EdF consortium looks to Rybnik for power exports

By : Joe Harper

   The new majority shareholder in power generator Elektrownia Rybnik, a consortium led by Electricite de France (EdF), plans to export up to 20% of Rybnik’s power to Switzerland and Italy, EdF Polska President Yves Lhullier said last week.

   EdF, along with Germany’s EnBW, upped its stake in Rybnik to 51% from 35% on Oct. 16.

   “We’re planning to export a portion of Rybnik’s surplus power to Italy and Switzerland and we started talking with (grid operator) PSE (Polskie Sieci Elektroenergetyczne) about getting permission for this,” Lhullier said. “We expect to get a response in a month, with actual sales starting in about six months.”

   EnBW’s head of power trading, Marcus Sussmann, would not confirm or deny Lhullier’s comments.

   Rybnik has unused capacity of about five terawatt hours (TWh) – selling only about seven TWh out of the 10-12 TWh of annual capacity. Lhullier said EdF is looking to sell one to two TWhs a year.

   Lhullier said the plant’s long-term power purchase agreements (PPAs) with PSE would expire next year, “and we will then need to find new buyers for our power. If we can lower costs at the plant, we can then start shifting some power southward,” he said. Rybnik also sells about 65% of its power to the Silesian distributor Górnoœlšski Zakład Energetyczny (GZE). Lhullier said further investment in Rybnik is essential to lowering costs and that EdF is looking into investment plans for the company.

   He said EdF is talking to several Italian firms, including Fiat. “And (we) are looking at developing an international strategy that would see Polish exports fit into our wider European picture,” he said.

   But analysts said that apart from power costs, other logistical and infrastructural questions could make EdF’s plans difficult to realize, as other international companies have already found out.

   Many pointed to the potentially obstructive role played by PSE, Poland’s international interconnections operator. While last year PSE announced its intention to double the country’s power exports in 2002, it would not say whether other parties would be allowed to participate. “We will alter our market for competition only when Poland finally accedes to the EU (European Union),” said Marek Zerka, deputy president of PSE. “On the day of accession it will be necessary to open the Polish market to imports from the EU. That will be the major change in the future.”

   Installed capacity in the Polish power grid is 33,000 megawatts (MW) and absolute peak demand is 22,000 MW, leaving a reserve margin of 50% (the 11,000-MW difference between the two being 50% of peak demand). Only about 60% of Poland’s 33,000 MW of capacity is used during peak consumption hours. The rest could be sold to end-users outside the country, analysts said.

   PSE said Poland exported 7.6 (TWh) of power in 2000 – about 6% of total domestic production and 20% more than in 1999. Of that figure, about 83% was directly exported by PSE and the rest via Polenergia, which is the only company apart from PSE that has a license to export power. PSE said total income from export sales last year fell by about 8%, reaching zł. 657 million ($156 million) at zł. 86.5 per megawatt hour (MWh), or zł. 5 per MWh less than in 1999.

   Polenergia President Paweł Kuraszkiewicz said Poland would likely be exporting about 15% of its total production by the time it joins the EU. He said there would then be no obligation on PSE to balance imports and exports.

   PSE said increasing exports is finite mainly for technical and logistical reasons, although some observers doubt this is the only reason. Instead, they pointed to the huge opportunities for making money in the sector and the fact that PSE does not want any other company to get involved.

   Poland exports to Germany primarily through the Czech Republic grid, which bought 6,777 gigawatts per hour (GWh) in 1999, about 60% of which was then sold to Germany and about 15% to Austria. Slovakia took 1,280 GWh in 1999, while Germany took 369 GWh that year. Other transit countries include Austria, Switzerland, Hungary and since last year, Sweden.

   Polish legislation puts limits on international trade and the country cannot open its borders to electricity imports without reciprocity clauses with other countries, PSE said.

   “The limited capacity of interconnectors will be a key consideration for physical trade,” Zerka said.

   International interconnections transmit 1,300 MW (1,000 MW exports, 150 MW imports), with technical transmission capacity of 5,200 MW. PSE estimates that by 2010 the technical capacity for exports will rise to 11,100 MW.

   Four interconnectors with the Czech Republic are in place: Wielopole-Albrechtice (400 kilovolts – kV), Wielopole-Nosowice (400 kV); Kopanina-Liskovec (220 kV) and Bujaków-Liskovec (220 kV), with a total technical transmission capacity 2,080 MW. From Slovakia, the Krosno-Lemesany (400 kV) has 1,600 technical transmission capacity.

   In addition, insiders highlighted other logistical problems of exporting to the West. “Technical problems with the two German interconnectors and with east German-based energy group Veag make it difficult to export directly to Germany,” said Ryszard Radomski, head of Austria’s largest generator and grid operator, Verbund’s Polish trading unit APT Polska. “The monthly bidding system also makes it difficult, time consuming, more expensive and less reliable,” he said. “Exporting via the Czech Republic is more expensive obviously and the interconnectors are very busy.”

   Lhullier ruled out signing any deal that would see the company investing in upgrading the poor interconnection infrastructure – both domestic transmission and cross-border interconnections.