This interview with Bartosz Fedurek CEO of PGE Baltica explores the current state and future prospects of offshore wind development in Poland. While Poland is behind more established markets like the UK, it has made considerable progress, recently reaching a final investment decision on the Baltica 2 project. Fedurek highlights regulatory frameworks, supply chain development, and macroeconomic pressures as key factors influencing the industry’s maturity. Security concerns and defense coordination are also significant challenges, requiring ongoing dialogue with authorities. Looking ahead, PGE Baltica is focused on advancing the Baltica 3 project and participating in upcoming auctions, with optimism tempered by the need for continued collaboration and support to ensure the technology’s competitiveness. The discussion emphasizes regional cooperation and a positive narrative to drive further growth in the offshore wind sector.
Krzysztof Bulski, BalticWind.EU: To begin, could you assess the maturity of the Polish offshore wind sector from PG Baltica’s perspective, especially compared to other Baltic Sea countries? What stage of development is Poland currently in?
Bartosz Fedurek, PGE Baltica: Compared to more developed offshore wind markets like the UK, Poland is still in its early stages, like a teenager. However, we’ve made significant progress. PGE obtained its first location licenses around 2012. Just two months ago, in January, together with Ørsted, we made the final investment decision on Baltica 2, our most mature project. This decision came 12 years after receiving the license, marking a long journey. Another key milestone was in 2016 when we conducted the first environmental surveys. A lot of capital and dedicated people have been patiently invested. Currently, Poland does not yet have operational offshore wind assets, although two projects are officially under construction. Our colleagues at Baltic Power are already installing monopiles. We plan to begin our first offshore operations this year.
Krzysztof Bulski: So exactly what is the plan for the next steps? But perhaps if you could draw a shorter time frame than the next 12 years, maybe the next 2 or 3 years, what can we expect?
Bartosz Fedurek: To further elaborate on the maturity of the sector, let’s consider the regulatory environment. We have a strong foundation with a Contracts for Difference (CFD) scheme based on the British model. However, some regulatory aspects are still in progress, such as defense and security, and coexistence with fishermen. More time is needed to establish the right regulatory regime, especially regarding the supply chain. It’s important not to judge the level of local content based on these initial projects but rather on the entire project lifecycle and volume. The upcoming auction in 2025 will be a crucial moment for the industry. This will be the first competitive CFD auction for offshore wind. There have been challenging discussions regarding the ceiling price for this auction, and the industry is experiencing significant macroeconomic pressure. During the contracting, we saw cost increases of 30% to 50% compared to our 2021 CFD application. Despite these headwinds, we remain optimistic. In the coming months and years, construction of Baltica 2 will continue, including offshore work and boulder removal for cable routes and WTG monopile locations. Onshore infrastructure is also underway, with the construction of an onshore substation in Choczewo, along with the construction of an onshore base in Ustka starting this spring. So keep your fingers crossed please.
Krzysztof Bulski: But one more threat. That’s threat challenge that we already mentioned at the beginning. Could you elaborate on the practical implications of the current security situation for offshore wind farms? Is security the primary challenge in the foreseeable future, or are there other significant concerns in the first and second phases of development?
Bartosz Fedurek: Defense and security is a broad topic, and Tomasz Urbaniak, Head of Defence and Security at PGE Baltica, will discuss it in detail during a dedicated panel. Key considerations include aligning with the Ministry of Defence on installing equipment to mitigate any negative impacts on defense systems. Other questions to be answered include who should bear the substantial costs, and who should operate and be responsible for the defense equipment on-site.
Krzysztof Bulski: May jump in here. I should note that we may not fully answer these questions today, as some answers will be provided by Tomasz Urbaniak during the security panel. These issues are complex, particularly regarding who bears the costs, as it depends on multiple factors and actors.
Bartosz Fedurek: These are complex issues. Maintaining a close and positive dialogue with authorities, including the Ministry of Defence, is crucial. We are focused on optimizing the placement of additional equipment and sensors to avoid interference, which can reduce the precision of the information gathered. Optimization should include all new wind farm developments. Currently, each installation is treated separately, so there is room for improvement. When we began assessing conditions for offshore wind farm construction in 2020, the geopolitical environment was very different. The current security concerns were not as prominent. Consequently, many of the associated costs, affecting both CAPEX and OPEX, were not factored into the maximum CFD price calculation. These discussions impact the economics of our projects.
Krzysztof Bulski: Could you provide more insight into PGE Baltica’s plans for the second phase? Also, considering recent challenges in Lithuania and Denmark, what are the possible scenarios for this year’s auction in Poland?
Bartosz Fedurek: Securing Baltica 2 was a major achievement. However, the next day we immediately resumed working to secure our future pipeline. PGE Baltica, a modern organization with 170 highly skilled professionals, is eager to expand. We have Baltica 3 in our portfolio, which was developed alongside Baltica 2 but was paused and reconfigured due to CAPEX increases. We are committed to accelerating Baltica 3. Additionally, we are focused on developing a strategy for this year’s auction and preparing Baltica 1, a project developed from scratch. We hope to receive the environmental permit by the end of this year, enabling us to participate in the auction. Our perspective involves preparing for the auction and organically accelerating Baltica 3, a JV we have with Ørsted.
Krzysztof Bulski: So it looks rather optimistic. And I think we can say that there is a big chance that this will be a good year.
Bartosz Fedurek: Yes, that is our expectation. While the future appears promising, it requires additional effort from investors and authorities. We must remember that the offshore wind sector is still developing and requires support and close cooperation among investors. That’s why I often refer to our colleagues from Ireland and the region. We need to maintain a positive narrative and defend the cost-effectiveness of this technology compared to alternatives. We must work together regionally, leveraging the synergies within the region to ensure success.
