Polish industry facing shutdowns as heat wave hammers aging power fleet

By bne IntelliNews August 10, 2015

bne IntelliNews -

 

Polish companies were forced to suspend production lines on August 10 as the ongoing heatwave saw power regulators introduce limits on large consumers. Officials suggested the rationing could be extended for some weeks. 

With temperatures over 30 degrees Celsius for over a week now, and drought conditions in place across Central Europe, Poland's aging generation capacity is struggling to keep pace with raised demand. The lack of rain also sees water for cooling the country's mainly coal-powered plants in short supply. 

Polish grid operator PSE announced sharp cuts to electricity supplies would last throught the day, after the system struggled on August 7. Planned and unplanned outages saw 7.1GW of capacity knocked offline on August 10, reports ICIS. Wholesale power prices for next day delivery hit a record high of 264.54/MWh. 

"This is an extreme phenomenon," Henryk Majszczak, who heads PSE, said according to Reuters. "We are recording high air temperatures and a lack of wind, which could be used by wind farms," he also noted. Poland has no significant solar power capacity. 

“[PSE] has had an amazing adventure trying to avoid a blackout today,” one power trader told ICIS. “We are a whisker away from blackout."

The event puts the state of Poland's power sector into sharp relief. According to a recent report from the country's audit body, NIK, half of Poland's power generation capacity - around 19GW - relies on installations commissioned in 1970s. Before these installations are retired, which is planned for 2020-2035, they are however expected to struggle as hot weather is forecast to become more frequent in Poland, an effect of climate change. 

With close to 90% of Polish power generated by burning coal, Warsaw is at the forefront of opposition to EU schemes to reduce the use of the fossil fuel and set emissions targets. That only complicates efforts to build new capacity, especially with power prices in the doldrums. 

Around 19GW - or half of the country's generation capacity - will have to be retired in 2020-2035, but power utilities have declared plans for just 10.5GW of new capacity - most of it coal-fired - by 2028, at a cost of PLN54bn (€13.45). Warsaw hopes to fill the void with a nuclear power plant, but the project is now delayed by at least five years from the original date of 2020. 

Poland's transmission grid is also vulnerable because of its age, often nearing 40 years. The network is in urgent need of upgrades and expansion, with PLN41bn (€10bn) in investment needed by 2019. 

Meanwhile, the power outage has hit wider industry. Copper and silver miner KGHM said it will strive to maintain production and use its own power sources if necessary, according to PAP. Chemicals company Azoty said the power limits would trim production at one plant by 10%. Steel maker ArcelorMittal was forced to put some of its operations on hold. 

However, those problems could snowball should the problem persist. deputy Prime Minister Janusz Piechocinski announced on August 10 that he has prepared a resolution to rubberstamp a motion from PSE to reduce power supplies and consumption to August 30. 

Prime Minister Ewa Kopacz also worried that the problems could rise, with the high temperatures forecast to remain in place for some time. However, she stressed that there is no risk that household power supplies wil be limited, for the moment at least. 

 

 

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Poland's Law and Justice nominates hardline cabinet

Wojciech Kość in Warsaw -   Poland’s Law and Justice (PiS) party, which won an outright majority in the parliamentary elections on October 25, has announced a hardline ... more

Kaczynski expected to appoint hardline cabinet

Wojciech Kość in Warsaw -   The Law and Justice (PiS) party, which won an outright ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss