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Polish TSO to stop awarding new wind farm electricity grid connections

10 Oct 2012 17:46:45 | edem

Poland's electricity grid operator PSE-Operator has said that it will not award connection contracts to new wind farm projects, because of the poor working conditions of the network and a surplus of contracts already awarded. Traders have told ICIS that new wind capacity is one reason for a slump in the forward curve.

"Given the current state of the connection conditions and issued contracts for the connection of wind farms, it should be noted that the possibility of connecting wind farms are almost exhausted," PSE-Operator said in a statement. "But new wind farms will be connected once the conditions for connections have been achieved or agreements for connection have been concluded."

PSE announced in September that it will be spending Zloty (Zl) 9.9bn (€2.4bn) to upgrade its aging grid system (see EDEM 28 September 2012) over the next five years. It said the upgrades are aimed at fulfilling obligations that have arisen from contracts with distributors.

Legal oversight

Poland has 2.5GW of capacity from wind generation from the Polish grid. However, contracts have been awarded for the potential capacity of 17GW from wind generation, although most of these projects will not materialise. PSE-Operator has said that it plans for just 7GW of capacity to come from wind generation by 2020.

"The law that allowed 17GW of idle potential capacity was not proper and it is hard to say how long these permits may last for," Pawel Puchalski, BZ WBK Brokerage head of equity research, told ICIS. "There needs to be a law change, we are waiting for this mess to clear. The changes may come with the new energy law, which is anticipated for the end of 2012 to 2013."

He added: "This is no news for the old entities present on the Polish market, but bad news for newcomers - new developers will not receive approvals."

Declining prices

"The fact that PSE said they won't connect more wind means nothing. There must be a lot of outstanding grid agreements," said one Polish trader. "In my opinion, PSE has given too much away for wind power already."

Another trader told ICIS that the addition of renewables was a major factor in declining electricity prices in Poland (see EDEM 9 October 2012). He pointed out: "Installed capacities of Polish wind farms is now higher than transport capacities between Germany and Poland, which means it is Polish wind deciding on the spot's meltdowns, and therefore on forward pricing." KM

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