Boston, MA -- (SBWIRE) -- 06/11/2014 -- Growth in electricity generation and consumption in Poland will remain relatively subdued over our forecast period, although both the economy and wholesale electricity prices look to be rebounding very gradually following a slump in H113. As sentiment improves in line with economic fundamentals, delayed capacity expansion ventures may start to move along the project pipeline and there will be a greater emphasis on new nuclear and renewable capacity as well as shale gas exploitation.

Poland is in a difficult position as it establishes its future energy policies: it must adhere to EU directives so as to reduce the amount of polluting coal in its capacity mix, but is struggling to attract the investment needed to replace or modernise ageing capacity as low wholesale electricity prices and weak demand sap interest in the power sector. With 5GW of coal-fired capacity due to come offline before 2016, Poland faces the prospect of an electricity deficit as demand picks up again - triggering calls for the introduction of a capacity mechanism that could be underpinned by law.

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Nevertheless, there are indications that the outlook for the economy and the power sector is improving gradually. The economic rebound seen in H213 is gathering momentum and is being driven by stronger domestic consumption and net exports. In the power sector, wholesale electricity prices have climbed a little higher. Although electricity prices remain low by historical standards, rising prices are a key indicator for Polish power generators and show there is increased optimism about future demand growth.

In this context it is no surprise that Prime Minister Donald Tusk has been in conflict with the European Commission (EC) as he attempts to ensure cheap, but highly polluting domestic coal remains a key part of Poland's energy policy. This is underscored by his commitment to building the large Opole coal-fired power plant by 2018/2019 - a litmus test of his energy policy.

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

- Prime Minister Donald Tusk and his cabinet finally adopted Poland's nuclear power programme on January 8 2014 - a programme that should lead to the delivery of the country's first nuclear power plant by 2024 and its second by 2035 at a combined cost of USD13bn-USD16bn. Poland's top utility PGE is currently looking for technology and financial partners to support it in constructing Poland's first nuclear power plant.
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