As expected, Poland’s latest capacity market auctions have highlighted a significant shift towards the battery energy storage systems (BESS) beside the fact that the de-rating factor has been significantly decreased. The auction held by Polskie Sieci Elektroenergetyczne S.A. (PSE – an electricity transmission system operator in Poland and the sole operator of the country's high-voltage transmission lines, 100 percent owned by the State Treasury) on December 12, 2024, ended in the seventh Dutch auction round with a strike price of PLN 264.90/kW/year for Polish physical units and 247.87 PLN/kW/year for foreign physical units in the synchronous profile zone. As a result, the total capacity obligations secured exceed 8 GW, with over 1.5 GW attributed to contracts with foreign entities.

Approximately 2.5 GW was secured by “new generation capacity market units”. This designation, exclusively applied to Li-ion energy storage projects in previous auctions, i.e. to BESS. The capacity obligations for these projects ranged from 1.2 MW to 153 MW rated power, with an average capacity of around 30 MW.

The decision to reduce the de-rating factor for energy storage systems in the last capacity market auction in Poland from 95 percent to 61 percent did not prove detrimental to the market. Assuming a mix of 2-hour and 4-hour BESS, with 70 percent of the total contracted capacity comprised of 4-hour systems and the remaining capacity allocated to 2-hour systems, this results in an effective price of around €38,000 per MW per year for a 4-hour system - the reduction in the de-rating factor implies that only 61 MW of a 100 MW battery energy storage system may be rewarded at auction. However, based on the result of other capacity market auctions in Europe industry experts view this modification as an opportunity to refine long-term project planning, rather than a significant impediment to market participation.

Energy storage systems are a relatively new technology in the Polish capacity market. They have participated in two auctions so far: making their official debut in 2022 (with 2027 delivery year) and subsequently dominating the competition in the 2023 auction. Even more surprising was their performance in the December 2024 auction: out of the 245 Market Units that won the main auction for the 2029 delivery year, 82 were identified as BESS.

The capacity market auctions have awarded established players, but also created openings for smaller developers and local firms to participate in the energy transition. The next key milestone for most of the projects is now securing debt financing, which is without precedent for that technology in Poland.