Poland Power Report Q3 2013 - New Market Study Published

Regulatory uncertainty overshadows Poland's power sector - with many question marks over the future direction of the energy-generating mix. This quarter sees leading utility PGE cancel plans for a two coal-fired power units at its Opole power plant, citing lower demand and a drop in electricity prices as key motives behind its decision. PGE is not alone. Tauron has also warned that it does not rule out stopping a project for a gas-fired unit at its Blachownia power plant, while in renewables, Iberdrola announced that it plans to sell its 75% stake in Renewables Polska. Any delays to new capacity are going to have a severe impact on Poland's ability to meet future electricity demand; many outdated power plants are due to be taken off the grid by the end of our forecast period, making the country at risk of power shortages in the short term. Another factor affecting Poland's energy market is its overdependence upon coal. Poland is under pressure from the EU to incorporate renewable energy rules in national law, but the government is slow to do so. Poland faces financial penalties if it does not implement the law, and a draft law is currently under discussion in parliament.

Full Report Details at
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BMI estimates that energy generation in Poland stood at 154.4 terawatt hours (TWh) in 2012, and forecasts that it will decrease by 0.6% in 2013, to 153.4TWh. Coal will account for the majority of this electricity generation - although we do forecast that its share will drop over the course of our forecast period. A stable population, the economic crisis facing the eurozone and improved energy efficiency measures will keep energy generation growth to a minimum. BMI forecasts average annual growth of 1.8% between 2012 and 2022.

In a shift away from coal, Polish firms are already preparing for the construction of a nuclear power plant towards the end of our 10-year forecast period. A contract was awarded for site characterisation and licensing services in January 2013, and Poland's leading three utilities have agreed to share the cost of constructing the power plant; Prime Minister Donald Tusk acknowledged that the project will require state support.

The key developments in Poland's power sector are:

* In April 2013, PGE began a series of meetings to find potential investors and providers of technology for the development of Poland's first nuclear plant. The meetings are scheduled to be completed in May 2013. The government is also likely to offer state support for the project.
* PGE has decided to scrap its plans for two new units - costing US$3.6bn - at its Opole coal-fired power plant, the utility announced in April 2013. Falling energy prices are a factor behind this decision. Along similar lines, Tauron is considering halting a project for an 850-megawatt (MW) combined-cycle gasfired power plant at Blachownia; Tauron pushed its launch date back one year to 2017 in April 2013.

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