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Fight for government contracts, won under the so-called auction energy market, the manufacturing market leader will expose the "all the arsenal". There will be lignite, coal and gas blocks, as well as wind farms, hydroelectric and biomass plants, and pumped storage units.
– I hope our assets will come together. Our expectations are great. We are a market leader with about 37%. The production capacity based on different fuels, flexible, younger than the competition, subject to modernization – explains Henryk Baranowski, president of PGE.
We are after the "revision of forces" of the Polish energy sector. This is the general certification of Polskie Sieci Elektroenergetyczne, which was a necessary condition to apply for a government contract for electricity supply in the future. How did it end for PGE?
Henryk Baranowski, president of PGE: C & # 39; was the first contest of energy blocks wishing to join the auction of power supplies for 2021, 2022 and 2023. From the point of view of the PGE group, all was 100%. as expected. We have submitted all our existing production units as well as several planned units. All registered units have passed certification
What new and planned units did you submit?
In addition to the ongoing investments in Opole, Turów and Rzeszów, we have also notified a small gas unit project in Bydgoszcz
What assets do you actually apply for this year's auction?
We still have the main certification for the auction. Only blocks that will successfully pass this second stage, scheduled for September and October, will be allowed to compete for electricity delivery contracts.
What are you counting on at the auction?
I hope that our strengths will come together. Certainly, our expectations are great. They must be. We are the undisputed market leader, gathering around 37%. production capacity, based on different fuels, flexible, younger than the competition, subject to modernization. In the game for the electricity market, 142 of our units with a total power of 17.3 GW remain. Who, if not PGE, will save the system from the blackout?
Where does the decision to centralize auction participation come from?
The intragroup electricity market management agreement will enable an effective and structured approach to competition. In addition, the agreement, which will be signed on July 27 at PGE National SA, also regulates the obligations and competences of the parties in the field of certification processes, which will allow in the future to provide adequate resources. and to carry out these processes in the most efficient way. I'm glad we signed a contract as the first of the energy groups. This is proof of our speed, efficiency and effectiveness, because the parties to the contract are strong entities of the group, such as PGE GiEK, PGE Energia Odnawialna and PGE Energia Ciepła with Elektrociepłownia Zielona Góra, PGE Toruń and ZEW Kogeneracja. Under this agreement, the assets of all these companies will be managed from the level of PGE Polska Grupa Energetyczna, which is the headquarters of the entire capital group.
Does the market aim to limit intra-group competition? The goal is exactly the opposite. The electricity market achieves its objectives by systematising the selection of units that must be shut down, maintained or built into the electrical system. Through a Dutch type auction with a lower price, which we are going to process in Poland, the units with the lowest cost of power are selected to achieve the electricity market targets. By joining forces, we are able to put on sale a larger volume of energy and offer it to our customers at a lower cost
What does this mean in convenient? in terms of availability, adaptation to environmental requirements, planned power costs, including the necessary expenditures for maintenance and upgrading, which actually create what is called order of merit power supplies in the entire PGE group. All this will allow us, as a group, to set up units that will perform power tasks at the lowest cost. Such construction ensures an optimal level of benefits for the PGS, as it will allow us to win the highest auction volume, as well as reduce procurement costs for PSE and the overall P & C. system. That's why we put all our arsenal for the fight for electricity contracts, starting with lignite, gas and gas blocks, going through wind farms, hydroelectric plants and biomass, up to 39 to the pumping stations. They will win the best, at the lowest cost.
How can electricity market revenues affect PGE's financial results?
The electricity market was designed as the cheapest way to ensure Poland's energy security. work in exchange for a specified pay as a result of a competitive auction. In practice, the electricity market will avoid a power outage or a loss of power over a large part of millions of people. The capacity market was not created to improve the financial performance of producers, but to ensure the security and stability of the electricity supply
These failures cost a fortune, for example the losses caused by a 2003 blackout on the east coast of the United States. billion dollars. In a scenario where there is no energy market in Poland, the cost of such interruptions would reach PLN 10 billion per year.
More gas than coal has been declared for general certification? Will this translate into real investment decisions?
This scenario can not be excluded if we consider Poland's efforts to diversify gas supplies. Only PGE plans to build two blocks of 500 MW gas each at the Dolna Odra power station and another of similar power, but in a different location that we are not yet able to reveal. Other manufacturers could follow in our footsteps
Should competition be strong between Polish companies this year?
This long experience in similar power auctions in the United Kingdom and the United States bears witness to the strong competitiveness of this solution. We are perfectly prepared for this competition.
Foreigners may also be held abroad …
Foreign powers may participate in the Polish energy market on preferential terms. In the first years of deliveries, the volume of the additional auctions is guaranteed and in the next years their bids will be on the main auctions with the majority of other capacities
Will the electricity market be a mechanism supporting the transformation and modernization of the Polish energy sector? Should the capacity market solve the dilemma of choosing the cheapest way of transforming the Polish energy industry by competing prices for generating capacity and reducing demand? . In particular, thanks to the electricity market for the first time, we can be sure that the resolution of this dilemma will not degrade the level of energy security of end customers in Poland.
PGE has a small volume of capacity to reduce storage capacity demand in pumped storage power plants. Although PGE does not intend to act as an electricity supplier for the DSR entities outside of PGE, it has already started working on the balancing services of market for third parties and plans to offer such services in the first quarter of 2019.
The Electricity (PKEE) stresses the need to spend more than 600 billion PLN for low-carbon sources of electricity. 39, here 2050. Can this mechanism be financed?
The US market experience shows that the electricity market can unleash a hidden potential to the energy system, also in the form of demand reduction, as well as from the electricity market. encourage investment in new generation sources.
The statements about the need to transfer the full costs of processing only to the electricity market are not correct. As a rule, the capacity market plays a complementary role compared to the basic sources of the statement of economic efficiency for a given investment, namely the electricity market, the service market system or the DSR product market. The Dutch auction conducted on the capacity market guarantees the preservation of security of supply and the realization of such a goal at the least cost to the consumer.
Some experts point out the poor chances of Ostrołęka C to land a contract in the electricity market. Without profit from the electricity market of a similar class, the block would be profitable?
As an energetic supporter of this project, but as a PGE leader I do not have enough knowledge to be able to evaluate it.
How will the electricity market affect the atomic project? the power does not affect the atomic project. The electricity market guarantees the availability of power in advance 5 years, maximum 17 years. Investments in nuclear power plants require much more time, both for the implementation of these investments and for the return on capital employed. The construction of nuclear power plants can not be implemented in the capacity market, which is confirmed by the experience of countries where the capacity market has existed for several years, such as the United Kingdom.
The Ministry of Energy and the sector hope that the awarded contract will not be withdrawn after the reform of the European market. But in reality, is there no such risk?
Indeed, the final form of the electricity market can still be affected by the regulation of the internal electricity market, which will establish detailed rules for its operation. Negotiations are entering a key phase of reconciliation. We hope that the final text of the agreement will be worked out by the end of the year. The ordinance will probably come into effect in the first quarter of 2019.
Will it upset the Polish electricity market?
The main task of the negotiations conducted by the Ministry of Energy, supported by the PKEE – electricity market, will be focused on emission limits and price areas. From the point of view of the electricity market, the rules for the application of emission limits for energy supply contracts after the entry into force of the regulation and the protection the duration of the performance contracts will be the most important. before the regulation comes into force. We are seeking full protection of vested rights for 15-year electricity contracts entered into before the entry into force of the Regulation and an adequate derogation from the application of the EPS standard 550. g CO2 / kWh for existing units.
Protection of contracts concluded before the date of entry into force of the Regulation is our priority. It refers mainly to the implementation of 15-year electricity contracts whose last year of delivery will fall in the mid-1930s. Recall that energy companies have invested more than 20 years in the construction of new energy units. production in Opole, Turów, Kozienice and Jaworzno. Billion PLN. We must be sure that these assets will be profitable in the long term to ensure the security of energy supply in Poland. In Brussels, our arguments are understood and are aware of the need for a compromise between the implementation of the policy of reducing CO2 emissions and the guarantee of security of energy supply in Poland. I think we will find a solution that satisfies all parties.
What do we want to convince a Europe that is finally trying to decarbonise?
Above all, we want to convince rights acquired and the application of the principle of legal certainty. For today, we still do not know how this legal situation will arise after the adoption of EU regulations in terms of access to coal plants, and yet the first sale auction will be resolved in a few months. This is also confirmed by the aid decision, in which the Commission accepted the Polish electricity market, without excluding support for units emitting more than 550 g of CO2 / kWh. Since Brussels has confirmed that the problem of security of supply in Poland is systemic, it is necessary to ensure continuity of support approved by the Commission less than half a year ago [19659039]
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