Polish power traders question flow irregularities as spot prices spike

Apparent irregularities in physical electricity flows from Poland into Germany on Tuesday fed into a soaring prompt power price for delivery the following day, available data suggests.

And this has led Polish traders to question the physical flow patterns, highlighting the lack of an economic incentive with a heavy premium in evidence on the Polish side of the border.

On Tuesday, Day-ahead Baseload for Wednesday delivery gained almost Zl 44.00 (€10.65)/MWh compared to the previous day’s equivalent, settling at Zl 251.75/MWh on the POLPX electricity exchange.

The POLPX outturn is influenced by pricing signals on the balancing market – its dominant physical driver.

On Monday 14 July, the latest date for which balancing market data was available at the time of writing, power was priced between 14:00-15:00 at Zl 836.39/MWh. This was the third hour of a three-hour long spike in excess of Zl 800.00/MWh.

Yet during this third hour 800MWh of electricity left the Polish system in the direction of Germany, the website of the European Network of Transmission System Operators for Electricity (ENTSOe) showed, with 700MWh flowing the same way during the preceding hour ( see data here )

On the same day meanwhile, Polish grid operator PSE figures indicated zero cross-border flows in either direction. PSE had not commented on its published data at the time of publication.

The following day, Tuesday, electricity was exported from Poland into Germany. This came despite the German day-ahead price on the OTC market having settled at a €17.00/MWh discount to Poland on Monday.

‘Sensitivity is very high’

“In peak hours it is fairly easy to influence the balancing market price [even] with small volume because price sensitivity is very high,” one Polish trader said.

According to figurers presented by the source, 500MWh missing in one hour can drive price spikes on the balancing market from Zl 300/MWh up to and above Zl 1,000/MWh.

Polish traders have previously drawn attention to cross-border flows published on the ENTSO-e website, and the relationship to prices.

For example that data showed during certain hours on 22 April, 600MW of power flowed from Poland into Germany.

One source said that despite the potential for losing out financially by exporting power into Germany, one participant appeared to be desperate to send the energy out, boosting the balancing market price in Poland even higher in the process ( see EDEM 28 April 2014 ).

Despite the economic irregularities in the flow patterns, some market sources simply put the soaring prices down to fundamentals inside Poland’s borders.

One said 4.5GW of power plant outages was underpinning bullish short-term prices.

Additionally, according to PSE, in June 2.7% less electricity was produced in Poland compared to the same period the previous year. Meanwhile this month the country has registered record demand for power in the summer peak hours, at 21,733MW, because of very high temperatures.

But while all of this points to an increasingly tight power supply picture, it does little to explain the sharp, short-term spikes.

As such some market participants remain convinced it was intra-day flows from Poland into Germany that caused price spikes on both the balancing market and the day-ahead exchange. Karolina Zagrodna