Poland’s first electricity capacity auction is set to take place next year, a document released by the country’s legislation centre on Saturday said.
According to latest details, power plants outside of Poland, in markets that are physically linked to Poland via interconnectors – Germany, Czech Republic, Sweden and Lithuania – will also be able to take part in the bidding process.
Should the mechanism be approved by the Polish parliament, it will become law in January 2018. The first auction would determine reserves for delivery of electricity between 2020 and 2023.
A separate auction for foreign producers would then take place a year later in 2019.
Under Poland’s capacity market, power generators and demand-side response will bid in for payment in return for being on stand-by to generate electricity.
Despite being technology neutral, it will further embed the country’s reliance on coal-fired generation, because this accounts for 90% of Poland’s production capacity, so coal-fired plants will therefore make up the overwhelming majority of domestic capacity that is successful under the scheme.
Poland plans to proceed with implementing the model despite previous calls from the European Commission to cut support for coal-fired plants on environmental grounds ( see ICIS briefing on Polish capacity market ).
According to the proposed legislation, the capacity market scheme is designed to attract new investment and modernisation as well as avoid the “premature decommissioning of existing sources of power”.
The aim of the legislation is to ensure mid- and long-term security of electricity supply for end users in a way that is cost-effective and non-discriminatory, the document said.
It added that current forecasts in Poland are for increasing demand for electricity as well as a risk of supply shortages as early as 2021.
This is why it is necessary to bring forward “the moment at which the market will get a strong economic signal to sustain more capacity in the system“, the document said.
A net total of nearly 5.3GW of new power generation capacity is set to be added to the grid before the end of 2019 but Poland currently does not have any new projects on a large scale in the pipeline post-2019.
More details on the legislation can be found here (Polish language) . firstname.lastname@example.org