Nonetheless, existing regulations are a priority for day-to-day business. Although mega trends set out a certain direction, regulations specify the speed and depth of the changes.

Factors shaping regulations

On a European level, the framework for the development of the power sector is being established. The EU regulations are sort of compromise taking into account that every member state has different natural (renewable and non-renewable), infrastructural and financial resources.

Therefore detailed regulations for power-sector companies are being established at the country level – including regulations supporting or limiting the development of specific energy technologies. They are shaped by many factors, the balancing of which at country level is the basis for executive and legislative authorities, which have influence over the shape of regulations.

These factors include:

• social (capacity to ensure the state's energy security, stability of electricity supplies, jobs for citizens, sustainable development of the country)
• economic (cost of electricity for households, competitiveness of the economy expressed as the cost of electricity for industry, ability to use domestic technologies, local suppliers and service providers, availability of natural resources, infrastructure and know-how)
• natural environment (costs for the environment related to specific operations)

Capacity market and Supply reliability

A review of the modus operandi of the electricity market is an important direction of regulatory changes. In today's reality it is difficult to speak about a fully competitive energy market. Ever-present support systems (such as for renewables or CHP plants) have distorted the market and in effect unnaturally lowered prices due to out-of-market support. Meanwhile burden systems (centrally controlled fees for CO₂ emissions, environmental fees) have increased costs for conventional generation units and hampered its market competitiveness.

Therefore discussions about a capacity market are becoming increasingly popular - a parallel market where the commodity would be the reliability of energy supply, meaning certainty that it will be possible to turn on electric appliances any time during day or night. It should be noted that various types of remuneration mechanisms for plants providing such certainty (conventional or pumped-storage) operate in most EU countries.

A full capacity market is in place in the United Kingdom and France. In Poland, work is under-way on implementing it. The effects of this work will have tremendous significance for the Polish power industry, which would operate on two parallel markets, offering two commodities - electricity and supply reliability. 

Direction of key regulatory changes for PGE

Aside from the capacity market, other important regulations that will shape the market in the coming years are as follows:

• Possible changes in national energy policy arising under the new Polish Energy Policy until 2050 as well as overall guidelines indicated in the Sustainable Development Strategy
• Possible new support system for cogeneration
• Update of the renewables act, auction schedule and volume and level of reference prices
• Obligations to redeem certificates
• Changes in system services

And on a European level:

• The Clean Power for All Europeans Package
• Revision of the ETS system
• BAT conclusions

Our responsibility

Responsible development for PGE means economically optimal use of the regulatory frameworks in which we operate. Our Group operates almost exclusively within Poland. This is why the specifics of domestic regulations are what will largely shape our strategy and operating activities... and what partially differentiates us from our Western competitors.

The idea of mutual understanding is very important to us. Therefore, in dialogue with our shareholders and bondholders, we try to explain the determinants of the Polish power market.

We emphasise that operational flexibility is a priority for us. Flexibility that will allow us to adapt to changing rules of the market game. This is why we place much emphasis on monitoring regulations, both domestic and European.