Market conditions in the Polish energy sector in 2023 have deteriorated significantly. In terms of transaction costs, regulations and the level of use of flexible resources such as energy storage, heat pumps and smart meters, Poland received the lowest score of all European countries.
- Poland is facing difficulties in the accessibility of the energy market. This is primarily due to the increasingly stronger position of the main electricity suppliers and state interference.
- Changing regulations, lack of predictability, unclear rules and stabilization of the energy system based on conventional sources constitute a barrier for new investors. The generation, transmission and distribution of electricity, as strategic factors in the functioning of the country, are largely controlled by the state.
- Poland’s poorest result in terms of energy market accessibility is alarming and certainly constitutes a signal to take urgent action in this area. Investors are looking for predictability to enable financing of investments with long payback periods. Policies and incentives that support the creation of fair, transparent and accessible energy markets in 2024 are key.
The 2023 Energy Transition Readiness Index (ETRI) study covered 14 countries. Poland, with an overall rating of 2 on a five-point scale, turned out to be the least ready country for the energy transformation.
The openness of the Polish energy market to renewable energy sources is decreasing
In the latest ETRI study, Poland recorded a significant decline in the assessment of energy market accessibility (in 2022 we received a score of 4, in 2023 it was only 2).
There is also a noticeable change in the result related to regulations and rules that enable fair access to the energy market for all participants.
In the 2022 report, Poland received the highest score of 5 in this area and was ahead of other European countries. A year later, it was placed next to Switzerland at the bottom of the scale, with a rating of 2. The openness and efficiency of the Polish energy market also decreased (from a rating of 4 in 2022 to 2 in 2023). The best countries in terms of energy market regulation and transparency were Norway, Finland, Denmark, the Netherlands and Ireland.
Poland is facing difficulties in the accessibility of the energy market. This is primarily due to the increasingly stronger position of the main electricity suppliers and state interference. Changing regulations, lack of predictability, unclear rules and stabilization of the energy system based on conventional sources constitute a barrier for new investors. The generation, transmission and distribution of electricity, as strategic factors in the functioning of the country, are largely controlled by the state. Freeing the energy market would certainly be an impulse for its development – emphasizes Mariusz Hudyga, product manager at Eaton.
Transaction costs do not encourage renewable energy investors
It is not only regulations and market openness in Poland that are not conducive to energy transformation. Transaction costs in the energy industry were also assessed unfavorably.
In 2022, our country received one of the highest scores in this area among all the surveyed countries – 4. However, the 2023 report showed that the Polish energy market is not attractive to investors.
The reasons include, among others: growing transaction costs, which have a negative impact on increasing network flexibility and developing green energy sources. The best investment conditions in this respect are provided by Norway and Ireland.
A European strategy is needed. Energy storage the solution?
According to the ETRI report, the 14 surveyed European countries will need a total of an additional 1,000 TWh of renewable energy power by 2030. As Eaton experts point out, countries should primarily focus on planning future demand for low-emission energy. Determining the network’s needs will allow system operators to take them into account when planning its development.
Regulatory authorities and transmission and distribution system operators should cooperate closely and develop coordinated energy transition plans.
Poland’s poorest result in terms of energy market accessibility is alarming and certainly constitutes a signal to take urgent action in this area. Investors are looking for predictability to enable financing of investments with long payback periods. Policies and incentives that support the creation of fair, transparent and accessible energy markets are key. Therefore, reforms are needed that will open markets and strengthen fair competition there. No less important is the removal of barriers such as network bandwidth limitations and the development of intelligent measurement devices and IT systems that will help better energy management, points out Mariusz Hudyga.
Tax breaks could improve investments in the Polish energy market
Tax reliefs similar to those offered under the American IRA program, targeted at energy storage, electric vehicles and heat pumps, could also help encourage investors.
In March 2023, the European Commission adopted an energy storage strategy, which included, among others: recommendations to remove barriers to this type of solutions, including the avoidance of double taxation and the simplification of permit issuing procedures. In the coming years, energy storage will play an increasingly important role in the transformation of European energy systems.
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