Power market - PKEE report

PKEE presents its report: „Capacity Market as means to avoid blackouts” September 8th, 2016 Publications We have the pleasure of presenting yet another report by the Polish Electricity Association (Polski Komitet Energii Elektrycznej - PKEE) 

This publication is a detailed response to our industry’s fundamental question: how do various electricity market models influence the growth potential of the power system in view of assuring security of supply? We stand firm by our opinion that discussion about Polish economy cannot be held without referring to the fundamental issues of energy supply security and continuity

Conclusions of our study indicate the need to urgently commence efforts aimed at improving the effectiveness of electricity market in Poland. Failure to do so will adversely impact broadly understood social welfare, primarily due to increase of the cost of supplying electricity to end-users.

At the same time PKEE appreciates the changes recently taking place in the electricity market – in particular introduction of strategic and operating reserves and announcement of introduction of capacity market. In the transition period before its introduction the key issue seems to be the continuation of reform of the wholesale electricity market and ancillary services. In our opinion the regulatory priority should be to reflect the real value of electricity in instances of supply deficit threat and faster development of the DSR (Demand Side Response).

We hope that the PKEE report will positively influence the quality of discussion about the capacity mechanisms end the electricity market model in Poland.

The introduction of a power market will also make it possible to obtain funds to cover the costs of reconstruction and modernisation of generation units and to maintain the necessary levels of available capacity required for the safe operation of the power system.

The report is the result of several months of work by industry specialists, including experts in market analysis and wholesale trade services.

The publication of the document comes exactly one year after last year's technical problems with balancing the national electricity system and the introduction by the transmission system operator of the highest, 20th power level.

The report draws attention to the socio-economic consequences of blackouts and points out that the cheapest way to ensure continuity of electricity supply will be to introduce a power market based on the proposals put forward by the Ministry of Energy, as the total cost of undelivered energy in the scenario based on maintaining the current single-carbon electricity-only market amounts to PLN 37.6bn by 2030. At the same time, the report stresses the importance of transitional solutions, which in the coming years will form a bridge on the way to the introduction of target solutions. From the consumers' point of view, failure to take the actions recommended in the report may have far-reaching consequences in the form of a drastic fall in energy security and an increase in their costs by more than PLN 10 billion annually.