Jabłoński compared this provision with the controversial clauses in the Yamal gas pipeline contracts with Gazprom and the Russian Federation. The Czech Environment Minister Richard Brabec argued that this provision was nothing new and it was the Poles who wanted to negotiate anew a long-established issue.

The leverage the Czechs can use, possible thanks to the irregularities that occurred when Poles decided to prolong Turów’s mining license (Lex Turów – worth reading about), was handed to them by the CJEU in the form of a EUR 500 thousand per day penalty starting on 21 May, when the court decided that Poland had to stop extraction at the mine until the legal dispute is solved. Of course, the Turów complex should not be shut down for two reasons: the agreement with the Czech Republic may take into account the absence of the CJEU penalty, its cost will still be lower that the price of shutting the mine overnight.

The media are turning the heat up, and the dispute over Turów has turned into yet another opportunity to throw bricks at European institutions, which sometimes make controversial decisions, such as the one to shut down the Turów mine. The ruling can be challenged by lawyers, but they will not necessarily be forced to do so if Warsaw manages to reach an agreement with Prague. However, the Court of Justice of the European Union has often defended Poland’s interests, for example by standing up for energy solidarity in disputes with Gazprom over Nord Stream 1, Nord Stream 2 and their onshore legs.

The biggest loser in this dispute is European integration, called out by the same people who do not want to criticize the achievements of the Polish negotiators. The biggest winners will be the Czechs, who use the circumstances and the available political and legal tools to pursue their interests. Warsaw can limit losses on the one hand, and use the Turów precedent to start a regional discussion on lignite mines in the Czech Republic and Germany, and additional funds for the energy transition in those countries and Poland.
It is worth noting, however, that the Turów agreement is only the beginning. Greenpeace is already challenging the license process of nine coal mines, and unofficially the German city of Zittau is considering suing Turów. Lignite mining in the three countries in question used to be a common asset during the prosperity of the industry, but is becoming a common burden in an era of accelerating climate policy. The Poles can show that the Czechs and Germans should also take political and financial responsibility for shutting down open pit mines. However, this requires that the fighting mood in our capital cities be replaced with cooperation. It would be enough to withstand the psychological torture resulting from the pressure of negotiation. The finish line is on the horizon. It is worth turning failure into success for the benefit of the whole region.

The fitness trail begins with Turów. Poland is on the offensive

The legal dispute over the Turów mine is only the beginning of a fitness trail that coal may have to face, because of critics from Germany, Czechia and organizations like Greenpeace. Despite coming under fire, the Polish government has launched a counteroffensive and is calling the bluff – writes Wojciech Jakóbik, editor-in-chief BiznesAlert.pl.

The fitness trail begins

Poles are being dragged through the courts by the Czechs on a technicality that does not comply with EU law. No agreement could be reached, which prompted the Czech side to refer the case to the Court of Justice of the European Union (CJEU). The licence to extract lignite in Turów was extended on the basis of the so-called Lex Turów, which was against the EU regulations. Poland prolonged this concession by six years without an environmental impact assessment, in breach of directives 2011/92 and 2000/60. The environmental conditions for the extension of this document were issued by the Regional Director of Environmental Protection in Wrocław. The flawed provision adopted back in 2018 has already been removed from the mining law by the climate ministry.

The dispute is now focused on remedies to address Czechs’ concerns about the impact of the open pit mine in Turów on their environment, including water levels. Polska Grupa Energetyczna (state-owned company, owner of the open pit and the adjacent power plant – ed.) has declared that it will complete the construction of an anti-filtration screen to protect the Czech waters. An objective look at the case reveals that any open pit mine can affect the environment, and there are many of those in the area – in Czechia, Germany and Poland, Turów being one of the smaller ones.

Until recently, Prague and Warsaw agreed that the mine does not affect the Quaternary geological layer in which groundwater is located. The screen was supposed to protect the Tertiary layer, on which the impact has not been proven, and the Czechs do not use water from that layer anyway. Despite the fact that the environment ministers of both countries did not meet in February, about which I wrote, the foreign affairs ministries did meet. The Minister of Climate and Environment of the Republic of Poland Michał Kurtyka had learned about the meeting plan proposed by his Czech counterpart Richard Brabec too late, and could not see him because of other commitments. Brabec did not respond to the proposal to reschedule the meeting. Meanwhile, the screen built by the Poles is now to be monitored to determine whether it helps protect groundwater as the Czechs expect it to. It is worth noting that in 2019 the Czech side had accepted the plan on this issue, and only after a while began to question it. The total cost was estimated at more than PLN 80 million.
Anyway, there was no amicable end to the dispute, for which there had been still hopes back in February when our ministries responsible for the environment were still in a dialogue. Then the case went to the Court of Justice of the European Union. It’s been suggested that Brandenburg may join the Czechs as a plaintiff, and that the court dispute will drag. Meanwhile, Greenpeace raised objections to the work of nine coal mines in Poland. Environmental arguments will be used to stigmatize the extraction of this fossil fuel, against which there is growing public resentment fueled by active climate policy and the activities of organizations such as Greenpeace. It seems that this particular fitness trail begins with Turów and may turn out to be long.

Poland in the crosshairs

The latest news suggests that during the latest round of talks, the Czech Republic and Poland have again failed to reach an agreement. It must be assumed in advance that the legal technicality on which we were caught red handed would be best handled outside of court. The Polish-Czech agreement is within reach, but our negotiators must overcome the pressure of the Czech side by responding positively to legitimate demands and rejecting those that lack justification. The negotiations are difficult due to many factors, but at this point they boil down to how much Poles are ready to pay for their legal errors.

It still needs to be decided who will receive the money. Unofficially, according to several sources, Warsaw is ready to accept the penalty of the Court of Justice of the European Union and transfer the money to the EU budget instead of bankrolling the expectations of the Czech local governments as part of a settlement agreement. If Prague was ready to settle, the money paid by Poland would go into the coffers of the Liberec Region. The money transferred to the Court in the event of a judgment without an out-of-court agreement will go to the EU budget. The heat surrounding the dispute has been turned up by a leak of documents suggesting that the Czech prime minister, who may lose his post after the election, may have bought himself an estate in France with shady money.

Poles have started revealing facts about the talks, thus suggesting a willingness to accept the judgment of the Court of Justice of the European Union, whatever it may be. The penalty of EUR 500 thousand per day may reach the amount similar to the EUR 50 million, Poles will have to pay the Czechs if their claims are recognized. The Poles want to demonstrate their determination and uncover the game the Czechs are playing.

Deputy Foreign Minister Paweł Jabłoński decided to reveal what has been talked about. “We are not in the habit of revealing the content of negotiations, but since the Czech foreign minister has departed from the truth, we are forced to do so. Public opinion in both our countries has the right to know who is responsible for the failure of the talks and the deterioration of relations, ” he tweeted. “We didn’t offer a “two-year deal”. We are offering a contract that will be valid until the mining ends, and that can be terminated in case either of the parties abuses the conditions of the agreement. This is the basic standard in international agreements concluded on a partnership basis. Moreover, we have proposed that the most important provisions, chosen and indicated to us by the Czech side, continue to operate until 2049 – even if the agreement is terminated. Those provisions pertained to, among others, monitoring the level of groundwater. The Czech government claimed that this was a key issue. Our offer guaranteed EUR 50 million for water projects in the Liberec region, above – standard rules for monitoring water, pollution, noise, regular reporting of information – and even a ban on the mine approaching the Czech border, until all of the listed conditions are met,” Jabloński enumerated.

“All this would be done in the first months of the contract. However, this proposal was rejected, because the Czech government demanded an agreement that Poland could never terminate – even if it was abused in the future. Partners do not enter into agreements on such terms. A responsible negotiator cannot bind their country to a 30-year no-exit agreement without knowing whether the other party will behave unfairly in the future. The result of the actions of the Czech government: the inhabitants of Liberec will not receive any money for water projects, no additional monitoring of groundwater, which is not required by law; the mine will be able to approach the border without any additional conditions,” the minister summed up.

“In the last hours, at the finish line, in response to our proposal, the Czech side began to escalate their demands in such a way as if their goal was to break off the talks,” the Polish Minister of Climate and Environment Michał Kurtyka explained. “We cannot transfer these funds to the inhabitants of the Liberec Region on behalf of the Czech government, even though this would guarantee an amicable settlement of the matter. If there is no will to reach an agreement, then we must take note of this situation. We want to talk with a partner who has the will to reach an agreement and if it is not there, we will not sign the agreement with ourselves, so we left the table, ” he added.

Chance for a deal after the election?

Perhaps after the election in the Czech Republic there will be a better political atmosphere for the resumption of talks with Poland. However, it is not certain, because the Pirate Party may have influence over the new government. The group is believed to be even more radical about the environment than the team of Andrej Babiš. “We will use all available legal provisions to show that the imposed temporary measures are a direct threat to the residents of our country, but also neighboring countries. We will submit additional requests for the withdrawal of the provisional measures in response to the new circumstances,” assured minister Kurtyka in the Rzeczpospolita daily. “At this stage, we would need to see a noticeable change in attitude on the part of our partner to return to the negotiating table. At present this has not happened, ” he added. So, there is a chance the parties will go back to the negotiation table if the Czechs make their position more flexible.

Fire, Sword and Nord Stream 2

Fire, Sword and Nord Stream 2

The Crimea Platform was an occasion to talk unofficially about Nord Stream 2. Poland and Ukraine played a significant role in those conversations. Together both countries can create an alternative to the supply system controlled by Putin’s pipe. They should start with solidarity in case Russia disrupts the supply, especially that Moscow is already cutting supply to Europe on purpose – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.

With fire and sword, or with gas and the military

The divisions between the crown’s noblemen and the Cossack nobility (Ukrainians – ed.) that led to the downfall of the Polish–Lithuanian Commonwealth described in Henryk Sienkiewicz’s prose, belong to history. Today Poland and Ukraine work together against Moscow, which is occupying Crimea and using gas for political ends, of which the latest example is it limiting the gas supply to Western Europe to force the launch of Nord Stream 2 as quickly as possible. According to Volodymyr Zelensky, the German promise that the role of Ukraine’s gas sector after Nord Stream 2 will be to provide green hydrogen is “about the future”, whereas Putin’s pipe poses a challenge that is here and now. The draft deal on Nord Stream 2 has many carrots, but still too few sticks. On the pages of Le Figaro and Die Welt presidents Andrzej Duda and Volodymyr Zelensky have warned that the project may be used by Russia to orchestrate a new aggression in the region. Thus, the leaders stressed the security aspect of the proposed deal on Nord Stream 2 formulated by the US and Germany in July this year, an issue that is not talked about enough. The first novel in Sienkiewicz’s Trilogy was titled “With Fire And Sword”, which was a comment on the fratricidal wars in the Commonwealth where this type of weapons were used. In the 21st century Russians are waging their war against Poles and Ukrainians with fire (gas) and sword (the military). The Polish-Ukrainian alliance is making the supporters of NS2 remember about this aspect of the issue. This pertains especially to Germans and others who, contrary to facts, want to present the pipe as a business venture.

Gas solidarity aka SOS

Supported by Poland, Ukraine demands specific security guarantees, that so far have been missing from the agreement on Nord Stream 2. On the 23rd of August politicians from Ukraine, Germany and the United States responsible for energy held a meeting to discuss the deal on the contentious Nord Stream 2 pipe. The talks are to be continued. The Independent Commodity Intelligence Services (ICIS) has ascertained that Ukraine allegedly sought to join the EU solidarity risk sharing system established under the SOS regulation. Ukraine wants to join a group of countries that would support one another in case of issues with gas supply. The group members already include Poland, Germany, Czechia and Slovakia. According to the ICIS source, Ukraine is concerned about a possible gas shortage at a CEE gas hub in Baumgarten this fall, due to the limited supply from Russia, a problem BiznesAlert.pl wrote about previously. If the plan pans out Germany will be responsible for guaranteeing a secure supply to the East at the point in Lanzhot on its border with Czechia. ICIS claims that Poland could benefit from the deal as well, as it would increase its chances at tapping into gas supply from Germany, that would complement the smaller deliveries via Ukraine, caused by a drop in transit across its territory.

The foiled return of Catherine the Great

In the past Poles have already tried to add Ukraine and other members of the Energy Community (e.g. Moldavia) to the solidarity risk sharing system under the SOS regulation, an initiative led by the former Polish prime minister Jerzy Buzek, one of the originators behind the Community. The regulation says that the regional energy solidarity group will exchange gas in case of supply shortages. It had been drafted after the gas crises in 2006 and 2009, and was then revised by, among others, Poles so that the stranglehold Gazprom has on gas storage facilities in Germany was not a threat to the security of gas supply to Poland. Here again a reference to Sienkiewicz’s novel is pertinent. The author’s memorable words about Catherine the Great crushing the Zaporozhian Sich (a disputed area ruled by Ukrainian Cossacks – ed.) are brought to mind when one considers the discussion on the security of gas supply to Europe. The amendment to the SOS regulation includes the solidarity rule, which is the foundation of the cooperation between regional groups. Germany was added to the group with Poles, making it offer gas from its system in case of problems, even if Gazprom does not want to provide gas from its German facilities, the biggest of which is called Katharina, named to honor… Catherine the Great, of which I wrote in 2015. The successful struggle to improve the European regulations increased Poland’s security, but in the future it may also increase Ukraine’s, provided that Kiev’s call is heeded across the European Union. For this reason it would be wise to include the Commission in the talks about the NS2 deal, which was wrongly replaced with Germany, which is trying to put on the EC’s shoes, and thus strips European integration of its credibility, especially when it comes to the gas sector. It should also be ensured that Russians emptying their gas storage facilities right before the winter season, which goes against market logic, will not lead to supply shortages in the European markets this fall. Poles and Ukrainians have warned about this. Polish gas storage facilities are full at 89 percent, and have a capacity of a little under 3.2 bcm. At the same time Ukraine wants to pump a record 20 bcm of gas into its storage before the heating season. Their western neighbors cannot claim they are equally prepared. The European storage facilities controlled by Gazprom are full at a record low 18 percent.

Poland and Ukraine can learn from history

Poles and Ukrainians could take another step and use the three-party cooperation with the US started during the Trump administration, as well as the investments promised in the region as part of the NS2 deal. Co-financing the construction of the Poland-Ukraine gas pipeline, for which neither the Poles nor the Ukrainians seem to be able to pay, would unclog the transit route in both directions, including to Ukraine which could receive 6.6 bcm a year. This move would make Kiev a true member of the SOS regime. Another step could be for Poland and Ukraine to jointly utilize their gas storage facilities to counterbalance the Gazprom-owned storage in Western Europe, which is fuelled by NS2. The Polish and Ukrainian storage facilities could take in LNG and gas from the Baltic Pipe, as well as other sources, e.g. Turkmenistan, which has been suggested by Ukraine. This is why in an interview with BiznesAlert.pl, the CEO of the gas transmission system operator by the Dnieper – OGTSUA has proposed a future where the energy security of NATO’s eastern flank will be strengthened thanks to an integrated gas hub, capable of providing up to 50 bcm of gas a year to the region, thanks to Poland’s diversified gas sources in Świnoujście (LNG terminal) and Pogorzelica (Baltic Pipe). It is worth reminding that the NS2 yearly capacity is 55 bcm. The gas and security sectors need to therefore respond to Russia fighting with fire (gas) and sword (the military). This is why the discussion on the security of the region after the annexation of Crimea should also be about the stability of gas supply and the other way around. The talks about the gas sector after NS2 also need to be about security. Poland and Ukraine can contribute to this debate, provided they receive efficient security guarantees and practical support with regard to gas supply. In the past arguments between our nations led to the disastrous collapse of the Commonwealth. The contemporary, successful cooperation in the gas and security sectors may bring a completely different outcome – further integration in opposition to the threat posed by Russia.

Vicari: Gazprom incident in face of historical gas price record in Europe

Incident at Gazprom facility in Siberia has temporarily affected gas supplies to Europe through Jamal-Europe pipeline. Although Gazprom informs about resuming the gas supplies, this incident is important in wider context of Nord Stream 2 dispute and gas price record in Europe. Madalina Sisu Vicari is commenting this issue for BiznesAlert.com.

The fire occured at Gazprom’s gas condensate facility near Novy Urengoy on Augus 5 has impacted the gas flows through the Mallnow point, which predominantly handles Russian flows to Europe. The gas flows through the Mallnow border point between Germany and Poland almost halved on Thursday, but then the have seemingly been restored on Friday – resumes Vicari. She reminds that the prices in Europe reached historical record on August 6 of $540 per 1000 bcm and the future contracts on ICE exchange reached a peak volume too. It was €44.65 per kWh.

The Urengoy incident has played an important role in the bullish sentiment around the prices increase, although the flows to Mallnow (entry point at Yamal-Europe pipeline at Polish-German border – BA) been restored. But it is not clear yet whether the future gas production or gas exports to Europe would still be affected – states Madalina Sisu Vicari. – However, the gas prices in Europe could still be under high pressure due to gas inventories factor, especially the disparity between the counties with satisfying rate of gas inventories , and the countries with low rates. For instance, on August 7, countries with good rate of gas inventories were : Poland – 83.85% filled inventories ; Italy – 76.03%; Hungary- 72.46% ; Portugal and Spain over 70% rate.

Conversely, the rate of inventories in Austria and Germany , especially at Gazprom’s underground storage facilities is very slow compared with the timing and the needs. Also on August 7, inventories at Haidach UGS ( Austria) were at 34.12% from the total capacity, and at Germany’s Rehden, the inventories are at 8.79% of capacity. Worth mentioning that within half of July, there were no gas injections at Rehden, and between August 5-August 7, there have been withdrawals from Rehden inventories, but no injections . Worthy of mention what were Austria’s and Germany’s gas inventory rate on August 7 : 37.49% , 52.67% respectively – states Vicari in comment to BiznesAlert.com.

Concocting a story about how Poland didn’t want in on a Russian pipe

The dispute over Nord Stream 2 has become so important, that various outlets are now building a narrative according to which Poland did not want a Russian gas pipeline on its territory, so it’s her fault that the pipe now goes directly to Germany. That is completely false. We must reiterate the facts to show how Gazprom is manipulating the public opinion in Europe – Wojciech Jakóbik, editor in chief at BiznesAlert.pl, writes.

Nord Stream 2 is not in Poland’s interest

“After Nord Stream 2 is done, we will get gas from Germany. If Gazprom wants to upset Poland, it won’t be able to, because it will have to transmit the gas via Western Europe,” professor Zbigniew Lewicki told the Rzeczpospolita daily. That’s not true – Poland is in Central Eastern Europe. NS2 bypasses the country. This situation does not strengthen our security. For Poland the Nord Stream 2 is not as big of a problem as it is for Ukraine only because we have the alternative in the form of the LNG terminal, and soon the Baltic Pipe. It took a few parliamentary terms and great pains for these projects to even launch. Yet, the pipe is still a political, market and legal problem, but not just that. Nord Stream 2 is bad for us, and according to the Bruegel think tank the project may increase, not lower gas prices in Central and Eastern Europe. This is because there aren’t enough gas connections between Central and Eastern Europe and Western Europe. This bottleneck situation will make it harder to get Russian gas from Germany, than to buy it via the existing infrastructure. This may up gas prices.

It was Russia that did not want the second Yamal gas pipeline

The fairytales that Poland could have joined the Nord Stream 2 project so that it didn’t bypass it, are based on the lack of knowledge about the fact that in the 90s Poland agreed with Russia it would expand the second Yamal gas pipeline, and it was Russians who failed to keep their end of the bargain. Unsurprisingly Russia proved to be unreliable. A section of the Yamal gas pipeline (Yamal-Europe) runs across Poland. It was completed in September 1999, and according to the documents, a second line was planned. Poles supported this idea, but Russia did not want to get involved. Perhaps this is why in 2001 Poland decided to build a pipeline from Norway. Probably due to that development Russia decided to divert its gas transport to Germany to the Nord Stream pipeline, which bypasses Poland. In 2005 Gazprom and BASF-E.on signed a deal to that end. In 2007 it was officially announced that the second line of the Yamal pipe would not be constructed. This wouldn’t have been a problem for Poland if Leszek Miller’s government hadn’t decided to abandon the Norwegian project. Meanwhile the first Nord Stream was completed four years later.

The idea to build a second pipeline from Russia to Poland came back in 2013 with the so-called “Peremychka”. Russians encouraged Poles to start talks about the second line of the Yamal, but with a new route – via Poland to Slovakia. During a staged conversation with Gazprom’s CEO Alexey Miller, president Vladimir Putin suggested that such a contract could be signed. The transcript of this discussion was then published online. Poles took the bait. PGNiG signed a memorandum on assessing the profitability of the Peremychka, but the whole thing ended with the dismissal of Mikołaj Budzanowski, the Minister of the State Treasury and Grażyna Piotrowska-Oliwa, the CEO of PGNiG. They were fired by the then Prime Minister Donald Tusk, because allegedly he found out about the company’s initiative from the press. The case needs to be investigated further, because the Peremychka route was to run close to the Grupa Azoty facility, which was the target of a hostile takeover in the previous decade by a Russian millionaire. The dispute over the Peremychka caused a crisis in the Polish government, which only shows how these sorts of Russian bites work. In reality the story about Poland not wanting a gas pipeline from Russia is false, and was concocted to convince the public opinion about Poland not being rational on the matter, and Gazprom presenting a reasonable stance.

The best punch line to the story about Poland not wanting Nord Stream 2 is the plan to use the Yamal gas pipeline for delivering LNG and natural gas from Norway from the Baltic Pipe, and to treat it as part of the domestic infrastructure. If Russians do dry up the Yamal, its capacity will be used to benefit Polish interests. If not, they will be able to use it in a civilized way and in line with the EU regulations.

Gazprom’s manipulation tactics

In reality Russians are carrying out an information policy that pushes for projects such as Nord Stream 2, which later on may be used as a tool for the Kremlin’s nefarious foreign policy. I myself had the opportunity to learn how this works, when I took part in an online conference INTERENEF in Croatia’s Split. I was invited to a panel with a representative from the Polish Embassy in Zagreb Bartosz Marcinkowski, Robert Bosnjak from the Croatian Plinacro and Vitaly Yermakov from the Oxford Institute for Energy Studies. At the last moment two representatives from the Russian embassy were invited – Vladimir Prokhorov (Minister Counsellor at the embassy) and Vladimir Ivanov (economic advisor). I found out about this during the panel. The discussion was interesting. The Russians, including the fellow from the Oxford Institute, presented the familiar arguments known from Kremlin’s propaganda mouthpieces, such as the Sputnik. They accused Poland of being “rude”, because it tries to dictate Germany how to run its energy policy. They failed to respond to the fact that the EU states coordinate their policies in line with the energy solidarity principle, which stands in stark contrast to unilateral projects with Gazprom, such as the Nord Stream 2. However, the cherry on top was a question from the audience asked by a citizen of Bosnia and Herzegovina, who accused the Polish participants of being “emotional” and asked the Russians to reiterate their arguments. In result, they got a few minutes to recite their talking points without the moderator interrupting them. After the debate we managed to ascertain that in the past, the lady from Bosnia and Herzegovina worked for a decade at… Gazprom. That’s what a public debate with Russians looks like.

CBAM, or how to prevent Fit for 55 from becoming Europe’s economic suicide

The Fit for 55 package needs to be considered as a collection of regulations that will change the EU economy. The mechanism that will tax CO2 emissions outside of the European Union – CBAM, is to protect Europe against an economic suicide. It may also be an opportunity for Poland – Wojciech Jakóbik, editor in chief at BiznesAlert.pl writes.

CBAM, or how to tackle emissions outside the EU

Previously I wrote a piece where I explained that if the Fit for 55 package lacks the right calculations and mechanisms that will compensate for the levies imposed on fossil fuels, the ambitious project may kill Europe’s economic growth instead of putting it on the green track to success. In other words, Europe needs to tread cautiously to not throw the baby away with the bathwater. One of the elements of the Fit for 55 package is CBAM, which is a sine qua non condition for the success of the EU’s vision for economic development on the international arena. The acronym stands for the Carbon Border Adjustment Mechanism. The mechanism will impose levies on goods imported to the EU, depending on the amount of CO2 emissions generated during their manufacturing. The goal is to even out the playing field for European businesses that need to pay for the EU CO2 emissions trading system, since they will have to compete against non-European companies that so far have not had to pay for CO2 allowances. The CBAM rate will depend on the price of CO2 allowances. The details on this are to be presented by the end of the year.

The idea has been already criticized by the EU’s foreign partners. Australia, China and Ukraine claim it will be used to unfairly undermine competition. Beijing has already announced it would fight with CBAM at the World Trade Organization. The proponents of this solution argue that they will be able to reconcile it with free trade rules. The US and Russia have expressed a more moderate approach to the issue, and they are trying to negotiate with Brussels. The CBAM will not be imposed on economies that will implement their own climate policies that are akin to the one in Europe. This is the EU’s way of encouraging its partners to follow its green path. A scenario that is optimistic from the point of view of Brussels says that CBAM will not be imposed on countries that will cooperate, and that the products they export to the EU will be manufactured with adherence to higher standards. While states that will reject the climate policy will pay increasingly more, until they are convinced that it’s better to protect the climate. The pessimistic scenario will result in Europe’s economic suicide, as nobody will follow it. The debate on the CBAM may last until 2024.

Foreign cooperation or economic suicide

The hope for reaching an understanding first came from the US, where President Joe Biden has declared the country would achieve climate neutrality by 2050, invest billions in green technologies as part of the Environmental Justice and Equitable Economic Opportunity Plan, as well as introduce its own version of CBAM, i.e. the Carbon Border Adjustment. However, Biden has never promised to introduce a CO2 emissions trading system similar to the EU ETS, and until such a system is introduced, American businesses will be liable to CBAM. An emissions trading system is present in eleven states on the East Coast (RGGI) and California, which has introduced its own CBA. However, it is worth stressing that the price of an allowance in the Golden State is about USD 18 per ton, while CO2 emissions in Europe are breaking records, exceeding EUR 50, which is about USD 60, three times as much as the price in California. The Russians have also taken steps to adapt their policy to the expectations of the European Commission. The Ministry of Economic Development has estimated that CBAM will cost Russia EUR 3.6 billion a year as of 2035, but according to Vygon Consulting this is an overestimation. In July, in a move to lower the emissions generated by their economy, Russians introduced a voluntary emissions trading system. We wrote about this on BiznesAlert.pl. Russia will negotiate a discount tariff, the ability to compensate for its emissions with green projects. The relationship Russia will have with the EU climate policy will be marked by issues related to security and foreign policy, just like it is in the case of the hydrocarbon sector, a problem I wrote about elsewhere. China has also launched a CO2 trading system pilot project, which does not match the ambitions of the one in Europe, but nevertheless it is the first step on its way to follow the European path. On the other hand, Beijing has already announced it would fight CBAM on the forum of the World Trade Organization.

If Europe manages to use CBAM to convince its international partners to introduce a more ambitious climate policy, the burdens imposed in result of the Fit for 55 within the EU borders will not be as onerous for its member states when competing with other global powers. However, if it turns out that the Europeans will be the only ones that stick to their ambitions, they will commit an economic suicide by thwarting economic development instead of stoking it. The optimism of the planners responsible for the EC policy stems from the fact that the long running subsidies for renewables have made it possible to lower the cost of this technology so much, that now it is developing freely, and Europe is leading the way when it comes to promoting it. The same fate is said to await energy storage technologies, hydrogen and other green solutions that will be promoted in the Fit for 55.

CBAM and Poland

A compromise would involve bankrolling the energy transition with money acquired through CBAM. While financing the status quo in the conventional energy sector is off the table, one could imagine a situation where CBAM could subsidize new solidarity mechanisms to support the transition in countries that need it the most, such as Poland. It would add another source of money for the energy transition, next to the Modernization Fund and other pools from the EU ETS. The scale of challenges proposed in Fit for 55 means that the new solution should not replace, but complement the old one in a way that will prevent us from throwing the baby out with the bathwater.

NPP in Kaliningrad – unconnected and unwanted, yet touted

In order for the Baltic Nuclear Power Plant to transmit electricity to Poland, a power connection has to be built, but it doesn’t and probably won’t have political support in Poland. However, Russians may lobby in Europe for a cable to the Kaliningrad Oblast fro a different reason – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.

Nuclear power from the Oblast without a connection

The idea to engage Poland’s ZE PAK, which is owned by Zygmunt Solorz-Żak, in the NPP project in the Kaliningrad Oblast is bad from the point of view of Poland’s security and foreign policy, an issue Mariusz Marszałkowski wrote about. However, this project is not feasible for other reasons as well. Piotr Naimski, the Government Plenipotentiary for Strategic Energy Infrastructure, explained that according to the Polish energy law, only power plants that are constructed on the basis of Polish regulations can be connected to the grid.

However, this does not mean that a power connection with the Kaliningrad Oblast to import electricity from the Baltic Nuclear Power Plant cannot be built. For this to happen political will is necessary, and the so-called power bridge from Kaliningrad has been tested in the history of the Third Polish Republic a few times already. It requires bilateral agreements between Poland and the Russian Federation and between the Polish grid operator PSE and its Russian counterpart Rosset (FGC UES). There is no political climate in Warsaw for this to happen.

The talks with ZE PAK about power imports may have started, because of the problems with high energy prices in Poland. The company’s response is to invest in renewable energy sources and green hydrogen. It will import first electrolyzers to Poland. They may be powered with the mentioned renewables, as well as nuclear power that could be produced in Pątnów, as one of the potential locations. The Polish Nuclear Power Program says that up to six reactors will be constructed. They are to be located in two or three facilities, depending on the technology. Reportedly the first one is to be built in Pomerania, perhaps Bełchatów will be next, and then Pątnów (Greater Poland region – ed.). The NPP in Greater Poland could also power Solorz-Żak’s electrolyzers. It is also worth mentioning that Russians will promote hydrogen generation from their nuclear power in the EU as well. Purple hydrogen will be either zero- or low-emission, but the fact that it will come from Russia will – as usual – create risks when it comes to the security of supply, and hook Europe on another Russian gas. A better alternative is the Polish purple hydrogen that will be generated in result of the Polish Nuclear Power Programme.

Getting power from the Kaliningrad Oblast is such an uncomfortable topic in Poland that few people want to comment on it without holding on to their anonymity. Government representatives don’t want it to become bigger than it is, as some of them believe it is just a pseudo-event with an unaccounted origin. One of BiznesAlert.pl’s sources at the government claims that a power bridge with the Oblast will not be built, especially considering the fact that the Baltic states are synchronising their grids with the continental system via Poland, using the underwater cable HVDC Harmony Link. Once the Baltic states cease to be a power island, it may turn out that the Russian exclave will become one, as it will be surrounded by a European system that operates at a different frequency. Another source of ours claims that the talks between the government and investors did not result in any decisions. Meanwhile, our interlocutors from the private sector believe that perhaps someone wanted to pull the rug from under ZE PAK.

Another reason for promoting the NPP in Kaliningad

Russia taking shots at cooperation with Europe with regard to power generation may be its attempt at opening a discussion on the future of the Kaliningrad Oblast. In the years to come they may demand that it is synchronised with the EU, unless they fail to make it self-sufficient when it comes to energy. This will be possible thanks to the development of power generation from gas. As recently as in 2019 President Vladimir Putin announced that the Pregolsky Gas Power Plant, which was commissioned in that year, will give the Oblast an aggregate generation capacity of 1 GW, which will be enough for Kaliningrad to be self-sufficient. This is why the Baltic NPP is perceived as a facility built to export power, much like the Belarusian Astravets NPP, which has become a hot topic for the Baltic states. Lithuania is accusing Russia of using the plant to undermine the synchronization process and derail new non-Russian power projects that allow the Baltic states to make themselves independent of imports from Russia. It is worth reminding that nuclear power from the Oblast has been previously promoted as an alternative to the Visaginas Power Plant in Lithuania and the Polish NPP. The idea to lower the costs of synchronization of the Baltic states with the European system by connecting them to the NPP in the Oblast was first put forward in 2014 by Rudolf Dolzer who was the facility’s advisor. The Baltic NPP once was and may become yet again a tool in the Kremlin’s foreign policy toolkit.

A nuclear race for the undecided client in Poland

Americans and the French are preparing offers to build nuclear power plants in Poland. Lurking in the shadows are Koreans who have also declared they were ready to take part in the program. Their engagement suggests that the 2033 deadline for the first reactor is achievable. The race for the nuclear contract in Poland is benefiting the client who is still on the fence – writes Wojciech Jakóbik, editor in chief at BiznesAlert.pl.

The nuclear club in Europe

The French embassy in Warsaw organized a meeting with journalists on the occasion of the opening the EDF office, which is to handle issues related to the nuclear power contract, in the capital city of Poland. During the event representatives of the French government and business argued that the EDF offer is the best for the Polish Nuclear Power Programme, according to which the first reactor should be completed in 2033 and another 6-9 GW should be added by 2043. “The end of 2022 is the last call to build a nuclear power plant in Poland by 2033,” Philippe Crouzet, the High Representative for Polish-French Cooperation on Civilian Nuclear Energy, said. “Germany abandoned this source of power, and Great Britain left the European Union. France supports Poland joining the nuclear club. This will balance the situation,” he stated. He also added that “it is apparent that some countries want to phase out nuclear power. Thanks to its strength France can support Poland on its road to this goal.” The French have also used a political argument and have proposed mutual support during voting and political debates in the European Union on nuclear power. However, it is worth pointing out that Poland and France are already voting hand in hand when it comes to nuclear power and this should not change, irregardless of which partner Warsaw will choose, as this is in the interest of both countries. This is why one should expect that Paris and Warsaw will continue to defend the atom in the EU taxonomy and other disputes of this kind. On the other hand, France will stick to its ambitious climate policy, which it can pursue with ease precisely thanks to nuclear power, which has made it the least emission-generating state in the European Union. Therefore, one should understand that irregardless of Warsaw’s decision, Paris will turn up the heat on climate policy at a time when Poles will want to turn it down.

Polish engineers at EDF construction sites

The French want to convince Poles with the fact that the EPR technology is accessible in Europe and has already acquired a license in France and Finland, and that it is also present outside the EU – in China and Great Britain. EDF argues that this type of a reactor is 36 percent more efficient and generates 30 percent less waste in comparison to the competition. EPR1200 is capable of producing 9 TWh of power a year, and thus prevents 6.6 million tons of CO2 from polluting the air. The French have also offered nuclear waste utilization with the help of their companies. They have also promised that the reactor will be so flexible that it will be capable of turning down the power by 80 percent within 30 minutes, and that its availability will be at over 90 percent. These features are important, considering the fact that nuclear power will be used to supplement the capacity of renewable energy sources in Poland. EDF has argued that their reactor could successfully be used to produce purple hydrogen, which is important for the EU climate policy and its climate neutrality target. The French also claim that the repeatability of the nuclear power projects at Hinkley Point C and Sizewell C in Great Britain has made it possible to lower the construction cost by 20 percent. So, the Polish copy could be cheaper than the projects that have been used by critics of nuclear power as examples of the technology being too expensive. The French believe that if the contractor for the Polish nuclear power is selected in 2022, it will be possible to complete the project by 2033. “We believe this is doable, which is why we are talking to our partners,” Deschaux said. EDF has promised jobs to Polish engineers in the country and abroad. It has identified 350 Polish companies that could take part in the construction of the NPP, and has reminded that in case of Hinkley Point C, 64 percent of the production was local. Poland doesn’t have a nuclear sector, but it can count on 45 percent in the beginning, 60 later on and then even more. Therefore, the companies engaged in the construction of the reactors in Poland could later on count on contracts for other EPR projects across the world.

Who will be the highest bidder?

The French are cautious when it comes to engaging their capital in Poland’s nuclear projects. “The financing model will be selected by Poland as a client. EDF will adjust to that choice. The money will come from export credits with proper guarantees and from Poland’s own funds, be it public, or private investors,” Philippe Crouzet assessed. “At Hinkley Point the contract for difference mechanism is used. It makes it possible to bankroll part of the investment. There is also another element that is not being discussed – Regulated Asset Base, which lowers investment risk and enables acquiring cheaper financing. This will affect production cost,” Thierry Deschaux, who is responsible for managing the EDF office in Poland, said. Interestingly he is also employed at Dalkii, which belongs to the EDF Group. During the meeting there was no mention of any financial engagement by the French government, despite the fact that in the past there were rumors about French banks wanting to cooperate. This may be an important issue when it comes to the race against Americans, who have promised Poles that the export bank EXIMPORTBANK would engage in financing the Polish nuclear power plants. The US companies Westinghouse and Bechtel have already received a grant from the United States Trade and Development Agency for a FEED study, which will be prepared by the company started by George Westinghouse for the Polish Nuclear Power Plants company (formerly known as PGE EJ1). Westinghouse will provide engineering know-how about the AP1000 technology, while Bechtel will bring in knowledge on managing facilities of this type. So far, the French have not offered such far-reaching financial and political engagement. Perhaps they are put off by the fact that the practically ready proposal for building the NPP by EDF in Poland was rejected when the government changed in 2015.

An undecided client

The potential technology and capital providers for the Polish Nuclear Power Programme are competing at full speed, which proves the Polish plans do have a true potential. The competition between them is good for the client who can also choose the South Korean proposal, which is presented by the Korea Hydro & Nuclear Power company with much less detail, also on BiznesAlert.pl. That Poland has still not decided who will build the nuclear power plant on its territory only reveals that the 2033 deadline for commissioning the first reactor is arbitrary and secondary in view of the fact that already in the 2020s our country’s dependence on the import of energy and gas will be growing. This is because the capacity generation gap will be widening, and due to the lack of alternatives it will be sealed with gas.

Poland is not at the mercy of Gazprom despite the issues with Baltic Pipe

The problems facing the Baltic Pipe project have led the public opinion to believe that Poland may reach a dead end, and be forced to sign a new Yamal contract with Gazprom. This will not happen thanks to decades of diversification. Plan A is being implemented and we have a plan B – Wojciech Jakóbik, editor in chief at BiznesAlert.pl writes.

Full freedom to choose a gas supplier

Gas supply from Russia is a very hot topic, because for years it was a political issue due to Gazprom’s unpredictability. The company could afford to act that way mostly because until the completion of the LNG terminal in Świnoujście and gas connections with its neighbors, Poland did not have alternative sources of supply. The existential threat of having the gas supply cut off disappeared after 2015, when the LNG terminal was opened, which is why Poland is in a different situation than Ukraine, which still depends on the flow of Russian gas via its territory. This is because the transfer brings in big profits and requires the maintenance of pressure in transmission gas pipelines. Whereas Poles are able import gas from other sources, and if for some reason Gazprom fails to deliver the gas it will pay a fine, just like in 2017 when it turned off the tap due to alleged technical problems (gas contained water). However, if Poles decide that the Russian price is unfair, the dispute may go to an arbitration court, which happened in 2015. Poland’s PGNiG won that case in 2020, Gazprom carried out the sentence, and the head of Gazprom Export Elena Burmistrova sent warm signals to Poland claiming it was an “infallible client, a great country”. “We are still embroiled in many disputes with the Poles, but at the same time we continue trade negotiations,” she said back then. One could argue that such statements are another benefit of Poland’s diversification efforts.

Poland needs more imported gas, irregardless of the progress of the Baltic Pipe

Poland is following a real diversification plan, which is supposed to be done and dusted at the end of 2022, when the Yamal contract with Gazprom will end. PGNiG decided not to renegotiate the agreement. Some politicians from the governing coalition decided that Poles would stop buying any kind of gas from Russia, once the Baltic Pipe and the expansion of the LNG terminal are done. However, the initial plans for developing Poland’s gas market have failed to respond to the country’s real needs, which is visible in Gaz-System’s forecast, according to which by 2030 the demand for gas in Poland will increase by 50 percent. This year I published my own calculations, which say that Poles will need 2.1-3.8 bcm of gas more, even if the diversification projects are not delayed, including even the Baltic Pipe that should be ready in October 2022. In this light, the problems of the pipe’s onshore section in Denmark, which may or may not delay the entire project, seem secondary in relation to the general direction that Poland is following to become less dependant on the import of gas. Probably Poles will import additional gas from their neighbors due to the fact that the demand is higher than the original forecast. Finally, it is worth adding that this is one of the reasons why the capacity of the planned FSRU (aka the second LNG terminal) in the Bay of Gdańsk is expected to reach between 4 and 8 bcm a year, depending on the demand.

Last choice provider

A higher demand for imported gas in Poland does not actually mean that we will need to automatically sign a deal with Russia’s Gazprom. One should expect that Russians, who want to maximize their sales in the European Union, in view of the energy transition in the EU, will fight for every client. This means they will probably present an attractive price offer to Poland, just like Paweł Majewski, the PGE CEO, expected. One could imagine that Russians will offer a shorter contract, for a smaller volume and without controversial clauses questioned in the EU, and with a low price. They will join the ranks of other potential providers, and Warsaw will be free to make a decision on the basis of its own definition of energy security. One could bring up the example of Ukraine, which thanks support from the US and the EU, stopped buying gas from Gazprom and has been importing gas from the EU since 2015. The gas molecules from the West that are delivered by the Dnieper River probably partially come from Russia, but Kiev does not have to negotiate with Petersburg where Gazprom’s HQ is located, and instead is in talks with western companies that are known for following cooperation standards. Poland will be able to use such a solution if it decides not to use the Russian offer. The physical supply of additional gas may in the future be delivered via the connections with our neighbors: the Polish-Lithuania gas pipeline, the Poland-Slovakia pipeline, the connection with Czechia – Stork, the connection with Germany in Lasów and the reverse flow on the Yamal pipeline on the border with Germany. Poland has a choice and is no longer at the mercy of one main provider, which will lose strategic importance after 2022, because the unfavorable Yamal contract will end. In my opinion, Poland’s historical experiences suggest that we should first look for gas somewhere else. Thanks to the ongoing diversification, the number of alternative offers will be growing, and so the gas price on the market will be going down.