The results of Poland’s recent capacity market auction have been revealed, with a clearing price significantly lower than the previous years and IPP Greenvolt saying it won the lion’s share of around 1.7GW of BESS awarded contracts.
The auction which took place last month (December 2023) cleared at a fixed, consumer price-indexed (CPI) price of PLN 244.90/kW (US$61.73) per year for the contracts which start in 2028, the Polish state bulletin revealed yesterday (9 January). The contract lengths range from 1 to 17-years.
It awarded contracts to 159 projects totalling over 7GW of power, of which 111 are in Poland and 48 are abroad in Czech Republic, Slovakia and Sweden. The clearing price is significantly lower than the PLN 406.35/kW at which the previous auction cleared, for deliverability in 2027. There are lower clearing prices for the projects in Czech Republic and Slovakia.
The capacity market is set to kickstart the large-scale BESS market in Poland by providing the basic building blocks of the business case, according to numerous delegates interviewed by Energy-Storage.news at Energy Storage Summit Central Eastern Europe (CEE) 2023 in Warsaw in September.
Renewable energy developer and independent power producer (IPP) Greenvolt won 1.2GW of 17-year contracts for six battery energy storage system (BESS) projects it bid in, the company revealed on the same day.
It claimed this equated to over 70% of total capacity awarded to BESS technology, implying the total awarded to BESS was around 1.7GW. That would be over 10 times higher than the 165MW that won contracts in last year’s auction.
A breakdown of the winning projects from the state bulletin did not spell out the technology for each but analysis by Energy-Storage.news showed that projects described as ‘new generation capacity market unit’ (nowa jednostka rynku mocy wytwórcza) – as all of Greenvolt’s are – totalled 1,735MW.
A total of 16GW of BESS projects got preliminary registration to bid in to the December 2023 auction, though not all will actually have bid. Research firm LCP Delta recently did a deep-dive into the Poland and Eastern Europe grid-scale energy storage markets with a focus on the former and the capacity market auction for Energy-Storage.news.
Energy-Storage.news'' publisher Solar Media will host the 9th annual Energy Storage Summit EU in London, 20-21 February 2024. This year it is moving to a larger venue, bringing together Europe''s leading investors, policymakers, developers, utilities, energy buyers and service providers all in one place. Visit the official site for more info.
The European Commission (EC) has approved a €1.2 billion (US$1.32 billion) state aid package for Poland to support the deployment of electricity storage facilities.
It will provide direct grant and loan funding worth up to 65% of the capital cost of ''at least 5.4GWh'' of investments in electricity storage projects across the Eastern European country.
The capacity market was a major topic at the recent Energy Storage Summit Central and Eastern Europe 2024, which our publisher Solar Media hosted in Poland''s capital Warsaw, in late September.
The new scheme falls under the EC''s Temporary Crisis and Transition Framework (TCTF), which was introduced in response to the Russian invasion of Ukraine to enable affected EU Member States to bolster their economies.
TCTF focuses on energy transition efforts, and aid will be available for states to grant until the end of 2025 for measures to support the energy transition in three key areas: accelerating the rollout of renewable energy, facilitating the decarbonisation of industrial processes, and accelerating investments in low-carbon technology manufacturing.
Funding for the scheme in Poland will come from two sources: the EU''s Modernisation Fund, paid out to 13 Member States for modernisation of their energy systems in line with EU targets, and from the EU Recovery and Resilience Facility.
It follows a similar amount of state aid funding being made available for energy-intensive industries in Poland struggling with rising energy costs, approved by the EC around the same time last year.
The electricity storage support scheme aims to facilitate the reduction of fossil fuel use and the increased penetration of renewable energy on the Polish grid.
Grants and loans combined should not exceed 45% of the cost of each project; however, for medium-sized companies, this could be extended to 55%, and small companies could receive aid worth up to 65% of capital investment costs.
These include a €103 million package of direct grants in Romania in March 2023, €150 million for renewables and storage in Slovenia and €1.1 billion for Hungary a couple of months later. In December 2023 a €17.7 billion package in Italy toward the development of more than 9GW/71GWh of storage that the country''s transmission system operator (TSO) TERNA has identified the need for was approved, and earlier this year a €1 billion scheme in Greece to support renewable energy and storage got the go-ahead.
Yesterday, ESN Premium published an interview with Jan Kloczko of independent power producer (IPP) Greenvolt, which won 70% of the recent capacity market awards.
Kloczko spoke about the bidding process and how Greenvolt was able to win out despite participation being an "intensive and costly exercise," the status of the Polish market and how initial excitement around the nascent sector needs to be accompanied by a deep understanding of markets and technology, including battery degradation.
Poland looks set to lead battery storage deployments in Eastern Europe, with 9GW of battery storage projects offered grid connections and 16GW registered for the ongoing capacity market auction.
Eastern Europe has languished behind other regions in developing battery storage, but this is set to change. Driven by falling costs of renewables, the closure of coal generation and the need to rapidly find alternatives to Russian gas, the accelerated installation of intermittent generation will lead to a rapid transition of their electricity markets.
At the end of 2023, Lithuania has the most operational capacity with the energisation of four 50MW installations owned and operated as a single battery park by Energy Cells.Hungary has a small number of installations just above 30MW, while Poland and Romania have little more than 10MW of operating capacity.
Currently operational Front of the Meter energy storage projects in Eastern Europe (MW capacity and number of projects). Source: LCP Delta STOREtrack.
One of the largest barriers has been the lack of policy development and slow implementation of the Clean Energy Package to open ancillary services to market structures that would drive the development of storage. As a result, current capacity is dominated by pilot projects with strong network operator involvement.
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