The results of Poland’s capacity market (CM) were announced this week, with fewer awards to BESS than last year because of a reduction in the technology’s de-rating factor.
State-owned transmission system operator (TSO) PSE revealed the list of winning projects earlier this week (15 December), totalling 6,887.639MW of CM obligations starting in 2030.
The CM is the bedrock of the business case for large-scale energy storage in Poland, with the auctions in 2022, 2023 and 2024 handing out contracts to battery energy storage system (BESS) projects totalling 165MW, 1.7GW and 2.5GW of obligations, respectively.
However, this year’s auction saw only around 685MW of wins for BESS technology, the first time it has fallen.
Try Premium for just $1
- Full premium access for the first month at only $1
- Converts to an annual rate after 30 days unless cancelled
- Cancel anytime during the trial period
Premium Benefits
- Expert industry analysis and interviews
- Digital access to PV Tech Power journal
- Exclusive event discounts
Or get the full Premium subscription right away
Or continue reading this article for free
This is primarily due to a sharp cut in the de-rating factor for BESS to 13%, down from 60% in 2024 and 95% in 2023, executives from the Poland arm of developer-operator Harmony Energy and consultancy Arthur D. Little told Energy-Storage.news.
The de-rating factor, or ‘correction availability factor’, is a limit on how much of a project’s capacity can be bid in to the auction, and is meant to reflect a technology’s reliability in being called upon.
“It was clear that TSO wants to cut BESS in favour of gas. And they made their point,” said Michal Maćkowiak, executive director at Harmony Energy Poland.
His colleague Piotr Czembor pointed out that because of the de-rating factor the actual capacity of BESS projects that won contracts will likely total around 5GW, for whom the capacity market will be around 13% of revenues.
Gas projects, meanwhile, won around 2,400MW of contracts. The Poland government signalled its intent to change the parameters of the auction to favour gas in January this year. Is it also worth noting that the CM that just concluded is the last of its kind under the current system, with a new framework being negotiated with the EU.
Arthur D. Little partner Wojciech Swiercz said: “This year’s main capacity market auction was primarily designed to attract investors in gas-fired generation, with auction parameters significantly favouring gas over energy storage—unlike previous years, when storage technologies dominated. The correction availability factor (KWD) for energy storage, which directly impacts capacity contract revenues, was set at just 13.39%, a dramatic drop from over 60% last year and 95% two years ago.”
Nonetheless, he added that the amount of storage that won was surprising considering the disadvantage.
“Now, both gas and energy storage investors face a race against time to deliver on their commitments within five years. We can expect significant challenges ahead, including global shortages of gas turbines, regulatory uncertainty for energy storage, and high financing costs,” he concluded.
Notable developers and operators that won contracts for BESS projects in this year’s auction include R.Power, Nala Renewables, Axpo, RWE and Tauron, while state-owned power firm PGE won numerous contracts across different technologies including BESS. Enel X Polska, part of the Italy-headquartered power firm, won some contracts for demand response units. You can see the full list here (in Polish).
The CM’s conclusion came just a few working days after Poland revealed the shortlisted energy storage projects for €1 billion (US$1.17 billion) in grants.
