Photon Energy wins 315MW demand response capacity in Polish auction

Renewable energy group Photon Energy has announced that its subsidiary Lerta JRM has succeeded in the additional 2025 Polish capacity auction with 315MW of demand side response capacity and 1.088MW of renewable generation.

With the previously contracted capacity of 10MW for 2025, the company’s total capacity obligation of 316.088MW will ensure EUR 13 million ($14 million) in capacity market revenues for 2025.

Including the previously contracted capacity, the Photon Energy Group’s total maximum capacity contracted with PSE (Polish Transmission System Operator) will be 326.088MW in Q1 2025 and lower in the following quarters.

According to Photon Energy, the contracted volume and revenues may seem lower compared to the previous declarations, however, it is a deliberate strategy to maximise gross profit from the Virtual Power Plant business.

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“Being one of the first Demand Response aggregators in Poland allowed us to gain invaluable experience in managing and optimising DSR portfolios for the Capacity Market. The proprietary software technology, tools for optimisation and analytical skills we’ve developed have led us to become one of the biggest and most recognisable aggregators in the market,” commented Borys Tomala, New Energy director at Photon Energy Group.

“For the first time, due to unfavourable auction parameters and surprisingly low demand from PSE, our success is not well visible immediately after the auctions, and initial observations may even suggest a regression compared to 2024.

“However, our portfolio is growing every week, and we do not intend to change that – we are confident that the decision to decrease the volumes contracted during the auctions was the best possible one and that we will fill the gap in the secondary market later this year or during deliveries in 2025,” concluded Tomala.

After an analysis of the auction parameters and potential price paths, the Photon Energy VPP team concluded that the original volume would depress prices to unsatisfactory levels of ca. PLN 85,000 (EUR 19,696 / $21) per MW/year. Given recent successes with secondary market optimisations, including purchasing additional capacity obligations, Photon Energy chose to secure higher revenues from lower volumes and pursue additional transactions in the secondary market.

The auction results are announced less than three months before the new related market opens in Poland, with ancillary services provided by independent market participants.

Scheduled to open on 14 June 2024, this market will enable Photon Energy to monetise a significant share of assets currently managed for the capacity market by providing balancing capacity and energy during short-term needs.

Photon Energy’s virtual power plant business, which includes its participation in the Polish Capacity market and ancillary services, is operated by the New Energy Division, which was established following the acquisition of Lerta in November 2022.