Climate Ministry warns that capacity market may need to linger on

During the latest Cogeneration Congress, the Ministry of Climate and Environment talked about the challenges facing the heating industry. One of them is the appropriate balancing of capacity, which, according to the Ministry, may mean the need to extend the capacity market after 2028 in a “slightly changed shape”.

“When it comes to the challenges associated with Power to Heat technology, the question arises whether operators will respond correctly to price signals, whether they will take advantage of the possibility of aggregating individual systems in order to properly earn on the market. There is also the problem of ensuring an appropriate balance of capacity. Perhaps this will mean the capacity market will need to continue in a slightly changed model,” said Ksenia Ludwiniak, Deputy Director of the Department of Electricity in the Ministry of Climate and Environment, during the 5th Congress of Cogeneration in Kazimierz Dolny.

The capacity market is a support mechanism for maintaining the availability of power plants necessary from the point of view of security of energy supply, approved in 2018, and operating in Poland since 2021. The solution aims to prevent future electricity shortages by creating investment incentives to build new and upgrade existing generation units. The mechanism, as emphasized by the Energy Regulatory Office is to activate energy consumption management and make electricity demand more flexible.

In recent years, Poland has sought to extend the derogation of the capacity market, which was to be valid until June 2025. At the end of 2023, the European Union decided that the mechanism will operate until at least 2028.

Jędrzej Stachura