In October 2021, on the initiative of the President of the Energy Regulatory Office, the work of a special team was started to develop the “Charter for the effective transformation of the Polish energy distribution networks”, i.e. the Social Agreement of the Sector Regulatory and Distribution Industry.
“We have engaged in this project organizations associating electricity distributors – both the five largest and the small ones, PSE, experts, and the government side – ministries: climate and environment, state assets, development and technology, funds and regional policy, as well as the government plenipotentiary for strategic energy infrastructure “- President of the Energy Regulatory Office Rafał Gawin told PAP.
One of the areas the team is working on is the structure of financing the transformation of distribution networks. As Rafał Gawin noted, today there are many systems and sources of support for RES generation sources. Meanwhile – as he assessed – with current energy prices, production is managing on its own, and investments in renewable sources are largely able to finance themselves on the market.
On the other hand, the dynamics of the emergence of new generation sources requires the expansion and transformation of the network, for which significant financial outlays are required. “Production could be subsidized less and more resources transferred to distribution. Among other things, what actions should be taken in the area of DSO and what funds are to be used to finance them the team is responsible for “- emphasized the President of the ERO.
“Support programs make sense when energy prices on the market do not provide an adequate rate of return. But looking at today’s prices, it seems that it is worth transferring to the DSO the measures that have so far subsidized generation. This will relieve the recipients because the financial burdens included in the tariff will decrease“said Gawin.
As he explained, as part of the team’s work, first of all, it is necessary to determine what investments should be made in order to achieve the goals resulting from the state’s energy policy in the next 10 years. “One of such goals is the broadly understood integration of renewable energy sources – not only connecting new sources to the grid, but also the absorption of energy into the grid” – emphasized the President of the ERO. Another area identified as strategic throughout the Project is network digitization, which is necessary for effective and efficient network management with a dynamically growing dispersion of sources.
In order to include these two key areas in the Effective Transition Charter, activities should be divided into four main stages: determining the scope of actions necessary to take them, assessing the cost of their implementation, determining the possible financing structure of these activities, assessing the translation of this financing into tariffs – i.e. the cost for end recipients .4
“If we want to achieve a certain degree of digitization and integrate renewable energy sources at the same time, we have to answer the following questions: what investments should be made, how much money should be spent on it in 10 years, where to get the money and what impact it will have on distribution tariffs” – he explained Rafał Gawin.
He stipulated that if the team assessed that the translation of the assumed actions into tariffs would be socially unacceptable, the estimates for the changed parameters would have to be repeated. “I hope that in the end a plan will be developed that will include goals, means of their implementation and costs acceptable to all market participants” – he stressed. The works are ongoing and quite advanced, we assume that the effects will appear by mid-2022. so that the solutions developed could be reflected in decisions regarding financing investments in the sector for 2023, added the President of the ERO.