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Revisiting Market Power in the Polish Power System

Author

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  • Przemysław Kaszyński

    (Division of Energy Economics, Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, ul. Wybickiego 7A, 31-261 Kraków, Poland)

  • Aleksandra Komorowska

    (Division of Minerals and Energy Sustainable Development, Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, ul. Wybickiego 7A, 31-261 Kraków, Poland)

  • Jacek Kamiński

    (Division of Energy Economics, Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, ul. Wybickiego 7A, 31-261 Kraków, Poland)

Abstract

The consequences of the liberalisation of electricity markets have been widely discussed in the literature emphasising the successes or failures of privatisation and deregulation. While most developed power systems have undergone a form of economic transformation, they still require to be monitored and analysed to assess market power. The Polish power system is an example wherein the potential of market power examined fifteen years ago was summarised as significant. Since then, the transformation process and changes in the ownership structure have taken place. This study focuses on the assessment of the potential of market power in the Polish electricity market. For this purpose, statistics on power companies were collected and processed. Then, structural and behavioural measures were applied, including concentration ratios, the entropy coefficient, the Gini coefficient, the Herfindahl–Hirschman Index (HHI), the Residual Supply Index (RSI), and the Lerner Index. The results reveal that, despite a dynamic increase in renewable capacity, market concentration has increased in recent years, achieving an HHI of 2020.9 in 2021. An increase in the Lerner Index of lignite and hard coal-fired units is also observed, indicating high mark-ups by the key market players. Based on quantitative analysis, policy recommendations are outlined to reduce the negative impact of market power on consumers.

Suggested Citation

  • Przemysław Kaszyński & Aleksandra Komorowska & Jacek Kamiński, 2023. "Revisiting Market Power in the Polish Power System," Energies, MDPI, vol. 16(13), pages 1-23, June.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:13:p:4856-:d:1176453
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