Tempus challenges European Commission’s approval of Polish energy subsidy scheme
PRESS RELEASE - TEMPUS ENERGY
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Tempus challenges European Commission’s approval of Polish energy subsidy scheme, claiming it shuts cleaner, cheaper technologies out of the market and deprives European consumers of a better future.
Following its successful application to the European Court to annul the approval of the UK capacity market in November, clean-tech energy company Tempus lodged a new legal action yesterday. This challenge relates the European Commission’s decision to approve the Polish capacity market without opening an in-depth State aid investigation to examine the evidence, in particular on cleaner, cheaper alternatives to fossil fuel.
By becoming “demand-flexible”, electricity consumers can actively reduce their electricity demand at peak times and shift usage to cheaper, off-peak times, usually when renewable power is plentiful and transmission costs are cheaper. This saves money, while relieving network stress at peak times, improving system reliability and reducing our reliance on expensive, “peaking” fossil fuel plants. The technology, known as Demand-Side-Response (DSR), is especially valuable for keeping energy costs - and therefore production costs – down in industrial processes, but is also increasingly being used in homes and offices, thanks to the smart buildings revolution.
Tempus uses algorithms and machine learning technology to automatically manage the flexible, non time-specific element of customer demand into the most cost-efficient price period. In addition to the UK and Australia, Tempus operates in the German and Swedish power markets, which are connected to the Polish electricity market via cross-border lines. Tempus also plans to set up in Poland directly as part of its European expansion.
However, in 2018, the Polish government introduced an electricity capacity market scheme, which awards subsidy agreements of up to 15 years duration for the building of new coal and gas stations. Due to the flawed policy design, DSR capacity providers are effectively shut out of the main auctions, meaning they can only access contracts of one year maximum. This, combined with other barriers created by the scheme, skews the market, putting DSR at a competitive disadvantage and creating windfall profits for coal and gas incumbents.
Tempus believes that security of supply can now be achieved for European energy consumers with cheaper, cleaner technologies that will drive economic development and reinforce Europe as an Innovation hub. These technologies deserve a level playing field and must not be disadvantaged by unlawful fossil fuel subsidies. Multiple technologies now exist that enable energy consumers to be flexible with when they use electricity leading to a more efficient grid, which integrates intermittent renewable generation effectively and securely.
In Tempus’ view, the Commission’s approval of the Polish scheme contravenes state aid rules and demonstrates that it has not learned from the UK debacle. In November 2018, the EU General Court found in favour of Tempus, requiring the Commission to open an in depth investigation into the compatibility of the scheme, with particular regard to DSR participation. The investigation was launched in February and is likely to run for 6-18 months. The Commission is appealing the November judgment, which could take 3-4 years and does not affect the investigation. The UK Government has not respected the standstill imposed by the annulment of the State aid approval, so Tempus is also taking legal action in the UK courts to enforce the judgment and request that the £5.6bn already awarded under the scheme is returned to UK consumers.
On 7 February 2018, the Commission approved six capacity mechanisms on the same day, relating to Belgium, France, Germany, Greece, Italy and Poland. In Poland, contracts around worth around €1bn were awarded for 23GW of capacity in 2021 most of it going to coal. 50% of the units on offer were secured by PGE – Poland’s largest energy sector company - with the other dominant energy companies securing another 31% together. Polish state-run utility companies Enea and Energa said that the money would help to finance a new coal-fired unit in the northeast of Poland. Despite renewables and demand-side technologies now regularly outcompeting coal across the globe, coal still represents 75% of generation in Poland.
The fact that coal is a major beneficiary of the capacity market is therefore no surprise. What is surprising, in Tempus’ opinion, is the Commission’s complete dereliction of duty in not ensuring the cheapest, cleanest energy is procured for European consumers. The ongoing, misguided actions by the Danish politician Margrethe Vestager - currently serving as the European Commissioner for Competition - and her department cannot be allowed to compromise our environmental or economic future.
Sara Bell, CEO and Founder of Tempus said:
“A reform of the capacity market design will allow us to bring forward investments in cheaper, cleaner technologies such as demand-shifting and battery storage in order to meet our climate targets and decarbonise as quickly as possible.”
“Energy consumers in Europe including Poland as well as Germany and Sweden where Tempus operates already should be able to choose to benefit from the extraordinary innovation that has occurred over the past couple of decades.”
“Our operations In Germany and Sweden are helping energy consumer benefit from efficient, clean technology to decarbonise as cost effectively as possible. Unlawful fossil fuel subsidies can not be allowed to prevent the pace of the transition to a cleaner grid and we will fight for European energy consumers’ right to select the most cost effective, clean technologies around.”
“A customer revolution is on the cards. This challenge opens the door for cheaper energy – greater use of demand-side innovation would change the way we use electricity in practice, and place customers at the heart of the energy system for the first time.”
“Consumers are ready to be flexible and the technology now exists to deliver a smart flexible grid without Impacting security of energy supply. European consumers have a right to benefit from this cheap, clean technology.
Bell said, “We have one planet. We need to work together to rapidly deploy technologies and commercial solutions in the interest of consumers so we can decarbonise as cheaply and quickly as possible. Our legal action will ensure this happens”
Notes to Editors:
About Tempus Energy:
Tempus is an energy technology company, with a presence in several energy markets globally, including the UK. Tempus has developed software that interacts with existing demand side response (DSR)¬ technology and smart appliances to help customers to be “demand-flexible”, by actively reducing their electricity demand at peak times and shifting usage to cheaper, off-peak times, usually when renewable power is plentiful.
Tempus is currently piloting its technology with Australia’s largest energy retailer, Origin Energy. After seeing positive results and savings on average of 25% they have extended the pilot to include all states of Australia.
Demand management / DSR – explainer
Smart technology on the demand side can bring benefits both to households and to large energy customers such as those who have factory processes that can automatically shift to a time when energy demand (and prices) are low and renewables are abundant e.g. when the sun shines or the wind blows - or use power from a battery.
By tapping into energy when overall demand is low and supply is plentiful, non-time critical customer appliances and equipment that do not need to run at the same level continuously – such as charging a fleet of electric delivery vans or running a dishwasher – can be operated at a much lower cost.