- Technological advancement in the area of data collection and processing will impact the importance of TSOs as HFD owner
In the modern economy, data acquired with high frequency, showing economic activity on a micro- and macro-scale, play an increasingly important role. With technological advancements in metering, it is increasingly possible to collect and analyze data from the energy, gas, and water and wastewater utilities closest to the real economy. European TSOs, including PSE, make a range of generation, demand and import data publicly available. PSE acts as the Energy Market Information Operator and supervises the establishment and development of the Central Energy Market Information System, which will soon enable the collection and analysis of detailed high-frequency data on the Polish capacity market.
- Technological transformations in the area of energy storage and generation change the structure of generation and the nature of the transmission network and the role of the TSO
Renewable energy technologies have developed extremely rapidly over the past two decades, and their dissemination in Europe has been supported by fiscal incentives. Initially, these developments primarily included the dissemination of the onshore wind power generation industry. For several years, however, new RES technologies have been gaining ground: offshore wind power generation industry and photovoltaics.
Offshore wind power generation industry reduces the generation uncertainty problem in part because the windiness of sea and ocean areas is greater than that of land, but it is only available to countries with access to the coast. Offshore wind power generation industry development will also force necessary adjustments to the transmission network to receive energy from new sources.
The growth of photovoltaics is primarily based on the development of small, residential prosumer installations and small commercial installations. It was still supported by government investment subsidy programs in 2020. This has contributed to the development of civic power generation industry and the emergence of a group of active individual consumers - energy producers, the so-called prosumers, among households and companies. At the same time, it is increasingly challenging to serve prosumers within the existing distribution and transmission network infrastructure, which is reflected in new regulatory solutions.
A barrier to the development of renewable energy industry is still the problem of energy storage during periods of excessive generation; making it possible to use energy at times when generation from RES sources is not possible, during windless times, at night, etc. Until recently, the lack of effective storage technologies prevented this problem from being solved. In recent years, the commercial use of energy storage has become increasingly common. This is supported by falling component costs, the growth of commercial energy storage facilities for power systems, and the rapid development of information and metering technologies that enable distributed source management. At the same time, other energy storage technologies are developing, particularly power-to-gas and hydrogen electrolysis technologies. Their dissemination is expected to make it possible to use excess RES energy for electrolysis and to store it in the form of gas - e.g. hydrogen - for a long time, although far from being efficient thus far. Hydrogen is increasingly being touted as a future energy storage and transfer technology.
In Poland there is a dynamic development of prosumer energy based on photovoltaics. In 2020, it began to play a noticeable role in the national energy mix. Generation companies are gearing up for off-shore wind power projects. The first commercial energy storage facilities are also under development. As a result of the dissemination of new technologies, it will become necessary to adapt to the new model and spatial allocation of generation both the distribution networks managed by distribution companies (photovoltaics) and the transmission networks managed by PSE.
- The development of the European market and the increase in international trade influence the long-term process of price convergence in Europe
The development of the European market, supported by successive regulations, results in an increase in the scale of cross-border exchange. The effect of this phenomenon is a progressive equalization of energy prices in Europe. The acceleration of building a common market based on price zones through subsequent regulatory packages affects the process of development of the national transmission network and forces its adaptation to the new scale and directions of cross-border flows. In the medium term, it may also be a source of additional costs for transmission network operators due to the need for more frequent remedial actions taken by transmission operators outside the market, such as redispatching, which is the diversion of energy flows depending on weather conditions.
- European climate policy increasingly driving up the cost of generation from emitting sources
The situation of the national power system, and especially the condition of generators using conventional generation sources, is increasingly affected by EU climate policy. The primary tool of this policy is the so-called ETS - emission allowances, the prices of which are determined by the market. The increase in ETS prices observed for several years accelerated in late 2020, after a periodic decline in the spring (pandemic-induced demand collapse). In the first half of 2021, the ETS CO2 prices exceeded 50 Euro, increasingly affecting the prices of energy produced from emission sources. As a result, the competitiveness of conventional power generation relative to non-carbon sources drops significantly. In an open market, conventional energy sources will be forced to compete with domestic and foreign RES and with foreign conventional generators. This may contribute to accelerating the transformation of the Polish power generation industry.
- Increased demand for coal in the second half of 2020 and the first half of 2021 stopped the long-term trend of declining prices. However, this did not affect the intensification of investment processes in the industry.
Globally, coal is seen as a commodity for which demand will decline. New regulations adopted by EU countries and many countries around the world increase the risk of stranded costs in new investments in coal-fired power generation, resulting in very limited access to credit for these investments.
Due to the rising costs of emission allowances, gas-fired power generation is becoming the medium-term alternative to coal-fired power generation. Greater flexibility of gas-fired units makes gas-fired plants work better than coal-fired plants with an expanded RES sector. This results in a rapid increase in natural gas prices (due to increased demand in both Europe and Asia).
The growing importance of gas-fired power generation in the energy mix of Poland and the EU will have a negative impact on energy independence in the short and medium term. Later, the development of RES technology can help restore it.
Our response to global trends and changes in the environment
- Forward Market;
- Day Ahead Market;
- Intra-Day Market;
- Cross-Border Balancing Market.
- EU-SysFlex – a research project to develop solutions and tools for integrating large volumes of renewable energy into the power system;
- OneNet (One Network for Europe) – a project intended to develop effective methods for TSOs and DSOs to obtain and use the flexibility resources connected to the distribution network. The project is funded under the EU's eighth framework program Horizon 2020;
- Pilot demonstration project for the implementation of a system supporting safety of the NPS operation under conditions of a large share of generation from wind sources based on the Special Protection Scheme (SPS) and battery-powered hybrid electricity storage.
Integration of the Polish market with European markets
- MRC (Multi-Regional Coupling) – the main initiative of Market Coupling in Europe, as part of which the allocation of capacity on SwePol Link and LitPol Link takes place;
- CORE FB MC – project of the market coupling implementation based on Flow-Based capacity allocation methodology for the CEE region, including synchronous NPS borders;
- 4M MC – NTC-based Market Coupling provisional operating area covering the Czech Republic, Slovakia, Hungary and Romania;
- DE-AT-PL-4M Market Coupling (Interim Market Coupling).
- One common algorithm. A common algorithm ensures transparent determination of day-ahead electricity prices across Europe and allocates cross-border capacity. The algorithm has been developed with respect to the specifics of individual energy markets in Europe. This leads to optimized social welfare and increased transparency.
- Reliable performance of the algorithm. The PCR process relies on decentralized data exchange for reliable and flexible operation.
- Individual responsibility of the power exchange. The PCR Matcher Broker (PMB) tool allows exchanges to exchange anonymized order books and cross-border capacity to determine reference prices and energy transmission volumes between all participating market areas.
Activities currently underway are intended to ensure proper operational performance and proper development of the SIDC. These activities include initiatives with a European reach. In parallel, local initiatives are underway with the primary goal of expanding SIDC's reach into additional market areas.
- European initiatives
PSE are involved in this stream through participation in steering committees and SIDC expert groups. Major SIDC development initiatives over the horizon of the next few years include:
- the introduction of Intra-Day auctions, whereby prices will be set for each market area as a basis for determining congestion rent for each border,
- the implementation of 15-minute market products,
- the implementation of a solution to automatically account for transmission losses on HVDC connections, and
- the implementation of a flow-based method.
- Local initiatives
Italy was included in the SIDC mechanism in September 2021. Greece (under the so-called fourth wave of implementation) and Slovakia (under the so-called fifth wave of implementation) are planned to join the SIDC mechanism in 2022.
Joining the Slovakian market area to SIDC will mean that the PL-SK border will be added to the four Polish borders (CZ-PL, DE-PL, LT-PL, PL-SE) currently covered by the SIDC mechanism, thus ending the temporary solution for the Intra-Day Market based on the explicit auction mechanism. The operational integration of the PL-SK border into SIDC is planned for the first half of 2023.
- European platform for the exchange of balancing energy from replacement reserves
- Required activation time: 30 minutes.
- Implemented under the TERRE project launched on January 15, 2020.
- European platform for exchange of balancing energy from frequency restoration reserves with non-automatic activation
- Required activation time: 15 minutes.
- Implemented as part of the MARI project, scheduled launch in July 2022.
- European platform for exchange of balancing energy from frequency restoration reserves with automatic activation
- Activation via automatic controller in up to 5 minutes.
- Implemented as part of the PICASSO project, with scheduled launch in July 2022.
- European platform for the imbalance compensation process
- Based on avoiding activation of balancing energy from automatic reserves in opposite directions by neighboring TSOs.
- Implemented as part of the IGCC project (operating in Germany and neighboring countries).
Key achievements of international cooperation
We are a shareholder of TSCNET. We have a representative in the General Meeting and in the Supervisory Board of TSCNET, which currently consists of 5 members. Several PSE representatives are involved in the implementation of activities resulting from the tasks of the TSC decision-making and working structures.
In May 2019, the agreement specifying the conditions for the future synchronous connection of the BS system to the CE system entered into force. The agreement contains a so-called set of requirements, which is a list of detailed technical conditions required to be implemented by TSOs with BSs to ensure secure operation of the systems after synchronization. One of the main infrastructural elements included in the set is the Poland-Lithuania DC submarine link (Harmony Link). In 2021, a number of studies were launched to prepare systems and BS TSOs for synchronization. PSE is the leader of the TSO Consortium established to perform this work.
In December 2019, PSE and LITGRID received €10 million in funding from the EU's Connecting Europe Facility (CEF ) for activities carried out as part of the preparatory phase of this project.
In December 2020, PSE and the BS TSOs signed a grant agreement with the EU's Innovation and Networks Executive Agency (INEA) awarding €719.7 million in funding for Phase II synchronization projects, including €492.5 million for Harmony Link's implementation phase. In May 2021, PSE and LITGRID made positive investment decisions, thus the project moved from the preparation phase to the implementation phase. In July 2021, PSE announced a tender, through competitive dialog, for the selection of a contractor for converter stations in Poland and Lithuania. In August 2021, LITGRID launched a tender to select the HVDC cable contractor.
Currently, BS systems operate under the IPS/UPS system, which geographically covers areas of the former Soviet Union Republics. The synchronization of the BS systems with the CE, scheduled for 2025, is part of the European Energy Union concept and an example of solidarity in the area of energy security. The implementation of the project is critical to completing the integration and increasing the scope of connecting BS system markets to the European system. This is confirmed by the roadmap implementing the synchronization project signed in June 2019 by the President of the European Commission and the Prime Ministers and Presidents of Poland, Lithuania, Latvia and Estonia.