In 2023, the operation of the electricity system was affected by regulatory changes, impacting the legal framework within which PSE operates. The EU’s climate and industrial policies implemented under the Green Deal became their key element. March 2023 also saw the beginning of the process of short-term reform of the EU electricity market model, which took effect in July 2024. 

It is already known that in the medium and long term, the primary role in the evolution of the power system and its environment will be played by technological trends related primarily to the decarbonisation of the sector – coal exit, natural gas phase-out and the development of nuclear power. The renewable energy, energy storage and electromobility sectors continue to grow strongly. The process of introducing new metering technologies is also underway, providing opportunities for the use of high-frequency data (HFD) and high-accuracy demand data. In 2023, more than 19,600 new battery electric passenger and commercial vehicles (BEVs) were registered in Poland. This means that the number of new BEV registrations was greater in 2023 than the entire fleet of such vehicles in 2021^[1].

 

_{^[1] Source: Polish Alternative Fuels Association, “Rok 2023 w polskiej elektromobilności” [The Year 2023 in Polish Electromobility], Warsaw 2024,
from: https://pspa.com.pl/wp-content/uploads/2024/01/PSPA_Rok_2023_w_polskiej_elektromobilnosci_Raport.pdf} 

• Technological advancement in the area of data collection and processing will impact the importance of TSOs as HFD (High Frequency Data) holders

In today’s economy, data acquired with high frequency, showing economic activity, plays an increasingly important role. The use of such data is becoming easier thanks to the development of data processing technologies and the use of the analytical potential of large language models (AI). PSE acts as the Energy Market Information Operator and oversees the establishment and development of the Central Energy Market Information System, which is responsible for the development of a platform for the collection, distribution and analysis of data on the electricity market in Poland. The development of CSIRE will be supportive of the prosumer sector, or electricity market participants.

• Technological advances in the area of energy storage and generation are changing the structure of generation and the nature of the transmission grid and the role of the TSO

Poland is undergoing rapid development of prosumer energy based on photovoltaics, which began to play a noticeable role in the national energy mix in 2020 and whose importance is steadily increasing. The development of the large-scale photovoltaic sector is gaining momentum. More onshore wind farms are being built. Electricity generating companies are gearing up for the implementation of offshore wind farm projects. The new generation model poses an increasingly serious challenge for grid management, especially during periods of RES generation surplus or deficit.

What poses a barrier to the development of renewable energy is the problem of energy storage in periods of its excessive generation for use in periods when RES generation is impossible (no wind, nighttime, etc.). In recent years, the commercial use of energy storage (chemical, mechanical, pumped storage facilities) has become increasingly common. The development of the technology is supported by falling component costs and the growth of commercial energy storage facilities for power systems.

However, regulatory support for the development of storage technologies is much smaller in scope than support for generation technologies, and the rate of investment in new storage facilities is lower than for generation technologies, which significantly limits further integration of RES technologies into power systems.

Poland has its first commercial-scale energy storage facilities, such as the BESS facility in Pomerania.

• Development of e-mobility

The year 2023 was another period of electromobility development. In many European countries, this development was supported by subsidies for BEV buyers. However, the withdrawal of some of the subsidies resulted in a significant weakening of demand in late 2023 and early 2024. The discussion on the development directions of the automotive industry is still ongoing. At the same time, the development of infrastructure to ensure the effective use of BEVs has been relatively slow and in any case has diverged significantly from plans to electrify road transport. 

• Price war in the electricity technology market (RES and storage)

Competition from Chinese companies, increasingly dominant in the RES sector, has taken on the character of a price war. The production of sector manufacturing components and end solutions (PV panels, batteries/energy storage units, wind turbines, EVs) is often scaled in the Chinese economy to match or exceed global demand, in combination with a low-price policy. This makes it difficult or impossible to build these sectors outside of China (as evidenced, among other things, by recent decisions by European manufacturers to reduce investments related to battery/energy storage production). The result is an increasing monopolisation of many sectors (with shares of Chinese manufacturers between 60 and more than 90 percent of global supplies) and a growing dependence of the EU on Chinese supply chains. This can make one of the main goals of the green transition, i.e. energy autonomy, difficult to achieve – not because of dependence on imported energy resources but because of dependence on technology.

At the same time, China’s industrial policy in this area has led to long-term price declines for many RES technologies, in particular lowering the cost of investment in PV and energy storage facilities. In the longer term, however, significant price fluctuations are possible due to periodic constraints on production or supply from China.

• Problems of European RES companies

By 2023, many European companies in the RES sector, especially wind power, were in deep financial trouble. The problems affected, among others, companies involved in wind power development in Poland, including Orsted A/S and Siemens Energy. In Q1 2024, the situation of these companies stabilised periodically (in the case of Siemens Energy backed by state aid), but the sources of risks, including growing competition from China and investment uncertainty in the US and other regions of the world, have not been removed.

• Government policy to build nuclear power in Poland

A programme to build nuclear power plants is underway in Poland. The project site is being prepared, and regulatory work is in progress. The planned commissioning dates for Poland’s first nuclear power units (the first half of the next decade) are also key to the process of decarbonising the power industry and to the challenge posed by ageing coal-fired units, still the core of the NPS. With reported delays to the original investment plans, the risks associated with maintaining security of supply during the transition period are increasing.

• The development of the European market and increase in cross-border exchange contribute to a long-term price convergence process in Europe

The development of the European market, supported by successive regulations, results in an increase in the scale of cross-border exchange. The development of a common market based on bidding zones affects the development of the national transmission grid and necessitates its adaptation to the new scale and directions of cross-border flows. In the medium-term, it can also be a source of additional costs for transmission system operators owing to the need for a more frequent use of remedial actions outside the market.

• Change in Germany’s commercial exchange balance

 As a result of the shutdown of nuclear power plants in 2023 and the implementation of the Energiewende policy, Germany has become a net energy importer for the first time in at least 20 years. This is a result of both the collapse of exports after 2022 and the longer trend of import growth, which has continued since 2019. Data from the first half of 2024 indicates a continuation of both developments, especially an acceleration in the growth rate of imports.

• Discussion on the reform of the electricity market design

In 2023, the EC submitted for discussion draft amendments aimed at facilitating market penetration of RES and at the same time accelerating the phase-out of natural gas as a transition fuel as well as reducing the sensitivity of energy prices for end users, especially residential consumers, to fossil fuel price volatility. The changes are intended to complement the European Green Deal and the REPowerEU programme.

• ETS and the cost of generation from emission sources

The situation of the national power system, and especially the condition of generators using conventional generation sources, is also increasingly affected by EU climate policy and the growing pressure ─ both regulatory and from ETS pricing ─ for accelerated decarbonisation of the power industry. The primary tool of this policy emission allowance trading (ETS), a mechanism where the price of allowance is determined by the market. ETS price increase has been witnessed for several years. In 2023, the price of the unit, after rising to a record high of more than EUR 100, fell to around EUR 70 by the end of the year and stabilised at that level in the first half of 2024. The ETS covers more and more sectors of the economy, which is expected to accelerate the decarbonisation process.

For some European countries, including Poland in particular, coal-exit will be a major technological challenge due to the share of coal technologies in domestic generation and the time needed to phase in other technologies that could replace those used today.

• European climate policy will drive rapid adaptation of the grid to the new generation structure

 As a result of the spread of new distributed RES generation and storage technologies, it will become necessary to adapt both the distribution networks managed by distribution companies and the transmission grids managed by PSE to the new model and spatial allocation of generation.

This will necessitate in-depth redevelopment of transmission and distribution networks. In many European countries where investments in the redevelopment of the network structure have been made for a longer period of time, they are found to pose serious challenges in terms of cost and organisational and engineering issues. Costs are often significantly higher than planned, and implementation delays are significant.

• Restoring the balance of energy resources markets

Market prices for coal, oil and natural gas remained stable. The first quarter of 2023 saw price declines followed by long-term stabilisation until the end of the year.

PSE is working extensively to adapt to the new shape of markets and new technologies in both the short and long term.

Development of market mechanisms

PSE has been developing market mechanisms on an ongoing basis to adapt them to the changing situation. In 2023, intensive work was underway to prepare a thorough reform of the balancing market aimed, among other things, at adapting the market to the changing generation structure and enabling integration with European platforms for the exchange of balancing energy. The reform was implemented on 14 June 2024.

In order to prepare for longer-term changes, PSE participates in analytical work conducted both individually and as part of various international groups and consortia. The work carried out in 2023 largely focused on the integration of offshore wind power and the procurement and use of flexibility services, which, given the growing share of renewables, are becoming extremely important with the large share of uncontrollable generation in the energy mix.

Research and development

PSE implements a number of measures that are aimed at adapting the transmission system to new technologies and regulations and the dynamically changing market structure, especially the growing share of distributed generation.

They include: 

• Developing NPS metering and increasing the ability to assess the condition of the NPS in real time, obtaining information on the state of flows at each node of the transmission grid and obtaining detailed data (including generation from local sources) from DSOs (in accordance with the SOGL code);
• Recognising the feasibility of building HVDC connections, including a comparison of various configurations of such connections (point-to-point, multi-terminal) and their evaluation in technical and economic terms;
• Development of methods and tools for short- and medium-term forecasting, in particular the implementation of tools and process for forecasting generation from photovoltaic and wind sources;
• Optimising the implementation of European market regulations: CEP, network codes;
• Implementation of OIRE functions – development of a metering data centre (CSIRE);
• Development of an IT system for processing energy market information for the purposes of electricity market processes and the exchange of information between system users (CSIRE);
• Work in international groups to develop and agree methodologies, tools and the manner of execution of regional (international) processes implemented under EU law, aimed at protecting the interests of PSE and Polish market participants;
• Implementing changes to the way the balancing market operates, including changes to the way system services are procured.

The activities in question address the demand and cover virtually all areas of PSE operations. Our organisation’s effective response to the new challenges requires action in virtually every organisational unit of the company involved in the NPS operations and development planning.

In the research and development area, new technical and technological solutions are identified, and methods and tools emerging in the market are tested, including their applicability to the TSO’s business needs.

Substation configurator

The object of the work was to develop a methodology and create a tool for objective evaluation of the configuration of new substation switchgear against the functional tasks set. The tool created is designed to facilitate and accelerate the process of selecting the appropriate substation switchgear configuration in the course of PSE investment processes.The tool relies on the use – based on scoring – of station switchgear configuration criteria, taking into account engineering, operational, maintenance, reliability, economic and environmental factors. The work was completed in March 2023.

In Phase I, a methodology was developed for the process of configuring substation switchgear in the transmission grid, including the organisation of the process, the solution evaluation area, the implementation procedure, the necessary data and their availability at PSE.

In Phase II, the concept of a scoring tool for substation switchgear configurations was developed in the form of an Excel spreadsheet along with evaluation sheets, and tests of the tool were performed.

Developing framework technical requirements for OWF HVDC power evacuation facilities

The task includes the development of framework technical requirements for power evacuation facilities from an offshore wind farm (OWF) using HVDC technology, including an offshore converter station, an onshore converter station, an offshore cable line and an onshore cable line. The framework technical requirements in question will be a refinement of the existing technical requirements applicable to facilities based on HVAC technology, as defined in the Regulation of the Ministry of Climate and Environment of 25 May 2022 on detailed requirements for elements of power evacuation facilities and for elements of substations located at sea.

In Stage I, a report was developed that included an overview of global HVDC technology solutions used and planned for use in offshore wind power evacuation systems.

In Stage II, report was developed containing framework technical requirements for OWF HVDC power evacuation facilities.

In order to facilitate the integration of the deliverable with the applicable legislation, the requirements prepared we implemented as a proposal to amend the Regulation of the Minister of Climate and Environment of 25 May 2022 on detailed requirements for elements of facilities for power evacuation and for elements of substations located at sea. The work was completed in March 2023. The internal review was completed on 1 March 2024. The final version of the proposed provisions for the OWF HVDC power evacuation facilities is ready for further use. The implementation of the product at PSE was completed.

Development and verification of a new algorithm for the operation of the breaker fault protection (BFP) system at substations with a reactor installed

The aim of the work was to develop a new BFP system solution dedicated to substations with a reactor installed (in the form of a new operating algorithm and/or a new commercially available BFP system). Defining a new solution for the BFP system and simulation-based and, possibly, laboratory verification of its correct operation will make it possible to reduce the presented risk of failure of the LRW system to trip when breaker re-ignitions occur in the reactor bay during the interruption of the reactor’s operating current, and to minimise the risk of unwanted breaker damage in the reactor bay.

The work was completed in October 2023. In Stage I, a review of the requirements and experiences of other TSOs and manufacturers’ solutions was performed. Concepts were also defined for a new BFP solution for relay bays, a preliminary evaluation concept and a selection of concepts for simulation testing.

In Stage II, an EMT model of the concept for a new BFP solution was developed and simulation tests of the concept were conducted. The next step was to develop an implementation matrix of the concept and evaluate the potential for application at PSE substations.

In Stage III, a laboratory station was built at the Protection Equipment Laboratory and laboratory tests were conducted on a new, previously unused component of the BFP solution. The final step was to define application recommendations for the new BFP solution.