Filip Grzegorczyk, PKEE vicepresident: "We would like to achieve some derogations to make capacity market work"
Filip Grzegorczyk, vice president of the Polish Electricity Association (PKEE) in EFE's premises in Madrid. Photo: EFE/EPA
Filip Grzegorczyk, vice president of the Polish Electricity Association (PKEE), participated recently in Madrid in a EFEfórum Energy debate about “The challenges of the European electricity market and the decarbonization of the economy” organised by Agencia EFE and EURACTIV-Spain, with the support of PKEE. Before the workshop, he was interviewed on topics such as the potential of capacity markets and the new EU energy regulation.
By Claudia Boesser/Madrid
Why did you introduce the capacity market ? Was it really necessary?
Yes, it was absolutely necessary. It is predicted that in the following years there will be a 24% increase of energy consumption, so we really needed to introduce the capacity market, which is already notified to and accepted by the European Commission and is completely in tune with european rules. It is very important to have it.
What is your opinion on the new EU legislation referring to the energy market ?
It is a difficult question. EU legislation on electricity market is a complex of rules, not always easy nor friendly. It is as if we were in a triangle: we have the security, the climate protection and the market. Our opinion is that the European Union is too interested in climate and not enough in security supply, so that would be the disadvantage.
Regarding the latest legislation which is currently in process, the so called “Winter Package”, we have a lot of question marks here. We like that there is an European Commission proposal, but we are against the proposal of the European Parliament as far as with the packages. The only thing we want is the adoption of the European Commission’s proposal as a final text, due to the fact that the winter package has such a strong connection with capacity market. We would like to achieve some derogations to make capacity market work. If we don't have this derogation, the capacity market will never work.
The most important element here is the EPS 550, that is the real problem. We cannot introduce this EPS 550 to the capacity market because it would create an unworking market. We think that we should be treated equally in the European Union, so if in Germany this EPS 550 is not applied it should not apply to the Polish capacity market either because the schemes are more or less the same. If the situation is the same we cannot be discriminated.
In aims to ensure energy security, wouldn’t it be more rational to concentrate efforts on supporting the development of renewables, especially the production from wind and the increase of interconnectors capacity?
At first hand, I would say that you are right, but the issue is that all renewable sources, especially wind, regardless if its offshore or onshore, need reliable backup and conventional sources. It is a kind of paradox, we have to develop conventional sources of energy to enable renewable sources of energy to be developed. Polish energy companies are leaders in the pace of transformation into renewable sources, but each time we talk about wind farms we still have to think of backup. We really need this capacity market to be operating so we are able to develop renewable energy sources. The paradox is that we need to support the conventional energy sources, to develop renewable energy sources that are in tune with european guidelines.
What do you think is the perception of small and medium sized enterprises on the retail market on the costs of the capacity market?
We don't estimate very high costs, but when we talk about costs we always have to ask ourselves, what would the alternative of a blackout be? Entreprises are quite aware of the fact that the cost of blackout would be much higher than additional payment for the functioning of capacity markets. That is why we think that this regulation will be well welcomed. If you want to be secured you need to pay for it. In general, I do not see any obstacle in the perception of small businesses.
Will the introduction of the capacity market could eventually hinder the development of the internal energy market of the European Union?
I absolutely disagree. We already have some examples of capacity mechanisms in Europe and, to be honest, some countries were not even notified to the European Commission. Everything we did in Poland, as far as capacity markets concern, was in tune with european guidelines. For example, we have a bid and interconnectors that allow everyone to take part in this system. We do not discriminate any type of energy, so its technological neutral. Everything is transparent and in tune with european rules. If we look at the european energy market as a combination of more than twenty domestic markets cooperating well that is absolutely okay in terms of EU rules.