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Poland Power Report Q1 2014 - New Market Research Report

Recently published research from Business Monitor International, "Poland Power Report Q1 2014", is now available at Fast Market Research

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Boston, MA -- (SBWIRE) -- 12/19/2013 -- Our forecasts for electricity generation and consumption in Poland remain subdued this quarter - based largely on our anticipation of limited growth across the broader Polish economy as well as the cancellation of a number of large-scale capacity expansion projects. Poland is in a difficult position: the country is required to adhere to EU directives so as to reduce the amount of coal in its capacity mix, but is struggling to attract the investment needed to replace or modernise aging capacity as low electricity prices and weak demand sap interest in the power sector. As such, with 5GW of dirty coal-fired capacity due to come offline before 2016, Poland faces the prospect of an electricity deficit once demand picks up again - a situation which has triggered calls for the introduction of a capacity mechanism.

The major developments in Poland's power sector this quarter include:

- A report released by the country's Energy Ministry in July 2013 stated that the potential supply shortfall could be equivalent to 1,100MW of installed capacity during peak periods in 2017 (widening as demand for electricity rebounds). The ministry's projections are based on the fact that although the country is required to decommission around 4-5GW of aging (mainly hard coal-fired) capacity to meet the EU's green energy directives by 2015, no new large-scale power plants are due online over 2013 and 2014 - a symptom of the poor investment climate in Europe over the last few years.
- With the threat of blackouts looming, in October 2013, Poland's energy market watchdog, Urzad Regulacji Energetyki (URE), urged the Polish government to press ahead with the introduction of a capacity mechanism - whereby the government would guarantee operators a price for electricity generated to provide back-up power. Work on writing this capacity mechanism into law is expected to begin in Q114.
- In the meantime, short-term efforts to halt the idling of existing capacity and encourage upgrading (so as to align with environmental standards) are being pursued. To this end, PSE Operator, the country's grid operator, will be authorised to pay utilities a total of between PLN300mn to PLN500mn a year to keep capacity online - possibly beginning in January 2014.
- Indicative of the problems facing the power sector, in July 2013, Poland's second largest utility, Tauron, announced that the proposed 850MW Blachownia combined cycle gas-fired power plant would almost certainly be postponed. The project, which would cost an estimated PLN3.5bn (US$1.1bn), was scheduled to begin operations in Q217. Concerns had been raised about the feasibility of plans to provide power and heating to consumers - based on uncertainty about projected demand. However, in the same month, Tauron did reaffirm its commitment to building a new US$1.7bn coal-fired power plant in Jaworzno in the south of Poland

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