Maximum price act demolishes energy market

by dbereza

Maximum price act demolishes energy market

by dbereza

by dbereza
An appeal to the Speaker of the Senate issued by representatives of the RES industry and other private sector industries is a cry for help in the face of the Price Limit on the Polish Energy Market Act. The regulation contains substantial errors, and the industry rectification thereof. The decision to kill the development of renewable energy sources in Poland was made in just a couple of days, without any consultation with the industry. 

Organisations representing the energy sector, industry and entrepreneurs demand amendments to the draft Act on Extraordinary Measures to Limit Electricity Prices that was supported by the Sejm during voting on 20 October. Elements requiring improvement as well as specific proposals of amendments were specified. 10 entities representing the renewable energy industry and other private sector industries appealed today to the Speaker of the Senate, Professor Tomasz Grodzki, to include the industry’s proposals in further works on the draft. 


Signatories of the appeal to the Speaker of the Senate emphasize their understanding for the urgent need to adopt solutions limiting electricity prices and supporting certain customers in 2023, however the solutions adopted by the Sejm of the Republic of Poland entail the risk of excessive interference with the electricity market, which may result in an economic collapse. Excessive limits on producers’ revenues may in the long term result in an investment breakdown in the sector and numerous bankruptcies of large facilities.

“The draft Price Limits Act requires substantial amendments that take into account the nature of PPAs and do not discourage RES investments. We will be happy to commence a substantive dialogue and cooperation with politicians to optimise the governmental draft in line with the proposals,” said Janusz Gajowiecki, President of the Polish Wind Energy Association.

“The European Commission, presenting the recommendation to limit electricity prices for customers, clearly emphasized that all incentives for investments in renewable energy sources need to be maintained, because in the long-term such investments are a remedy for the crisis,” emphasized Michał Hetmański, CEO of Instrat.

President of Institut Jagielloński emphasized that the barbarous war waged by Russia against Ukraine cannot be an excuse for demolition of the energy market. “One of the reasons for our accession to the appeal is the elimination of the exchange obligation, i.e. the obligation to trad electricity on an exchange, which may give rise to enormous corruption,” warned Marcin Roszkowski, President of Instytut Jagielloński.

“We are happy that the Maximum Prices Act, which gave rise to such serious doubts, is subject to the Senate’s examination. In our opinion a competitive electricity market should feature various vendors and diversified forms of electricity contracting. If the suggested amendments are not implemented, we will face a rollback in renewable energy sources, which already are subject to a substantial slowdown,” stressed Sebastian Kwapuliński, Vice-President of the Renewable Energy Association.

The RES sector and industry emphasized three key areas that jeopardize further development of the renewables market. The first is the inclusion in the draft Act of a different nature of corporate power purchase agreements (cPPAs), which govern advantageous and stable terms and conditions for long-term purchase of electricity, unlike the draft Act, whose time horizon only extends until 30 June 2023. The solution adopted by the Sejm results in blocking of this market and increase in investment risk.

The second aspect is the change in the contribution to the Fund. The system designed in the Act results in a very high legal uncertainty related to the value of the contribution to the Fund for entities obligated to calculate and make the contribution to the Fund, and will result in insolvency, and eventually bankruptcy of trading companies.

The last element suggested by the industry is the detailed solution for cogeneration producers to be applied to calculation of price limits for the needs of the Fund contribution. The Act should address the special situation of producers of electricity in congregation with heat and request, for the purposes of calculation of the price limit for the needs of the contribution to the Fund, to include the total revenue and costs as well as reasonable profit on activity in the area of production of both electricity and heat.

Signatories of the appeal to the Speaker of the Senate include: Związek Przedsiębiorców i Pracodawców, Reform Institute, Instrat, RE-Source Poland Hub, Instytut Jagielloński, Polish Steel Association, Polish Wind Energy Association, Renewable Energy Association, Stowarzyszenie Polska Izba Magazynowania Energii PIME and UN Global Compact Network Poland.