Current market failures are well identified in the Winter Package. However, we feel that some of the proposals do not match the reality, Maciej Burny told EurActiv Slovakia.
Maciej Burny is the Secretary of the Polish Electricity Association (Polski Komitet Energii Elektrycznej – PKEE), association of the electrical power sector in Poland.
Burny spoke to EurActiv Czech Republic’s Adéla Denková at the SET Plan – Central European Energy Conference 2016 in Bratislava.
What is the general view of the Polish Electricity Association (PKEE) on the Winter Package presented by the European Commission last week?
In our opinion, the solutions presented in the Winter Package are following the right direction. If the EU aims to integrate its power market, it is necessary to have a look at market failures, which are present in the current system. One of them is the lack of market signals for investors caused by the impact of renewable sources development on electricity prices. Today, the wholesale price of electricity does not cover operational costs of conventional power generation, not even mentioning the capital costs needed for new investments. That puts the security of supplies into question.
We also welcome that the proposals indicate an effort to move support schemes for renewable sources closer to the market principles and remove the priority dispatch of renewables. If we are talking about giving more space to the market, indeed, we have to phase-out preferential treatment of certain technologies.
We think that the current problems are well identified in the Winter Package. However, we feel that some of the proposals do not match the actual development of interconnection capacities. We are also concerned about the problem of mutual scarcity – that means, what will happen if there is, for example, a shortage of generation capacity both in Germany and Poland? Can we fully count on our neighbours to supply energy across the border? According to the draft electricity market regulation they will be obliged to do that, but the national transmission operators in each country are motivated to dispatch the available power within their own territory.
In the future, the market, based on scarcity pricing rather than capacity payments, should drive investment in energy generation capacities. Do you think this is a realistic idea?
I do not think so and in my opinion, the Commission does not think so either. That is why they have developed a relatively robust system of control over the so-called capacity mechanisms, instead of identifying the energy-only market as the only solution. There are at least a dozen member states who have already introduced some form of capacity mechanism or are planning do to so. Therefore, it will be important to ensure that the schemes are developed in compliance with market rules, they are open to all technologies, do not discriminate cross-border generation etc.
At PKEE we have prepared a report assessing whether the energy-only market will work if we remove prices caps and introduce scarcity pricing. We believe this solution would not fully ensure the security of supplies. Therefore we think that the capacity mechanisms will be the only way to provide necessary revenues for the existing generation capacities and certain predictability needed for investments into new installations.
Read full article at EurActiv.com: http://www.euractiv.com/section/energy/interview/polish-power-rep-commissions-vision-of-the-electricity-market-is-slightly-utopian/