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Poland’s plan to avoid power blackouts by limiting Germany’s growing renewable electricity flows through its territory may help erase the biggest price gap between the neighbors in at least three years.
Baseload, or round-the-clock, supplies of German power for next-year delivery were an average 13 percent more expensive than Poland’s in the past year, the biggest premium for the comparable period since at least 2009, according to data compiled by Bloomberg. Poland’s plan to put transformers on its 467-kilometer (290-mile) border with Germany may regulate flows, freeing up its own capacity for buying and selling, according to PSE Operator SA, Poland’s grid manager.
Flows via Poland intensified since Chancellor Angela Merkel ’s decision to close the country’s oldest nuclear plants after the reactor meltdowns in Fukushima, Japan.
Increased wind production in Germany left no capacity available to trade on a cable linking the country with Sweden. Photographer: Hannelore Foerster/Bloomberg
Germany is being forced to turn to Polish and Czech grids to ship record electricity output from wind turbines in the country’s north to industrial users in the south. Flows via Poland intensified since Chancellor Angela Merkel’s decision a year ago to close the country’s oldest nuclear plants after the reactor meltdowns in Fukushima, Japan. Poland’s grid says the transformers will protect power lines from overload at the same time as tripling electricity export capacity.
“If the capacity increase is sustained, Polish prices would quickly converge with those in the Czech Republic and Germany,” Michal Wilczkiewicz, a trader for Fortum Oyj (FUM1V) in Warsaw, said in a phone interview.
German power for next-year delivery was 1.40 euros ($1.83) a megawatt-hour more expensive than its Polish equivalent today, compared with an average of 7.03 euros during the past 12 months, broker data compiled by Bloomberg show. The gap was 8.98 euros on Nov. 21, when PSE Operator SA, Poland’s network manager, said it would have no capacity to export electricity to Germany available to traders for the six months from May.
104 Billion Euros
Europe needs to invest 104 billion euros in its extra high voltage power lines over the next 10 years to avoid bottlenecks, 80 percent of which are related to renewable sources such as wind and solar power, according to the European Network of Transmission System Operators for Electricity, which represents network managers in Brussels.
Increased wind production in Germany on Feb. 24 left no capacity available to trade on a cable linking the country with Sweden, according to grid operator TenneT Holding BV. The Czech Republic’s grid is at risk of failure after unscheduled flows from Germany rose as high as 3,500 megawatts, more than three times the usual value, according to its operator. Belgium in 2009 installed the so-called phase shifting transformers on its links to stabilize supply as generation from wind and sun, which depends on favorable weather conditions, increased.
Unscheduled Power Flows
Poland handles as much as 2,000 megawatts of unscheduled power from Germany and needs phase shifters to improve the system, Grzegorz Tomasik, management board member of PSE Operator said in a Feb. 22 interview. The flows are equal to about 11 percent of Poland’s demand last year, grid data show.
“Recent years have shown a steady increase in unscheduled flows of about 5 percent annually” mainly from wind farms in northern Germany, Jerzy Dudzik, the head of PSE Operator’s system management department, said by e-mail yesterday.
The transformers would also allow the grid to offer the capacity to import power to Poland now blocked by German flows, boosting trade, Tomasik said. A tender will be announced by April, he said. Poland plans to put the phase shifters on its two cable connections with Germany in two to three years, more than tripling exports to over 2,000 megawatts and boosting imports by about 500 megawatts, PSE Operator said. 1,000 megawatts is enough to supply about 2 million European homes.
Elia System Operator NV (ELI), the manager of Belgium’s grid, installed the transformers on its external connections as greater variability of energy flows in Europe’s interconnected markets required measures to maintain stability of supply.