Mott's Blog

The core message in the current Parliamentary elections for Law and Justice (PiS) on energy issues is to repeal Poland's commitment to participation in the European Emissions Trading Directive and other environmental requirements that limit the unfettered use of coal in Poland. Their argument is that Poland is so dependent on coal that it is unfair to require the same things of Poland that other EU Member States have not only committed to, but are doing. The assumption of this argument is that, but for the emission charge on CO2, that coal energy would be profitable. This is a fundamental fallacy for several reasons. First, the current system grants free allowances for coal emissions and coal-fired power is still not profitable.[1] The current electricity rates make it difficult for the power companies to invest in new facilities, but simultaneously those rates are higher than Germany next door. The profitability of the coal-fired electricity sector is already very weak without...

Aging coal-fired power plants are, of course, problematic for the reliability of the Polish electricity supply. A single outage in one or two huge coal plants can cause major problems in the grid supply of electricity, as we saw this summer. However, the strategy of building large new coal-fired power blocks is also problematic for many of the same reasons. Poland is the only country in Europe pursuing this strategy and it makes no sense. A new report from a Polish expert  argues that shortages could become critical in three to four years. The aging power plants are closing (many this year due to the end of their exemption period under the EU rules for major combustion plants). Others will simply close because they are falling apart in the next few years. The only sources of electricity that can fill this void and create a more reliable and diversified electricity supply (critical to continued economic growth and energy security) are renewable energy sources (which could t...

The politicians cannot face the truth. But every good analyst already knows the outcome of the faltering coal sector in Poland. Less coal needed every year, higher priced domestic coal-fired electricity than our neighbors energy prices, most mining of coal cost more per ton than the market value, massive negative cash flows from the state-owned mines..... the end will not be pretty. This latest detailed article  in "High Voltage" lays out the numbers. By connecting the electricity utilities owned by the state to the mines going bankrupt the Government has basically used the financial resources of the utilities to achieve a political goal which will have a bigger economic price tag every year, before it hits bottom. The state-owned utilities have already signaled the same inevitable problem with their aging coal blocks as we have seen in Western Europe - a write-down of unprofitable assets. This occurs in the face of the Polish energy sector needing over 100 billion PL...