Tuesday, 1 July 2014

no chance for cheap electricity in Poland?

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According to Warszawski Instytut Studiów Ekonomicznych (Warsaw’s Institute on Economic Sciences), the possibility of cheaper electricity in Poland has vanished from the picture. Due to the necessary investments the whole system needs to go through, current price ( which is now about 165 zloty per 1 MWh ) in 2030 could reach 370 zloty/MWh.

“So far, the rise in energy prices was reflecting the rising price of commodities, including coal, which is the main source of electricity in Poland. In the future, price of energy will increase as the result of intensive investments in the energy sector. After 2030,there will be a need of replacement of most of the power plants operating today” – pointed out Maciej Bukowski, the President of WISE.
Warsaw’s Institute on Economic Sciences has recently published a report on the opportunities that EU’s climate plan has for the development of Poland, pointing out a few interesting figures. The document observes that Poland is still the subject of socio-economic transformation, which started in 1989. In the coming two decades there can be expected further fundamental changes, such as decline in the share of agriculture in GDP and in overall employment and turning towards economy of the services, not manufacturing as such. The effect of these changes will not only be a significant increase in GDP, estimated to be over 3 % per year in period 2010-2040, but also increase of prosperity and development of the aspirations and needs of the consumer. Such situation will generate higher demand in the electricity, to meet the needs of new customers.
Consequently, we will observe that Poland will do an excessive work to restructure current energy sector. Therefore, as Bukowski pointed out, the possibility of cheap energy might disappear. In the same time, I believe that diversification of the current energy profile (less dependence on coal and more RES involved in the energy production) will create more favorable environment for price competition. I would not be so pessimistic and I am close to say that until Poland won’t have well-functioning market-coupling with its neighbours, the prices should remain stable.
 
  
 
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