Page 17 - bne IntelliNews Poland Outlook 2025

uncertainty lies in the feasibility of implementing defence projects. Meanwhile, revenues might turn out smaller due to slower than expected GDP growth and inflation. Achieving deficit targets outlined in the medium-term budgetary plan will also require fiscal effort equivalent to 0.6pp, necessitating greater commitment than the planned reduction of just 0.2pp. Failure to meet these assumptions would prevent a natural reduction of the deficit within the four-year horizon, forcing spending cuts, which could negatively affect economic growth.
The budget project anticipates an increase in public debt to 59.8% of GDP in 2025, although it appears likely that the actual debt trajectory will be lower, given overestimations of expenditures, especially military ones (case in point: the Armed Forces Support Fund, Poland’s military spending agency, executed only 60% of its planned spending for 2024).
6.0 Energy and Power
The age-old adage of summarising Poland as “the coal country,” while still generally true, will ring more and more less and less true on the ground in 2025. Coal in both forms – hard and lignite – covered just over 66% of electricity generation as of November 2024, down by nearly 4pp y/y.
Yet there is a sense of stagnation. The government has dragged its feet over preparing an overhaul of regulations to boost the development of onshore wind power. The earliest the parliament can begin work on legislation tabled only in December is sometime in January, with actual investment effects to show only in late 2025 or even early 2026. On the other hand, the solar market – one of the EU’s biggest and most dynamic, with 4.7 GW of new capacity added by the end of October 2024 y/y – is suffering from curtailment imposed by the national grid operator as the grid remains unprepared for thousands of new installations getting added each year.
Poland’s big energy transition breakthrough is still elusive. Big offshore wind projects are not expected to start feeding the grid before 2027, while the country’s maiden nuclear power project has already been delayed two years and will only come online in the late 2030s. The European Commission has begun a state aid probe into the government’s €45bn support for the plant to determine if the support is legal state aid and how it might affect the EU’s electricity market.
The government is probing experts and public opinion on two transformation scenarios, both presented in late 2024. One assumes winding down coal as a source of energy incrementally until 2049, subsidising mining jobs along the way at a cost of tens of billions of zlotys only until 2030 (in fact, PLN16bn will have been paid for the purpose in 2014 and 2025 alone).
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