Green transition of power market conditions

The process of green transition of power companies is determined by economics. The choice of the applied technology in power sector has always long-term consequences. Hence, the companies; management has to choose a technology securing long-term sustainability of economic profits in the business environment transforming towards green solutions. The climate regulation strive to execute global green transition instead of previous the gas supply assurance and to ensure global withdrawing from use of fossil fuels.

The new power market conditions influence the technological areas of power companies’ operations. The legacy business based on fossil fuels starts to be minimized and operations must be adjusted towards requirement of being carbon-neutral. The expectation of required return on capital is related to design of efficient business model based on climate-friendly production assets backed by flexible power grids. Hence, environmental policy aspect is mainly reflected in technological context. There arises strategic problem for long term decisions concerning year 2050, because any decision concerning assets structure of power companies has long-term implications. Power company musts analyze the competitiveness’s dynamic of production technologies in constantly changing market environment, what creates issue of definition of optimal technological mix (production, power grids) just now.

Market developments delete existing competitive advantage, what requires to implement new, innovative technical solutions. Technology can give the advantage, but there appears a new solution and technological novelties become standard soon, what demands the power companies to develop new solutions. Technology determines the decisions concerning the energy mixt of power companies at three following perspectives:

1) security of power supply;

2) availability of power for customers;

3) environmental-friendliness.

The market dynamics and technical progress act as moderator determining use of available technology, changing the paradigm of power supply to customers that become more and more locally power producers. Hence the one of the most important challenges created by green transition is the stabile work of power grid in condition of significant penetration of RES. It requires to increase the technical and digital advancement of power grid, in order to support development of RES production locally on site and regionally. Power companies must develop new operational routines increasing the flexibility of power flow management - both production and network management. The digitalization allows to manage also the demand side linking power produced and stored locally (mainly photovoltaic and batteries) the power supplied to power grid. Customers, used digital solutions, can increase efficiency of power usage, reducing energy costs. There is observed just the maturity of power storage technology and power storage capacity (USA, Australia) that is relevant for operations of power system (peak power supply, ancillary services). Power companies shall support the development towards maturity of biomass market, what should support the green production based on biomass. Power companies shall use the technology and know-how that they possess – existing technical expertise, deep knowledge of power networks, capital engineering capabilities – to prepare organization to operate in condition of new requirements of green transition and develop new, innovative services. Technology level is important, because only basic transformation of operations and breakthrough of technology will secure success in green transition. Power companies shall consider the development of renewables-based co-generation and green hydrogen production. Above presented developments changes globally the power production structure that becomes greener, renewables-based. The new shape of power sector differs fundamentally from previous based on fossil fuels.