Spis treści
It is difficult to say, whether what happened o the 16th of December was, in a common meaning, a bidding procedure at all. It all lasted just one round. The bidding started at 8 a.m., and as soon as 8.51 a.m. PSE on its website announced its closure. Maximum price specified by the Ministry of Climate in its ordinance was 400 PLN 40 gr per a kilowatt. The participating investors approved the price 400 PLN and 39 gr.
As one of the bidding participants explained, this one grosz reduction resulted from an algorithm applied in the bidding as if a company had started from the maximum price, its offer could have been rejected by the system. – Significant dominance of demand over supply.
Perfect situation for power security suppliers — as other participant commented.
The bidding results might also be impacted by a withdrawal of at least one big investor between the 1st and the 8th of December.
The users charged with the power fee present of their bills may feel comforted that the first maximum price proposed by the Ministry of Climate i.e. 500 PLN/kW was abandoned, as it might have been the result of the bidding otherwise. Anyway, the prices on the power market are going through the roof. They were 200 PLN per kW in the firs biddings.
The exact amount of the power fee for 2026, seen on our bills will be specified by the Energy Regulatory Office.
We say no to coal
The bidding for 2026 has been the most important power bidding since the beginning of the power market. As it is the first time it applies the EU regulation which excludes power plants emitting more than 500g of CO2 per kWh from share in the power market. It means coal power plants were left outside the bidding. According to the regulation, year 2025 ceases supporting of coal power plants on the power market with an exception of the ones which have received longer contracts beforehand.
PKN Orlen is the biggest winner of the bidding. The Group took almost 2 GW out of 7.1 GW which received power contracts for 2026. The contract were concluded with gas power plants in Ostrołęka and Grudziądz, but also Demand Side Response contracts for T20 MW which will be performed by Enspirion — a company from a group acquired by Orlen Energia.
Węglowa Ostrołęka construction of which was abandoned had the power contract in the bidding from 2018 at the amount of 202 PLN/kW. Thus, gas power plant has the contract lower by half s it will pay twice less for CO2 emission allowances. Fuel, i.e. gas, will be significantly more expensive of course. The question for all power experts in Europe is how long such high current prices will remain.
Polska Grupa Energetyczna is yet another winner. As the company had announced, it reported only CHP plants on the power market. Czechnica near Wrocław, Bydgoszcz, tiny Zgierz and Gdynia will replace old coal units in these towns. There is also a surprise – these four have been accompanied by Lublin CHP plant with a capacity of 200 MW which will be modernized and equipped with a heat storage, according to our knowledge.
Huge success was also enjoyed by PAK, controlled by Zygmunt Solorz. The company reported a new gas power plant planned for several years in Adamów in the bidding . It will successfully supplement a newly constructed PV farm with a capacity of 200 MW.
French Veolia has a contract for Poznan HP plant with a capacity of 100 MW. It is the only foreign investor to receive a power contract in the bidding for 2026.
Połaniec plays va banque
The competition for the most interesting and the most risky enterprise is definitely won by Enea. The company from Poznań reported five coal units in Połaniec to the bidding – in total 1000 MW in total. How will they meet the emission standards?
According to WysokieNapiecie.pl knowledge, they are to be reconstructed in such a way so as to allow for co-firing of high amounts of biomass with coal. The experienced engineers told us that in order to meet 550g/kW emission standard, ca. 50% of biomass must be fired. This has never happened in Polish power plants so far. In 2005 —2015 biomass was co-fired with coal there, however, it never exceeded the level of 10 percent.
Połaniec is a unique power plant in Poland. As the only one it can boast boilers made by USSR, of much thicker and durable steel. It means lower corrosion susceptibility. When it was owned by French Engie, it underwent gradual adaptation to firing increasing amounts of biomass, record-breaking as for Polish conditions.
Co-firing fifty-fifty coal and biomass means the power plant will additionally receive ca. one million tons of woodchips or pellets well as e.g. sunflower husk. Whole Połaniec power plant fired 1.5 million tons of biomass in 2020, out of which approx. 90 percent is assigned to Green Unit – constructed in the “French” era, one of the biggest biomass units in the world with a capacity of 200 MW.
Eight old coal units and the only one biomass unit in Połaniec. In 2019 the power plant generated 366 million PLN of EBITDA profit, in the pandemic 2020 only 6 million PLN less at production drop by a third. Such good financial result is owned to, among other, Green Unit which operated in overload condition.
The engineers we spoke to estimated that the power plant reconstructed for biomass would consume approx. one million tons coal less, obviously meaning a drop in the “black gold” demand.
This will be a huge investment – a cost of reconstruction of a single unit amounts to 100-150 million. In total it amounts to 500 – 750 million PLN. This would qualify the power plant to apply for a seven years power contract providing it with significantly higher reliability of a fixed income.
However, it only applied for a one year contract. Why? There no simple answer to that. In case of a seven years contract more requirements must be met, so called “mile stones” must be settled with PSE, financing must be reported and audit performed. Fines for failure to comply with the seven years contract requirements may also be far more severe. A one year contract allows for avoidance of all the above requirements, however, it would also indicate that the company is not positive about future success of its enterprise.
According to our information from the company’s related sources, the decisive factor might have been the uncertainty of acquisition of such high biomass volumes, in particular, when speaking of the domestic woodchips.
The power plant reconstructed for biomass is to operate as a regulatory source; so, apart from the power market income, it will earn from energy price increase while the demand will be growing. A tender for reconstruction contractor is to be announced in the first quarter of 2022.
Enea has not said a word about these plans. There is nothing about planned reconstruction of Połaniec to biomass, neither in a stock market report for the bidding results, nor in the strategy update published on the 15th of December.
If Poland cannot do it, Sweden will help undersea
For the first time in Polish bidding power contracts will also be granted to foreign entities. Power plants from Lithuania applied for the bidding for 2025, but they did not succeed. In this year’s bidding contracts for 350 MW were obtained by power plants owned by Finnish Fortum. What is interesting, the negotiated price is one zloty less – 399 PLN/kW. Hey might have recalculated everything into EUR, and one Polish grosz is too small a unit to be expressed in the European currency.
Fortum will be able to send electricity via cable connecting Poland and Sweden, and, if due to any reason, the inter-connector fails to operate in so called emergency period, the Group power plants will have to deliver the contracted capacity in Sweden. It is enough for the power obligation to be deemed as statutory met.
Comfort for the industry
The technological bidding winner is by far the Demand Side Response. It is a demand reduction on part of the energy consumers, mainly industry. In case the system Lacks capacity, the facilities may reduce their demand, e.g. by production withholding. They will get paid for this.
There are so called “aggregators” on the market, which install special software for the consumers and group their customers into “packages” with several dozen MW of a potential power reduction. They get paid for this, however, the majority of profit from DSR is directed to industry.
In the bidding for 2026, SR contracted as much as 1500 MW in total. Two biggest aggregators: Italian Enel X and Orlen’s Enspirion won a jackpot of approx. 700 MW (Enel X 6T3 MW, Enspirion 720 MW), Lerta – new player on the market – received 50 MW.
The top position on DSR market is has still been occupied by Enel X with contracted 54 percent of the whole capacity in the services of demand reduction in all biddings. But Enspirion is just on its heels.
The companies in this sector also await a reform of the energy market after 2023 which will allow the consumers far more active market game; for example energy re-sale on the market in situation it only costs several thousand PLN per MWh and it is more profitable to re-sale it then to consume for goods manufacturing. However, it is still not enough to compensate Polish companies for huge increases in electric energy prices which are to come in the next years.Unfortunately, it was another bidding when large-scale energy storages experienced false start. Almost 1.8 GW of battery storages were reported for certification. The majority of them belongs to Neo Energy, but PGE also plans to construct 300 MW near Żarnowiec. This time they did not fit in the bidding.
What is the market price?
This was an exceptional bidding. The first one without coal, under the conditions of declining electric energy and gas prices on European markets and fear whether the system keeps up its capacity
If the next bidding also closes at a single round, with a grosz difference in relation to the maximum price, one should consider correctness of the parameters. Energy security costs, but the consumers must be sure they do not pay their dues.
