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The power industry is waiting for new technologies

14 lutego 2022, 15:20 /
The power industry is waiting for new technologies

Energy markets, and we will only refer to electricity markets, can be differen- tiated and classified according to their changing functions and related regulatory aspects. presenting these divisions, we mention generation, transmission and distribution, and trading markets, including wholesale and retail markets. However, the differentiation thus made practically completely ignores the fundamental sense of the existence of the energy industry.

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It is clearly not the production and adequate supply of energy for the sector’s own needs. the key mar- ket for which all analyses should be conducted in the 21st century and on the basis of which the strategies of states and energy companies should be built is the market of energy consumers. It is thanks to their awareness of climate change and the shape of new communication models (transport and information) as well as the growing use of electricity in heating and cooling that fundamental chan- ges in the energy sector are taking place. the ability of individual consumers to meet their energy needs has increasingly involved not only property owners, but also, through appropriate organisational forms, residents of cities and multi-family buildings.

Consumers classified as households are beginning to play a notable role in the production of renewable energy and in meeting the country’s obligation concerning the res share in total energy consumption. through the mechanisms supporting the develop- ment of civic energy, the state takes away from itself a significant part of the obligations related to the modernisation of the sector at the same time. however, it should be remembered that the majo- rity of energy is consumed by industry and services. It is this group that in recent years has been expo- sed to phenomena that have changed the perception of the generation, transmission and distribu- tion sector. limitations in energy consumption, forgotten for nearly a generation, which took place in au- gust 2015, initiated a new way of thinking about all aspects related to the energy sector. the consumers received a clear signal that relying on large-scale com- mercial power generation is burdened with a significant risk.

In subsequent years, the increase in ener- gy prices, disproportionate to the costs, gave an ad- ditional boost to take action to become independent of or less dependent on the commercial power indu- stry. the new fees imposed on all consumers, which, despite the initial assurances, will not result in a significant modernisation of the sector, and the conservative provisions of the “state Energy Policy” are a good illustration of the fact that the main needs of the ge- neration sector are those resulting from political andsectoral factors. the increasing “detachment” from consumers will further result in a significant develop- ment of industrial power generation. It is the latter, using new technologies and less carbon-intensive fu- els, that is entering decisively this hitherto “forbidden ground”, namely the production of medium-and large-scale electricity. the awareness of energy consumers forces new solutions that are slowly replacing the current model.

Owing to a strong consumer market, legislative changes, which will result in the weake- ning of the existing dominance of large-scale and sta- te-controlled commercial energy generation, may be introduced. however, the process is very slow. the strength of the sector and its impact is well illustrated with the term - „commercial power industry”. Even this detail in the nomenclature area indicates a certa- in kind of superiority and perhaps even a disrespectful attitude towards industrial and civic energy.  the influence of the consumer market is also strongly visible in the area of transmission and distribution. this area is most protected at institutional level, both by national and eU policies and regulations. In the area of transmission, and, above all, in distribu- tion, a battle for the future of the power industry will take place. It is enough to mention a few barriers reported by investors which, in their opinion, prevent or at least hinder the development of independent, di- stributed energy. the most frequently mentioned is- sues include direct lines, closed distribution systems and insufficient infrastructure ensuring the possibility of connecting new sources.

It will be difficult to expect a fundamental change in the energy sector without the boldness to implement changes in the area of di  stribution and transmission. The basic barrier is the fact that although it is a natural monopoly, in the po- lish version it is additionally strengthened by the mo- nopoly of ownership. at the time of construction of energy groups and their strong concentration, they were given a dominant position on the market by sur- rounding the distribution with power plants and trading companies. each group obtains most of its profits thanks to its distribution share. the main owner is not interested in making any changes for fear of upsetting these proportions. recently, the opinion has it that in order to change the functioning model and accelerate changes in the energy industry, distribution system operators should be unbundled from the structures of the groups and their actions should be directed towards the market. of course, consequ- ences of this move will be very severe or even cata- strophic for corporate finances. nor can we forget the owner, who, by such a move, loses in real terms the “galvanic connection to the voter” and, in the future, perhaps the control achieved by the installation of remote reading meters.

I am convinced that such structural changes would provide an excellent impetus for the modernisation of the entire industry. the power industry is waiting for new technologies and models of operation, and the funds that can be invested have never been so large before. It is also worth mentioning that, to a large extent, the changes will not result in increased prices for customers. there is much to fight for and denying general trends does not contribute to building of a strong and wealthy country.

Author: Maciej Bando