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“The new government will have to make a decision about terminating the future crisis shields, but I understand that this is a difficult issue. We have a little more time for further analysis. Let’s remember that the market does not like unexpected decisions and uncertainties,” Piotr Zawistowski, President of the Polish Power Exchange (TGE), tells BiznesAlert.pl.
The editor-in-chief of BiznesAlert.pl Wojciech Jakóbik conducted an interview with Piotr Zawistowski, president of the TGE, in which they discussed the situation on the electricity and gas price market and the future restoration of market mechanisms.
Mr Zawistowski pointed out that 2023 was calmer than the previous year, but we were still under the influence of last year’s regulations, which were aimed at limiting the effects of the energy crisis. He noted that it was impossible to say unequivocally that the crisis was not over, especially given that current electricity prices have not returned to pre-2022 levels, although they have stabilized strongly.
Piotr Zawistowski also referred to the situation on the gas market. “This year there was no gas crisis, because supplies to Europe were large enough. Of course, we still have to take into account the high price of raw materials on exchanges, but the tragedy of 2022 is unlikely to happen again,” he stressed.
In the interview, a question was raised about the feasibility of introducing a 100 percent exchange obligation on the energy market next year. President Zawistowski replied that from a market perspective, this was the optimal solution, as it would have a positive impact on the assessment of energy prices by final off-takers. “Such a solution has been repeatedly postulated by energy market participants,” he said.
“The issue of freezing wholesale prices looks different, but despite the fact that it could have been assessed positively in conditions of great uncertainty, at the moment I see more of its shortcomings . The reintroduction of the obligation to sell energy through TGE will improve market liquidity and lead to the return of a competitive model. It will also be a signal to customers that prices have been formed on the basis of transparent stock exchange rules,” said the president of TGE.
It is worth noting that as of the beginning of 2024, the exchange obligation will return at 55 percent to the gas market. Wojciech Jakóbik also asked about the impact of the mechanism next year. “From the perspective of the stock market, the gas market has not experienced any turbulence. Its turnover is usually determined by domestic consumption and not by the level of the obligation itself. In my opinion, its increase should have a positive impact on volumes, but the increase in the level of consumption will be more important, a prediction made by Gaz-System as well. Lower gas prices and higher demand from the chemical industry will increase turnover on the gas market,” he said.
“The abandonment of European gas supplies from the East and a clear increase in LNG imports will have a major impact on competitiveness. I am afraid that we will not return to past electricity prices. A positive aspect of this phenomenon may be more pressure to save.” he added.
When asked about returning to market mechanisms setting prices, the TGE President noted that since the beginning of the pandemic, protective measures have been taken in Europe and, as a result, the role of the free market has been slowly forgotten. He pointed out that it was necessary to slowly return to these mechanisms, and stated that solutions such as freezing gas and power prices were not optimal at all.
“In Poland, we have already started this process by expiring part of the regulations at the end of 2023 and in mid-2024. The new government will have to make a decision on the termination of future crisis shields, but I understand that this is a difficult issue. We have a little more time for further analysis. Let’s remember that the market does not like unexpected decisions and uncertainties,” emphasized Piotr Zawistowski.
At the end of the interview our editor-in-chief asked about the role of TGE in the Polish energy transition. The President said that the exchange was the answer to the needs of the market, but first of all it was necessary to define the tools of transformation in order to be able to support them with stock funds. “For example, as long as we are settled in gas, there is no need to introduce a new energy carrier in the form of biomethane or hydrogen. There must be appropriate technical mechanisms and regulations and market needs in order to be able to match our tools to them,” he stressed.
At the end of the interview, President Zawistowski wished that the next year would bring stability in the regulatory aspect, so that the business, based on predictable, healthy conditions, could continue to develop.
Summary by Jacek Perzyński
