Notification of the capacity market in Poland by the European Commission was never to happen. For this reason, it must be regarded as a success. However, it was bought with concessions. One of them is the consent for auctions for cross-border power plants, which are worrying for a part of the industry – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.
The compromise, which made it possible for the European Commission to notify the mechanism of the capacity market in Poland, provides for auctions for cross-border capacities, which in case of a victory will gain support for availability on their own market.
Support for power plants abroad
This means that power plants connected by interconnectors with Poland (in Germany, the Czech Republic, Slovakia, Lithuania or Sweden) will receive co-financing for the availability of power through capacity market auctions. The European Commission insisted that cross-border capacity should be included in the auctions. The supporters of this solution stress that without concessions notification would not have been possible. Critics warn that “foreign entities that win this auction will receive payments, but they will not have to deliver power to the Polish market, but it is sufficient that they remain active on their own market at the disposal of the local operator.” Meanwhile, the capacity available abroad will be deducted from the capacity of national power plants, which will be able to benefit from the capacity market.
– The key point of the negotiations with the Commission was the method for determining this volume – admits Director Przybylski during the consultation on the capacity market rules. – We will cooperate with a foreign operator – he pointed out. Its offer is to compete on equal terms with the capacities offered in Poland. – This solution does not assume any obligation to physically deliver electricity to the Polish market – said Maciej Przybylski, Deputy Director of the System Development Department in Polskie Sieci Elektroenergetyczne, In the Commission’s view, a functioning market will ensure that the energy needed will reach those in need anyway. The director admitted that “this could be disputed, but this is what the regulations are about.”
A secret auction
The preliminary auction, on the other hand, is to determine who from abroad is suitable for participation in the auction. – Polish operators will not be informed of the prices included in these offers. They will only have knowledge of volumes. These bids will be included in the main auctions, separate prices will be set based on the capacity congestion ranking to be distributed among operators. It will be devoted to increasing the capacity exchange and sales opportunities by foreign units – as the director summed up.
– In this way “equality” of entities on the European market is to be implemented, when Polish power plants will have to compete with foreign ones, which in a “confidential” manner, supported the Polish operator, will receive a significant market area even without the obligation to supply this market – warns the interlocutor of BiznesAlert.pl.
The portal’s other interlocutors argue that support for cross-border capacity is one of the cornerstones of the integration of energy markets in the European Union and it would be difficult to question it, simultaneously counting on the Commission’s notification. The situation of the capacity market will therefore be bad, or not as good as Poland would like, but without it it would be even worse.
– The introduction of the capacity market is a significant step towards minimising the risk of capacity deficits in the power system – the so-called “blackouts.” The generation capacity adequacy problems in Poland should be solved immediately, as evidenced by power shortages in the Polish power generation system in 2015. As shown by the PKEE Report, failure to introduce a capacity market in Poland could lead to power shortages, which would result in annual losses of about PLN 10 billion – warns the Polish Electricity Association.