Polish Electricity Committee discusses in Paris the experience of power markets functioning in the EU

Several dozens of experts took part in the Euractiv debate organised by PKEE in Paris. It was already the second international discussion on the European electricity market. The cycle of events organized in countries with functioning power markets started with the Tuesday debate in Madrid. The expert debates are to be a contribution to the negotiations on the regulation of the EU electricity market, which should be concluded during the Austrian Presidency in the second half of 2018.

Currently, the European electricity market is facing structural problems related to security of electricity supply, resulting from a shortage of capacity and limitations on financing new investments. Capacity markets, if well designed, can provide an effective response to these problems while supporting market reforms and the energy transition.

During the Euractiv workshop in Paris Fabien Roques, vice-president of Compass Lexecon, one of the most experienced consultants analysing EU power markets, argued that the introduction of this mechanism in Poland is the most economically justified way to ensure its supply security. He also added that CO2 emission reduction should be achieved by means of one tool, namely the EU ETS. Therefore, the introduction of an additional tool to the market regulation to reduce emissions with the EPS 550 emission standard increases costs and is not economically justified.

PKEE pointed out that the Polish power market approved in February by the European Commission is fully compliant with the EU state aid rules. Maciej Burny, Secretary of PKEE, reminded in Paris that the Directorate General for Competition of the European Council after a detailed analysis concluded that the power market is a proper option to solve the structural problem of ensuring security of electricity supply in Poland. The Commission's decision also applied to five other member states. „ Power market in Poland is necessary to provide incentives for new investments necessary for security of supplies, as the energy market alone will not ensure it. " Maciej Burny also drew attention to the danger of retroactivity of the new regulations, therefore, as he stressed : „ Auction participants expect that contracts concluded prior to the entry into force of the new regulation will be protected on the basis of acquired rights. - As is the case with the just-agreed amendment to the RES Directive, which fully respects the acquired rights of investment in renewable sources. We need the same predictability of the regulatory environment for conventional sources, which are essential in the electricity system to maintain its stability ”.

The participants of the debate also pointed out that the power mechanisms, that is, both the power markets and the strategic reserves in the EU, should be open to participants from other countries. The regional perspective postulated by the Commission can bring significant added value. However, in the case of resource adequacy assessments, which assess capacity resources and determine the level of security risk - and on this basis decide on the introduction of capacity mechanisms - this responsibility should remain at national level. They underlined that the responsibility for guaranteeing security of supply lies with the Member States concerned and their national authorities.

Among the discussed topics, which will have a significant impact on the future of power mechanisms in the EU, was the issue of CO2 emission standard (EPS550). So far, some EU member states have implemented power markets and some have strategic reserves - according to the EU competition policy these are power mechanisms, so as the PKEE representative argues, they should be treated equally. - –  In its proposal, the European Parliament postulates the exclusion of strategic reserves from the EPS550 requirements, which means the introduction of a double standard. We expect that the new regulations in practice will not favour some  countries at the expense of others - Maciej Burny, PKEE Secretary, pointed out.

PKEE points out that power markets effectively help maintain security of electricity supply in countries where more than 50% of the European Union population lives. - –  The Polish power market is one of several similar ones implemented in France, Great Britain, Ireland, Spain and soon in Italy  - Paweł Wróbel, director of the PKEE Brussels office, pointed out.

This Thursday Rome will host the third of the European debates on the power market co-organised by PKEE. The series of meetings will end in July with the Euractiv conference currently being prepared in Brussels.