Pressure On to Revive Polish Power Project

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Poland's largest power company, Polska Grupa Energetyczna (PGE) (PW:PGE)(Warsaw, Poland) may yet build two new coal-fired units in southern Poland, just two months after cancelling the €2.7 billion ($3.5 billion) project.

Pressure from the government - the largest stakeholder in PGE - has played a role in the change of heart. PGE said it will 're-evaluate' the project in light of the government's increased interest in the project. In April, PGE pulled the plug on the project blaming falling electricity prices and weak demand. It also maintained that the project -- Opole II -- would not represent a sound investment for its shareholders. For additional information, see April 10, 2013, article - Polish Utility Scraps $3.6 Billion Coal Power Project.

The project would see two 900-megawatt (MW) units being built at the existing coal-fired plant in Opole, a town located near Poland's border with the Czech Republic. The project has been deemed a 'strategic investment', because of Poland's need to replace aging power plants to avoid blackouts. Earlier this month, the country's Prime Minister, Donald Tusk, said the Opole project was vital for the country's energy security and that the government would press for the project to go ahead.

Poland's grid operator, PSE, expects that 6,600 MW of the country's 37,000 MW of installed capacity will be taken off the grid by 2020 as older plants close. For the first time in three years, the country's electricity demand fell by nearly 0.6% to just over 157 terawatt hours (TWh) in 2012.

There has been some reported tension between the government's Treasury department -- which manages the government's stake in PGE -- and the company's management board. Last week, Treasury Minister W³odzimierz Karpiñski was quoted on TV saying that PGE's decisions should not solely be made with shareholder interests to the forefront. He added: "I am fully convinced that we will find a formula to complete this project, which is important for the country's energy security".

A possible alliance on the Opole II project between PGE and state-owned mining company, Kompania Weglowa, has been rumoured but no official statements have been made.

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