IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i16p5151-d618373.html
   My bibliography  Save this article

Can Decarbonisation and Capacity Market Go Together? The Case Study of Poland

Author

Listed:
  • Aleksandra Komorowska

    (Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, 31-261 Kraków, Poland)

Abstract

In recent years, numerous countries have introduced or considered capacity markets as remuneration mechanisms for long-term capacity adequacy. Since adequacy is frequently linked with thermal power generation, there is an ongoing debate as to whether this instrument could impact decarbonisation. In this context, the paper presents a quantitative assessment of the consequences of introducing a capacity market on decarbonisation pathways. The Polish power system is taken as an example due to its heavy dependence on fossil fuels. To this end, a computable model of the Polish power system is developed and applied to the study of two research scenarios. The first scenario presents the power system without introducing a capacity market, while the latter considers the system with a capacity market in place. The analysis shows that the introduction of a capacity market delays the decarbonisation of the power system and has a negative impact on carbon neutrality. Even though coal-fired units are phased out, they are mainly replaced by natural gas. The method and model developed within this study can be applied to countries where a capacity market is being discussed, and fossil fuels continue to play a dominant role.

Suggested Citation

  • Aleksandra Komorowska, 2021. "Can Decarbonisation and Capacity Market Go Together? The Case Study of Poland," Energies, MDPI, vol. 14(16), pages 1-35, August.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:16:p:5151-:d:618373
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/16/5151/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/14/16/5151/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Audoly, Richard & Vogt-Schilb, Adrien & Guivarch, Céline & Pfeiffer, Alexander, 2018. "Pathways toward zero-carbon electricity required for climate stabilization," Applied Energy, Elsevier, vol. 225(C), pages 884-901.
    2. Goldthau, Andreas & Sovacool, Benjamin K., 2012. "The uniqueness of the energy security, justice, and governance problem," Energy Policy, Elsevier, vol. 41(C), pages 232-240.
    3. Kathleen Spees & Samuel A. Newell & Johannes P. Pfeifenberger, 2013. "Capacity Markets - Lessons Learned from the First Decade," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    4. Komorowska, Aleksandra & Benalcazar, Pablo & Kaszyński, Przemysław & Kamiński, Jacek, 2020. "Economic consequences of a capacity market implementation: The case of Poland," Energy Policy, Elsevier, vol. 144(C).
    5. Widera, Marek & Kasztelewicz, Zbigniew & Ptak, Miranda, 2016. "Lignite mining and electricity generation in Poland: The current state and future prospects," Energy Policy, Elsevier, vol. 92(C), pages 151-157.
    6. Joseph Bowring, 2013. "Capacity Markets in PJM," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    7. Kueppers, Martin & Paredes Pineda, Stephany Nicole & Metzger, Michael & Huber, Matthias & Paulus, Simon & Heger, Hans Joerg & Niessen, Stefan, 2021. "Decarbonization pathways of worldwide energy systems – Definition and modeling of archetypes," Applied Energy, Elsevier, vol. 285(C).
    8. Pietzcker, Robert C. & Osorio, Sebastian & Rodrigues, Renato, 2021. "Tightening EU ETS targets in line with the European Green Deal: Impacts on the decarbonization of the EU power sector," Applied Energy, Elsevier, vol. 293(C).
    9. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    10. Briggs, R.J. & Kleit, Andrew, 2013. "Resource adequacy reliability and the impacts of capacity subsidies in competitive electricity markets," Energy Economics, Elsevier, vol. 40(C), pages 297-305.
    11. Jacob Mays & David P. Morton & Richard P. O’Neill, 2019. "Decarbonizing electricity requires re-evaluating capacity mechanisms," Nature Energy, Nature, vol. 4(11), pages 912-913, November.
    12. Bastos, João Pedro & Cunha, Gabriel & Barroso, Luiz Augusto & Aquino, Thereza, 2018. "Reliability mechanism design: An economic approach to enhance adequate remuneration and enable efficient expansion," Energy, Elsevier, vol. 158(C), pages 1150-1159.
    13. Pietzcker, Robert & Osorio, Sebastian & Rodrigues, Renato, 2021. "Tightening EU ETS targets in line with the European Green Deal: Impacts on the decarbonization of the EU power sector," EconStor Preprints 222579, ZBW - Leibniz Information Centre for Economics, revised 2021.
    14. Papadis, Elisa & Tsatsaronis, George, 2020. "Challenges in the decarbonization of the energy sector," Energy, Elsevier, vol. 205(C).
    15. Peter Cramton & Axel Ockenfels & Steven Stoft, 2013. "Capacity Market Fundamentals," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krzysztof Zamasz & Jakub Stęchły & Aleksandra Komorowska & Przemysław Kaszyński, 2021. "The Impact of Fleet Electrification on Carbon Emissions: A Case Study from Poland," Energies, MDPI, vol. 14(20), pages 1-17, October.
    2. Viktor Koval & Oksana Borodina & Iryna Lomachynska & Piotr Olczak & Anzor Mumladze & Dominika Matuszewska, 2022. "Model Analysis of Eco-Innovation for National Decarbonisation Transition in Integrated European Energy System," Energies, MDPI, vol. 15(9), pages 1-19, May.
    3. Kinga Stecuła & Piotr Olczak & Paweł Kamiński & Dominika Matuszewska & Hai Duong Duc, 2022. "Towards Sustainable Transport: Techno-Economic Analysis of Investing in Hydrogen Buses in Public Transport in the Selected City of Poland," Energies, MDPI, vol. 15(24), pages 1-14, December.
    4. Tomasz Zema & Adam Sulich, 2022. "Models of Electricity Price Forecasting: Bibliometric Research," Energies, MDPI, vol. 15(15), pages 1-18, August.
    5. Pablo Benalcazar & Przemysław Kaszyński & Jacek Kamiński, 2021. "Assessing the Effects of Uncertain Energy and Carbon Prices on the Operational Patterns and Economic Results of CHP Systems," Energies, MDPI, vol. 14(24), pages 1-19, December.
    6. Przemysław Kaszyński & Aleksandra Komorowska & Jacek Kamiński, 2023. "Revisiting Market Power in the Polish Power System," Energies, MDPI, vol. 16(13), pages 1-23, June.
    7. Przemysław Kaszyński & Aleksandra Komorowska & Krzysztof Zamasz & Grzegorz Kinelski & Jacek Kamiński, 2021. "Capacity Market and (the Lack of) New Investments: Evidence from Poland," Energies, MDPI, vol. 14(23), pages 1-17, November.
    8. Komorowska, Aleksandra & Kaszyński, Przemysław & Kamiński, Jacek, 2023. "Where does the capacity market money go? Lessons learned from Poland," Energy Policy, Elsevier, vol. 173(C).
    9. Summerfield-Ryan, Oliver & Park, Susan, 2023. "The power of wind: The global wind energy industry's successes and failures," Ecological Economics, Elsevier, vol. 210(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mou, Yuting & Papavasiliou, Anthony & Hartz, Katharina & Dusolt, Alexander & Redl, Christian, 2023. "An analysis of shortage pricing and capacity remuneration mechanisms on the pan-European common energy market," Energy Policy, Elsevier, vol. 183(C).
    2. Przemysław Kaszyński & Aleksandra Komorowska & Krzysztof Zamasz & Grzegorz Kinelski & Jacek Kamiński, 2021. "Capacity Market and (the Lack of) New Investments: Evidence from Poland," Energies, MDPI, vol. 14(23), pages 1-17, November.
    3. Martina Ricci & Marcello Benvenuto & Stefano Gino Mosele & Roberto Pacciani & Michele Marconcini, 2022. "Predicting the Impact of Compressor Flexibility Improvements on Heavy-Duty Gas Turbines for Minimum and Base Load Conditions," Energies, MDPI, vol. 15(20), pages 1-14, October.
    4. Bonaldo, Cinzia & Fontini, Fulvio & Moretto, Michele, 2024. "The energy transition and the value of Capacity Remuneration Mechanisms," Energy Economics, Elsevier, vol. 139(C).
    5. Bhagwat, Pradyumna C. & de Vries, Laurens J. & Hobbs, Benjamin F., 2016. "Expert survey on capacity markets in the US: Lessons for the EU," Utilities Policy, Elsevier, vol. 38(C), pages 11-17.
    6. Łukasz Jarosław Kozar & Adam Sulich, 2023. "Green Jobs in the Energy Sector," Energies, MDPI, vol. 16(7), pages 1-20, March.
    7. David Newbery and Michael Grubb, 2015. "Security of Supply, the Role of Interconnectors and Option Values : insights from the GB Capacity Auction," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    8. Madurai Elavarasan, Rajvikram & Pugazhendhi, Rishi & Irfan, Muhammad & Mihet-Popa, Lucian & Khan, Irfan Ahmad & Campana, Pietro Elia, 2022. "State-of-the-art sustainable approaches for deeper decarbonization in Europe – An endowment to climate neutral vision," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    9. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2019. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Energy Economics, Elsevier, vol. 80(C), pages 1059-1078.
    10. Phoebe Koundouri & Angelos Alamanos & Angelos Plataniotis & Charalampos Stavridis & Konstantinos Perifanos & Stathis Devves, 2024. "Assessing the sustainability of the European Green Deal and its interlinkages with the SDGs," DEOS Working Papers 2405, Athens University of Economics and Business.
    11. Murphy, Sinnott & Lavin, Luke & Apt, Jay, 2020. "Resource adequacy implications of temperature-dependent electric generator availability," Applied Energy, Elsevier, vol. 262(C).
    12. Anthony Papavasiliou & Yves Smeers, 2017. "Remuneration of Flexibility using Operating Reserve Demand Curves: A Case Study of Belgium," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
    13. Komorowska, Aleksandra & Benalcazar, Pablo & Kaszyński, Przemysław & Kamiński, Jacek, 2020. "Economic consequences of a capacity market implementation: The case of Poland," Energy Policy, Elsevier, vol. 144(C).
    14. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    15. Zhong, Meirui & Zhang, Rui & Ren, Xiaohang, 2023. "The time-varying effects of liquidity and market efficiency of the European Union carbon market: Evidence from the TVP-SVAR-SV approach," Energy Economics, Elsevier, vol. 123(C).
    16. Tan, Xiujie & Sun, Qian & Wang, Meiji & Se Cheong, Tsun & Yan Shum, Wai & Huang, Jinpeng, 2022. "Assessing the effects of emissions trading systems on energy consumption and energy mix," Applied Energy, Elsevier, vol. 310(C).
    17. Growitsch, Christian & Just, Lisa & Pedell, Burkhard, 2014. "Risk Assessment of Investments in Energy-only and Capacity Markets," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 68(3), pages 181-188.
    18. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    19. Hänsel, Martin C. & Franks, Max & Kalkuhl, Matthias & Edenhofer, Ottmar, 2022. "Optimal carbon taxation and horizontal equity: A welfare-theoretic approach with application to German household data," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    20. Bajo-Buenestado, Raúl, 2017. "Welfare implications of capacity payments in a price-capped electricity sector: A case study of the Texas market (ERCOT)," Energy Economics, Elsevier, vol. 64(C), pages 272-285.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:16:p:5151-:d:618373. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.