Electricity market design: one size won’t fit all


The energy crisis has highlighted imperfections in the EU power market. The current rules were created almost 30 years ago with the aim to incentivise large conventional power plants, but they now need to be adapted to new challenges.

Disclaimer: This is an excerpt from an article published in Euractiv.com on 17 February 17. Click to read the full article.

Poland has always been, to say the least, cautious about the energy transition. As an argument against this, it said that the change would be too expensive and does not support energy security based on domestic coal.

These were mainly political declarations, but the desperate attempts to maintain the status quo have become counterproductive. Security of supply is deteriorating and energy prices continue to be high, even as the situation in the gas market normalises.

Nonetheless, last year, Poland, which had already started planning to move away from coal, stopped halfway. But the facts in 2023 are that production from hard coal has fallen year on year by 5 TWh and mining output has dropped. Now Poland must move away not only from coal but also reduce gas in its planning.

A change in thinking about renewable energies and the role they have to play in the energy mix in terms of energy security is essential, and this is our homework. It cannot be said that nothing is happening.

Solar energy has grown rapidly in the space of a few years, from 300 MW to over 12 GW. The increase in sales of heat pumps is the highest in the world, reaching nearly 200,000 units in 2022.

However, onshore and offshore wind energy development is slow and inadequate to meet the needs. In the context of the ongoing electricity market discussion, the key factors in our view are: 

  • right price signals for the transition,  
  • secure capacities that will balance the system, and,
  • bringing energy companies’ excess profits under control. 

Click to read the full article.

Dr Joanna Maćkowiak-Pandera
Dr Aleksandra Gawlikowska-Fyk

Date of publications: 
17 February 2023