​Poland's capacity market has served as the main revenue source for the country's utility-scale battery pipeline, providing long-term, government-backed payments for availability. From 2022 to 2024, Polish capacity auctions awarded some of the most generous BESS contracts in Europe. By 2025, the effective capacity payments fell by 85%. In this period, a total of 11-12GW of batteries have been scheduled for delivery by 2030.

But the capacity market alone can’t support batteries any more now that the derating factor has been cut. Nevertheless, interest in the auction has remained high, showing that the investment case for BESS is attractive even on a merchant basis.

Day-ahead arbitrage, newly integrated aFRR with PICASSO, and a growing intraday market now form the core merchant revenue stack.

Key takeaways

• The BESS de-rating factor fell from 95% to 13.4% over three years, eroding fixed revenue - yet 5.1 GW of physical BESS still cleared the December 2025 auction.
• Day-ahead spreads in Poland averaged 153 €/MWh in 2025, 17% wider than Germany's, highlighting a lucrative market for BESS.
• Poland’s ancillary services market still shows unsaturated revenues, but Europe-wide competition for aFRR via Picasso is beginning to drive down prices in summer periods.

De-rating cut effective BESS capacity payments by 85% in three years

Poland’s capacity market has been one of Europe’s most lucrative. But across Europe, BESS success in the capacity market depends on de-rating, which determines how much of a battery's installed capacity counts in the capacity auction. At 95%, a 100 MW battery is remunerated for 95 MW. At 13.4%, just 13.4 MW.

In Poland, Polskie Sieci Elektroenergetyczne (PSE, Poland’s TSO) applied this factor uniformly across all durations, unlike other European capacity markets, where de-rating scales with battery duration.

In just three years, de-rating slid from 95% to 60%, and then to 13.4% in the final auction under the current framework. The latest wave of projects, therefore, receives capacity payments based on one-seventh of their physical capacity.

The December 2025 auction cleared 5.1 GW of physical BESS capacity, but once de-rated, that translates to only ~685 MW of payable capacity. Yet this was the largest year for BESS projects in Poland, suggesting the market is confident that merchant revenues are substantial enough to support the assets.

De-rating favours short duration, yet 4-hour batteries dominate.

The de-rating cut was set administratively, without a transparent, duration-sensitive methodology. The flat de-rating would typically favour shorter-duration batteries. Yet the data shows that 4-hour batteries still dominated the most recent 2025 auction.

This indicates that the CM contract value is no longer considered the marginal revenue source for BESS developers. Instead, developers are directly targeting deep wholesale spreads with market fundamentals pointing to longer-duration batteries.

With the mechanism now promising barely any revenue uplift, the focus for Polish BESS is no longer on locking in generous capacity contracts. It is about whether the merchant revenue stack will be strong enough to justify investment.

Ancillary services, day-ahead arbitrage and intraday now form the core revenue stack

Beyond the capacity market, Poland’s main contributor to the current revenue stack will be ancillary services in the earliest phase of the market. In other European countries, BESS started with high revenues from FCR and aFRR, before shifting to wholesale markets as these shallow services saturate.

Poland's ancillary services market underwent two key transformations. Balancing market reforms in June 2024 formally separated BRP (Balance Responsible Party) and BSP (Balancing Service Provider) roles, opening the door for batteries to participate directly as balancing service providers.

Frequency Containment Reserve (FCR) is a balancing service that automatically activates within seconds to stabilise the grid frequency at 50 Hz whenever supply and demand fall out of balance. Poland only procures 171 to 197 MW of FCR capacity, split between upward and downward regulation. Prices average 15 to 25 €/MW/h. The procured volume is fixed by PSE, rising from 171 MW to 197 MW in January 2026.

For BESS operators, FCR offers steady revenue and a prime opportunity for early BESS assets to dominate this market. But with less than 200 MW market depth, even few BESS assets online could saturate this market quickly.

aFRR promises greater depth, but sees Europe-wide saturation with PICASSO

The second ancillary service of interest for batteries is automatic frequency restoration reserve (aFRR), which responds within 5 minutes of a frequency deviation and takes over from FCR. At 400–500 MW of procurement for aFRR capacity upward and 400–440 MW downward, this service shows greater depth than FCR.

On 11 July 2025, Polskie Sieci Elektroenergetyczne (PSE) joined PICASSO (the European platform for cross-border aFRR energy activations), integrating Poland into a shared pool of automatic frequency restoration reserves. Since then, aFRR capacity prices have also shown a persistent gap between upward and downward regulation. Upward capacity averages around 35 €/MW/h, roughly double the downward price of 15 to 25 €/MW/h.

For BESS operators, the capacity payment alone is a reliable source of revenue in a pre-saturation world. A battery committing fully to provide both directions of aFRR could have earned almost €500k/MW/yr just for being available, before any activation payments on top.

Early movers will capture higher initial returns, but as gigawatts of batteries connect, prices will compress towards long-run averages, as seen in GB, Germany, Australia and ERCOT.

Day-ahead arbitrage: Solar is already reshaping Polish day-ahead prices

Since ancillary service revenues often compress quickly once a wave of BESS enters a market, the long-term business case for batteries must be based on an energy arbitrage strategy, primarily in the day-ahead market. Poland already has over 24 GW of solar capacity. On high-output days, that is enough to create deep duck curves in day-ahead prices.

On sunny days, midday prices drop below -€90/MWh as solar floods the market. Poland's inflexible coal fleet, which still provides the bulk of baseload generation, cannot ramp down quickly enough to accommodate the surplus. Shutting down and restarting a coal unit costs more than absorbing a few hours of negative prices, so plants continue running but at lower loads.

When solar output drops in the evening, demand surges, but coal plants cannot ramp back up fast enough to fill the gap, pushing prices above €150/MWh. The resulting daily spreads averaged €153/MWh across 2025, 17% wider than Germany's.

Intraday market: from thin to essential

Poland's intraday volume hit 6.7 TWh in 2025, up 170% year-on-year. That is still tiny next to Germany's 106 TWh, but the growth rate matters more than the absolute size at this stage.

Fifteen-minute products went live in June 2024, and a new Towarowa Giełda Energii (TGE, Poland’s Power Exchange) liquidity provider programme launched in early 2026.

For BESS, the day-ahead market sets the baseline, whilst intraday lets you rebid as forecasts and imbalance signals shift. A deep intraday market allows batteries to retrade positions multiple times, making the most of their instant flexibility and boosting revenues.

Coal exit and a growing share of renewables are widening spreads

Poland's coal fleet is shrinking under growing pressure from the EU’s Emissions Trading Scheme and ageing infrastructure.

As coal's share of monthly generation falls and is replaced by intermittent renewables, average daily day-ahead spreads increase. Each percentage point drop in coal share adds approximately €6/MWh to the daily spread.

Poland targets 30 GW of new wind and solar by 2035, with coal phaseout as the end goal. Each gigawatt of renewables added steepens net load ramps, increases forecast error and drives more curtailment. For BESS, that means wider arbitrage spreads and a deeper intraday as renewables need to correct their forecast errors.

What this means for BESS investors and developers.

The market is young:

• A limited number of operational batteries means FCR and aFRR revenues will remain high until more batteries enter the market.
• Intraday liquidity at 6.7 TWh is 16x smaller than Germany's
• No operational track record for utility-scale BESS in Poland to benchmark against

This results in a market where the fundamentals are strong, but the infrastructure is still catching up.