BMI View: A PiS victory is the most likely outcome of Poland's parliamentary elections - with the party's populist brand of politics likely to mean it is more vehement than the incumbent Civic Platform in its support for the domestic coal industry. As a consequence, we anticipate an even more fractious relationship with the EU over climate targets and a greater willingness to intervene in the state-controlled utilities sector to support Poland's coal miners, at the expense of minority shareholders.
|e/f = BMI forecast. Source: EIA, National Sources, BMI|
|Generation, Total, TWh||151.504||153.719||157.426||162.300||168.201||172.789||175.484|
|Consumption, Net Consumption, TWh||140.5||143.3||146.3||149.4||153.0||157.0||161.7|
|Capacity, Net, MW||36,080.1||37,460.6||38,696.2||40,150.4||42,039.0||43,468.8||44,499.9|
A PiS majority or PiS-led coalition government should advance a more populist brand of politics that will be heavily focused on sustaining the role of cheap, but polluting coal in the domestic electricity generation mix - to ensure retail electricity prices remain low. This policy has also been pursued by Civic Platform, but we expect PiS's position to be more inflexible - exacerbating Warsaw's reputation as an outsider in Europe in terms of its position on climate policy.
The incumbent Civic Platform is attempting to restructure Poland's mining industry with the help of Poland's biggest state-backed utilities. Reports indicate PGE, Energa and gas company PGNiG may be involved in plans to rescue Kompania Weglowa, as co-investors in a state investment fund. In October 2015, Tauron's government-controlled supervisory board was even reported to have sacked the CEO, Dariusz Lubera, after his company failed to buy a loss-making mine. We expect the PiS to implement similar plans if it wins the election - with creeping government intervention to hit minority investors in state-controlled utilities.
PGE announced in August 2015 it posted a net loss of PLN5.06bn (USD1.34bn) in H115 due to a PLN8.08bn impairment charge on its lignite-fired assets. The reasons for the impairment were largely due to falling wholesale prices and tougher EU climate policies. The announcement - and subsequent postponement of the release of Q215 results - supports our view that Poland will ultimately introduce a capacity remuneration mechanism.
Our Oil & Gas team's decision to remove first commercial shale gas production from their forecasts in mid-2015 prompted us to downwardly revise our forecasts for Poland's gas-fired power sector. Gas will account for 3% of the electricity generation mix in 2016 and just 4% in 2024 - with coal to dominate.
In October 2015, incumbent Prime Minister Ewa Kopacz was reported to have said that nuclear power is not a priority and indicated she would instead focus on rescuing the coal industry. This aligns with our decision not to include planned nuclear capacity in our 10-year forecasts.
The Poland Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
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