Tag:
energy market

The capacity market is a system of public support to maintain dispatchable capacity in the Polish electricity system. It was introduced in 2018, with the approval of the European Commission, because coal-fired power plants were no longer making money for themselves. It could have initiated the creation of new dispatchable and flexible capacity, but after eight auctions so far, it is mainly old coal units that are benefiting. Now the capacity mechanism needs to be redesigned to give an impetus to new, flexible investments replacing coal. We present our take on how to organise a new capacity market in Poland. 

Household electricity prices in recent months bore little relation to real production costs, were kept artificially low and treated as an interface with voters. State intervention in this area was necessary in 2022 due to unprecedented price increases on the markets. If the price-freezing mechanisms expire as planned at the end of 2023, electricity prices for households could rise by up to 68% in January. The impact of price spikes should be mitigated. We are proposing a package of solutions: an energy voucher, support for distribution tariffs, additional money for improving the energy efficiency of buildings and a special tariff for heating buildings with electricity.

The energy crisis has highlighted imperfections in the EU power market. The current rules were created almost 30 years ago with the aim to incentivise large conventional power plants, but they now need to be adapted to new challenges.

How to prepare households for an energy war with Russia? Gazprom is suspending gas supplies to Poland under the Yamal contract. This is no great surprise. At the end of this year, Poland was going to give up buying Russian gas anyway. Physically, there is unlikely to be a shortage of gas, but Poland is entering a period of high prices, which will limit the use of this raw material. The role of the state should be to wisely support society in smoothly passing through the crisis. Without reducing demand in sectors where it is possible, this will be difficult.

On 16 March, Ukraine was synchronised with the electricity grid of continental Europe, bidding a permanent farewell to the systems of Russia and Belarus. The connection took place in an urgent and emergency procedure. This is an important step towards sustainable cooperation with the European Union. But today, in Ukraine, there is first and foremost a warfare, as well as an energy war, which is no less important for the lives of the civilian population of Ukraine and Europe as a whole.