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. 



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