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Storage Index update: Finland in focus
July 28, 2025 The last several months in the Polish political and regulatory space have been eventful from the perspective of BESS and energy markets. Only this week brought the creation of the new Ministry of Energy [1]. Heralded as a major reform allowing for the centralisation of energy decision-making, the change appears to be rather cosmetic, with competences still being split with the Ministry of Climate and Environment (responsible for RES and the National Energy and Climate Plan) and the Ministry of State Assets (responsible for state-owned energy companies).
More personnel changes are on the horizon. The inauguration of the new president, Karol Nawrocki, will take place on August 6. Power over the Presidential Palace will therefore remain in the hands of the opposition Law and Justice party. The incoming president has been critical of onshore wind farms in the past, and his potential veto could prevent the adoption of more favorable regulations for their development, recently passed through the Parliament. Offshore wind, on the other hand continues to receive strong political and financial support – the first CfD tender for 4 GW of offshore will take place in December 2025 [2].
Although Nawrocki’s rhetoric is strongly pro-coal, the days of coal in Poland are numbered. This has been recently marked by an unprecedented event – in June 2025, for the first time in the Polish history, RES have produced more electricity than coal-fired power plants. This is mainly due to the steady growth in PV installed capacity, which has exceeded 23 GW a month earlier. This, however, has also its dark side with RES curtailment at record high. The first half of 2025 saw curtailment of 796.5 GWh, a staggering increase from 2024 when total volume curtailed equaled 731 GWh [3].
Nuclear power, on the other hand, remains an area where there is political consensus, but the first signs of delays are already appearing. Initially planned for year 2033, we can expect the first reactor to begin operation in 2036 [4]. Meanwhile, the works are underway for selecting the location of the second nuclear power plant.
In terms of BESS development, the past months have been dominated by two topics: a first of-its-kind subsidy scheme for BESS as well as concerning changes to the de-rating factors applied to BESS in capacity market auctions.
The continued interest of BESS developers in the Polish markets was recently highlighted by a staggering number of applications in the 1 billion EUR subsidy scheme. A total of 630 applications were received for 20 GW and 122 GWh of BESS, exceeding the program’s budget sevenfold [5]. The program offered grants covering up to 40% of investment costs, with an extra 10% for medium-sized and 20% for small enterprises. Moreover, preferential or market loans could finance up to 100% of eligible costs.
This optimism is at the same time being overshadowed by the capacity market developments. Until recently, the Polish capacity market provided a very attractive source of stable revenues for BESS, offering 17-year contracts. This translated into investors interest, resulting in more than 4 GW being contracted in auctions to date. However, changes to the de-rating factors, which first dropped from 90% to 61% and most recently, to a record low 12-13% mean that this opportunity is now more difficult to access [6]. Experts speculate that this was due to the need of the TSO to contract new gas capacity indispensable from an energy security point of view. Indeed, the July auction, brought several gigawatts of expected gas projects which have previously lost to BESS. The last auction under current rules, planned for December 2025, is expected to also favor gas, and while some BESS might be contracted, the volume will be far from what was seen in 2024.
A new capacity market scheme for post-2025 is therefore being planned. Recent announcements from the Ministry of Climate and Environment and the TSO hint at a possible three-pillar approach: continuation of the capacity market, decarbonisation mechanism for coal units as well as a separate non-fossil flexibility mechanism, signaling potentially more favorable conditions for BESS development.
Notable changes occurred to other Polish markets relevant to BESS. On July 11th, Polish TSO, PSE, officially joined the European PICASSO platform for the exchange of automatic Frequency Restoration Reserves (aFRR) [7]. This integration enables cross-border activation of balancing energy between Poland and the 16 participating countries, enhancing grid stability and market efficiency. Moreover, since March 2025 trading on the intraday markets is possible with the 15-minute products [8]. This shift towards shorter timeframes as well as broader regional integration can strengthen the business case for storage in Poland.
Author: Julia Kieloch
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