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Polish government policies will drive power prices, while growth in renewables will be limited, says Moody's Investors Service in a report published today.
The report, "Europe's electricity markets - In Poland, national policies will drive power prices, limited growth in renewables," is now available on www.moodys.com. Moody's subscribers can access this report via the link at the end of this press release. The research is an update to the markets and does not constitute a rating action.
In Poland, Moody's expects wholesale power prices to vary within a range of PLN160-180 per megawatt hour (MWh) (EUR37-EUR42/MWh) through 2022. This compares with the current one-year forward price of around PLN174/MWh, and reflects Moody's view that the country's coal-dominated fuel mix will not change significantly.
"Growth in renewables is expected to slow down," said Joanna Fic, a Vice President and Senior Credit Officer at Moody's. "This is because the potential for new onshore wind capacity development has been significantly constrained by the law and offshore technology has not yet been deployed in the country."
Fic also added that there is uncertainty regarding acceleration in the development of other technologies.
Large state-owned energy groups have limited exposure to renewable energy sources. Of the four state-owned utilities, ENERGA S.A. (Baa1 stable) has the biggest share of renewable energy sources in its generation portfolio. PGE Polska Grupa Energetyczna S.A. (Baa1 stable), the country's largest power producer, has a fairly low exposure to the Polish renewable energy market.
The Polish power sector's high dependence on coal and investments needed to replace and expand capacity to support growing demand presents a challenge in the context of the European Union's decarbonisation policies. Significant amounts of ageing thermal capacity may need to be decommissioned into the early 2020s due to environmental requirements, posing a risk to the country's security of supply.
