October 10, 2019 / 2:06 PM / a month ago

Poland's cleaner power imports pile pressure on coal energy

WARSAW, Oct 10 (Reuters) - Poland is on track to import a record amount of electricity this year as power traders buy cheaper and cleaner electricity from neighbouring countries, reducing demand for the mostly coal-fired energy produced by state-run utilities.

Poland’s power imports soared by 24.6% to 8.1 TWh in the first nine months of the year compared with the same period in 2018, data from power grid operator PSE shows.

Although still a small part of the country’s total energy requirements, the rise is being driven by a surge in wholesale electricity prices in Poland, where 80% of power generated comes from burning coal, as carbon emission costs and coal prices increase.

“This is another record. The trend of rising imports is very clear,” said Aleksandra Gawlikowska-Fyk from the Forum Energii think tank.

Facing a general election on Sunday, Poland’s ruling Law and Justice party (PiS) has supported the coal industry. However, with awareness of air quality issues growing domestically and under increasing pressure from the European Union to cut carbon emissions, PiS has also pledged investment in photovoltaic, offshore wind and nuclear power to cut emissions.

SWEDEN AND GERMANY

The majority of Poland’s electricity imports this year came from Sweden and Germany, where average wholesale prices in the first half of the year were 175 zlotys ($44.71) and 165 zlotys per MWh respectively compared to 229 zlotys in Poland.

Exports amounted to 2.9 TWh and 4.2 TWh in 2018 and 2017 respectively. Until 2014, Poland exported more energy than it imported.

Analysts said that while Poland continues to produce most of its electricity from coal, prices will be higher than in neighbouring countries, which use more green energy sources.

“As long as Poland’s energy mix differs from the one in neighbouring countries, power imports to Poland will continue to rise,” said a power trader based in Germany.

Grid operator PSE said that launching a cross-border power link with Lithuania in 2015 and installing so called phase shifts on the German border in 2016, to prevent unwanted power volumes from Germany, had also contributed to the increase in imports.

“Operators do not make buy or sell decisions. The size of imports and exports is a result of a market game,” PSE said.

While the increase in imports helps Poland meet rising demand for power - total consumption between January and July was 98.7 TWh, according to PSE data - and is welcomed by the European Union, it adds to pressure on Poland’s state-run utilities which produce power mostly from coal and lignite.

Poland’s biggest energy group PGE reported a fall in power production in its lignite and hard coal power plants of 12% and 19% respectively in the first half of 2019, citing the increase in imports, with the trend expected to continue for the rest of 2019.

“This is not a comfortable situation for Polish utilities,” said Robert Maj, an analyst at Ipopema Securities. ($1 = 3.9142 zlotys) (Reporting by Agnieszka Barteczko; Editing by Bate Felix and Kirsten Donovan)

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