EU approves Poland’s capacity market

The European Commission approved Poland’s capacity market mechanism. The bill introduces auctions for reserve capacities and creates incentives for investments in the energy sector. Poland secured the approval along with five other EU member states. “Capacity mechanisms can help to safeguard the security of electricity supply, but they must be designed so as to avoid distortions of competition in energy markets. I am glad that our close cooperation with national authorities has enabled us to today approve well-designed capacity mechanisms in six EU countries. They will foster competition among all potential capacity providers to the benefit of consumers and our European energy market,” Margrethe Vestager, commissioner in charge of competition policy said. “In the cases of Italy and Poland, the Commission has authorized market-wide capacity mechanisms. These can be necessary where electricity markets face structural security of supply problems,” the EC said in a statement. “Poland has demonstrated that it is faced with market failures in the electricity market that prevent prices from incentivizing power generators to keep existing capacity in the market or to invest in new capacity,” the EC added. The annual cost of the market will depend on the auctions result but was estimated at PLN 4 billion. Customers will be responsible to cover the costs, which according to Energy Minister Krzysztof Tchórzewski will cost an average household less than PLN 2.