Recently there has been a significant debate about the possible implementation of a centralized capacity mechanism in Poland. Despite the fact that capacity adequacy is currently being discussed at the national level as a long-term issue, the lack of sufficient capacity and insufficient demand flexibility has already been observed on a number of occasions. In July 2016, the Polish Ministry of Energy expressed its support for the implementation of a market-wide capacity mechanisms. In view of these recent events, the aim of this paper is to shed some light on the possible implementation of a capacity market in Poland. The paper presents a brief overview of the key problems that the Polish power sector faces and provides a comparative analysis between some of the main elements of the Polish capacity market proposal and the GB capacity market.

The paper investigates the supply structure of the capacity market in Poland in the coming years. The results of the capacity auctions conducted in 2018 are analyzed for this purpose. Three auctions were held at that time. The products traded in the capacity market are capacity obligations for the following years: 2021, 2022 and 2023. The auctions were organized in accordance with (i) he Act of December 8, 2017 on the Capacity Market and the (ii) Capacity Market Regulations published by the Polish Power Grid. The source of data used in this study is the official information of the President of the Energy Regulatory Office on the final results of the main auctions for 2021–2023 delivery periods. The list of the capacity suppliers who won capacity auctions contains the type of capacity market units, the volume of capacity obligations, the duration of capacity agreements and the business name of the capacity suppliers. The conducted analysis indicates that the auction for 2021 was won mainly by existing units (45.81%) and refurbishing units (33.51%). In subsequent years, the share of existing generating units is significantly higher and amounts to 91.67% for 2022 and 84.54% for 2023. The results of the study carried out in this paper also show that one energy company, being the owner of power generating daughter companies, has a very high share in these capacity auctions. The PGE Capital Group contracted 51.95% for 2021, 69.92% for 2022 and 64.44% for 2023 of the total capacity obligation. The volume amounts to over 70% of their total installed capacity.

Capacity remuneration mechanisms have been imposed globally in order to ensure capacity adequacy and prevent a sharp increase in electricity prices in the long-term. The main causes of their introduction are to provide financial support for companies to generate electricity or reduce consumption in peak demand and ensure sufficient incentives for potential investors. The paper aims to review the capacity remuneration mechanisms introduced in various countries. The following mechanisms are discussed: capacity payment, strategic reserve, reliability options, capacity obligations, and capacity auctions. The paper indicates the main advantages of mechanisms and key challenges related to their introduction and operation as well. The paper contributes to the existing literature by extending and updating the knowledge on the capacity remuneration mechanisms in various energy markets. The results indicate that the most complex schemes are market mechanisms. Regardless of the nature of the traded good (call options, certificates, capacity obligation), the second market structure must be introduced and managed. Consequently, the obligations are imposed on (i) the regulatory body (regulator or transmission system operator), generation companies (or demand-side response), trading companies, and consumers. The other challenge of the implementation of various CRMs is related to the transparent treatment of all technologies. All CRMs should be technologically neutral, but ultimately, some units are more favorable due to their greater impact on the reliability of the power system.