Energy market 

In Poland the most modern form of using electricity in industrial plants was electric lighting. The first arch lamps were installed in the Royal Iron Works in the territory of present-day Chorzów in 1870. Another stage of utilizing the new type of energy was using electric motors on a wide scale. The first power station in Poland was put into operation in Szczecin in 1889. The first overhead lines (60 kV) in Poland were erected at the turn of the 1920s, while the first transmission line was commissioned in 1937 – its voltage amounting to 150 kV.

 

The first transmission systems with voltage of 220 kV were built in the 1950s. More or less at that time the existing systems with different voltage were connected, providing foundations for the present-day National Electricity System (NES). Its core was the transmission system based on 110 kV and 220 kV lines. The first 400 kV line was built in Poland in 1964, and twenty years later a 750 kV line connecting the Polish system with the system of the Ukrainian SRR was put into service (now the line is shut down). More than ¾ of electricity in Poland is now generated by power plants fired with hard coal (ca. 50%) and brown coal.

 

National Electricity System

 

The National Electricity System is a set of interconnected elements used for generating, transmitting and distributing electric power including systems controlling its operation. It comprises the generation, transmission and distribution subsystems. Correct operation of the entire electric power system requires coordination with the domestic economy as this system, next to the transportation system, can be deemed an economic ‘bloodstream’ conditioning the efficient operation of all branches and fields of economics. Thus, a correctly operating energy market to be considered a peculiar element of the national electricity system plays a very significant role.

 

Fundamental technical parameter

 

Contemporary electric power systems are based on alternating current (AC). This type of current is produced by current generating units and is transmitted to end users via power lines. The most important technical parameter conditioning the integrity of elements within an electricity system is frequency. It is a fixed amount of time between the occurrence of maximum temporary rating of supply voltage and current and it is characteristic of the entire system at a specific moment.

 

Current generators in power stations connected to the system, operating synchronically in normal conditions, that is, the angular velocity of their rotating masses (converting mechanical energy into electric energy) is identical and proportional to the frequency in the system. According to the rule of conservation of energy, the total power generated in power plants should equal the total power received and lost in the system. When, temporarily, there is no balance between them, a transitory condition comprising changes in system frequency occurs.

 

For example, when power intake is lower than the amount of electricity generated at the same time, the load of current generators is reduced and the angular velocity of mass rotation increases, hence the frequency in the system also increases. By analogy, when the intake of electricity increases – the load is higher and the rotation of rotating units is slower, so the frequency decreases. Therefore, the frequency in the electric power system is the indicator of the balance of power and it is monitored for the purposes of controlling the amount of power generated by respective power plants in order to cover the power received that randomly changes in time.

 

 

In the Polish electric power system the base (rated) frequency is 50 Hz. According to “terms of using, maintaining, operating and planning the development of the grid” as adopted by PSE S.A., the mean frequency value measured over 10 seconds at the points where equipment, systems or other grids are connected, should fall within the range:

  • 50 Hz ±1% (from 49.5 Hz to 50.5 Hz) for 99.5% of the week,
  • 50 Hz +4%/–6% (from 47 Hz to 52 Hz) for 100% of the week,

In addition, it is required that the number of working days in a month with a frequency setpoint of 49.99 Hz or 50.01 Hz, be no more than eight.

 

Polish electricity system in Europe

 

Maintaining the base frequency of 50 Hz in the National Electricity System (NES) made it possible to connect the national system to the shared, combined electric power system of Western Europe, that is, UCTE (Union for the Co-ordination of Transmission of Electricity). The Polish electricity system operator (PSE S.A.) became a member of the organisation at that time called UCPTE in 1999 although the national system already worked synchronously with the UCPTE from 18 October 1995 (along with the systems of Czech Republic, Slovakia and Hungary forming the so-called CENTREL system).

 

Serious transformations in European electric power industry such as, for example, the introduction of the first directive 96/92/EC to form a uniform electricity market (IEM Directive) and establishment of the organisation of the European Transmission System Operators (ETSO) in 1999, made UCPTE implement an organisational reform. As a result, a decision was made to limit the scope of UCPTE’s activities to transmission of electricity only, and as a consequence in 1999 the organisation removed electricity generation from the scope of its activities and was renamed UCTE.

 

The founding members of the restructured UCTE were 33 transmission system operators from: Austria, Belgium, Bosnia and Herzegovina, Croatia, Czech Republic, France, Greece, Spain, the Netherlands, Yugoslavia, Luxembourg, Macedonia, Germany, Poland, Portugal, Slovakia, Slovenia, Switzerland, Italy and Hungary. In July 2009 UCTE was liquidated by incorporating the structure of organisation in the reformed ETSO organisation made of electric power transmission system operators under the name of ETSO-E (The European Network of Transmission System Operators for Electricity).

 

PSE S.A., as the transmission system operator in Poland was granted the status of a founding member of UCTE on 17 May 2001 and, together with transmission system operators from the Czech Republic, Slovakia and Hungary, signed the articles of association of this organisation in Lisbon.

 

 

ETSO-E  coordinates the operation of the electric power systems of 41 members – transmission system operators from 34 countries responsible for developing and maintaining the connected electric power systems with the transmission grid of at least 220 kV. The objectives of the organisation include: promoting the development of a shared electricity market, supporting the competitive environment and at the same time ensuring the safe operation of an electric power system connected under ETSO-E/UCTE because safe operation of the interconnected systems is the condition for developing competition in the energy market. The resulting arrangement of interconnected systems of Continental Europe's countries has more than 500 GW installed power at its disposal.

 

In addition, ETSO-E is responsible for:

  • analyzing and monitoring the extension of the synchronous system operation zone,
  • coordinating mutual technical and operational support between transmission systems operators,
  • coordinating and improving the operating rules for the synchronous zone and its external connections with the neighbouring transmission systems,
  • popularizing expert knowledge about interconnected electric power systems.

 

Currently, in the European continent, apart from the zone of synchronous operation of electric power systems under ETSO-E/UCTE, including the electric power system of Poland, there are 5 other synchronous zones, namely:

  • Baltic states (BALTSO),
  • Scandinavian countries (Nordel),
  • British zone (UKTSOA),
  • Irish zone (ATSOI),
  • Russian Federation system zone (UPS).

 

Furthermore, some European countries are not included in any of the zones. The ETSO-E/UCTE system is connected with the neighbouring systems, e.g. British, Albanian, Scandinavian (direct current lines HVDC), Baltic states (connection between Poland and Lithuania with a direct current insert “LitPol Link”), and even synchronously with the system of Northwest Africa. Also, in the territory of Ukraine and Belarus there are small off-grid subsystems operating synchronously with ETSO-E/UCTE system.

 

NES organisation chart

 

In the period of economic transformations in Poland at the end of the 20th century the ownership relations within the structure of NES were subject to revolutionary changes, whereas organisational relations evolved. Changes in the structure of organisation and ownership were guided by ideas such as: privatisation, construction of an energy market, introduction of system services, antitrust measures and decentralization on the one hand and consolidation for capital and investment purposes on the other hand.

 

The electric power system is a technical system operating based on objective laws of electrical engineering. Meanwhile, energy companies have become economic entities pursuing their own, often different economic interests. Thus, it was necessary to set up a proper organisation structure to coordinate the activities of entities and ensure reliable and safe operation of the system and its development as a whole.

 

It is worth noting that insofar as electricity producers can compete with one another, the process of supplying power to end customers is a natural monopoly. Thus, it is irrational to build a double infrastructure in the specific territory for a grid supplying electricity from generating units working within a single system.

Electric power systems in terms of organisation are classified into:

  • transmission grids transporting electricity produced by major power stations connected to the grid at long distances to transformer and switching substations or the largest customers; theses are ultra-voltage grids (UV);
  • distribution grids, also referred to as switching grids, supplying power received from the transmission grid and generated by smaller generating units to end customers; these are high voltage (HV), medium voltage (MV) and low voltage (LV) grids.

 

These grids are managed by energy companies acting as their operators, i.e. distribution system operators (DSO) and transmission system operators (TSO). Their technical tasks and obligations are governed by national laws.

 

A legislative act that governs the basic relations and organisation of the electric power engineering sector in Poland is the Energy Law enacted on 10 April 1997 and amended many times afterwards. The delegation of this act forms the basis for issuing more specific regulations, e.g. so-called tariff and system regulations.

 

Electric power engineering in Poland is regulated at three levels:

  • highest level – Energy Law specifying institutional solutions,
  • medium level – executive acts issued by the Council of Ministers and the minister in charge of power industry based on the act,
  • individual level – regulations of the President of the Energy Regulatory Office having a wide range of discretionary powers.

 

Thus, the Energy Regulatory Office (ERO), established in response to the necessity to implement the first IEM directive of 1996, has a special status in the regulatory and organisational system of national electric power engineering. The above-mentioned directive enumerated the powers and responsibilities of such an office as an antifraud authority in charge of ensuring correct operation of the electric power engineering sector in the market competition environment.

 

The President of ERO is responsible, among other things, for: regulating the operation of the market, promoting competition and preventing monopolist practices, monitoring of safe power supplies, granting licences to energy companies and resolving disputes, in particular those connected with licensed energy activities.

 

The President of ERO is empowered to issue licences with regard to generation of electricity in larger units, its transmission and distribution. Pursuant to the decision of the President of the Energy Regulatory Office, the transmission system operator (TSO) in Poland is the company PSE Operator S.A., as a separate legal entity isolated from the structures of PSE S.A. in July 2004. The company has 5 branches. They are based in Warsaw, Radom, Bydgoszcz, Katowice and Poznań.

 

At the beginning of 2016 the list of companies licensed by the President of ERO to act as distribution system operators (DSO) in Poland comprised 172 entities. These are: major industrial and service plants with their own wide area grids and generating units (e.g. steelworks, refineries, railway, heavy industry), municipal enterprises including combined heat and power plants and new companies building the power infrastructure within new investment areas. However, these entities play no major role in terms distribution throughout NES since the largest infrastructure is at the disposal of four operators working within consolidated energy groups deriving from former power distribution companies (PGE Dystrybucja S.A., Energa-Operator S.A., Enea Operator S.A., Tauron-Dystrybucja S.A., and RWE Stoen Operator S.A.).

 

 

The operating management of the technical resources of the National Electricity System (NES) is the responsibility of dispatching services in a hierarchical four-level arrangement, namely:

  • National Power Dispatch Centre (NPDC),
  • District Power Dispatch Centres (DPDC),
  • Works Power Dispatch Centres (WPDC),
  • Regional Power Dispatch Centres (RPDC),

 

The two first levels (one NPDC and five DPDCs) are TSO’s dispatching services, whereas the other two (WPDCs and RPDCs) are the services of respective DSOs. The scope of their tasks and mechanisms of cooperation are described by the Energy Law and detailed regulations issued on its basis (e.g. so-called system regulation). Detailed operating procedures and criteria include internal documents such as transmission and distribution grid maintenance and operation instructions (respectively IRiESP and IRiESD in Polish). The instructions must be approved by the President of ERO.

 

The necessity of developing and expanding the transmission system and increasing demands to the operator regarding the effectiveness and efficiency of supervision of the transmission grid resulted in the adjustment of the model of operation of transmission grid dispatching services. The change was about separating the tasks involving coordination of works connected with the operation of the grid, starting with pure maintenance coordination tasks (control of the grid’s operation, control of power flow and maintaining proper system operation parameters). In 2006 a new unit was established – the Monitoring Centre (MC). In the following year, five branches called Regional Monitoring Centres (RMC) were set up in respective grid areas. Since 2008 they have operated on a 24h basis. The basic task of these units is ongoing monitoring of the technical condition of grid assets. Thus, the NPDC and respective DPDCs are in charge of maintaining and controlling the operation of generating units within NES, in their capacity as TSO’s dispatching services; however, ongoing and continuous monitoring of the operation of elements of the transmission system and supervision of necessary works on such elements is the responsibility of operation monitoring services in the MC and respective RMCs.

 

Generation in NES

 

The generating capacity of the national electricity system (NES) is characterised by installed power defined as a total of all active generators installed in power plants. As at 1 January 2015 the power was 38 477 MW.

 

The maximum active power that all power plants within the national electricity system can generate is the attainable power. This power is smaller than the installed power by permanent capacity deficiencies caused, among other things, by a change in fuel quality, reduced efficiency of respective elements of the power plant (e.g. damage of some blades of the turbine, sediment in the boiler). The attainable power in NES at the beginning of 2015 was 38 121 MW. In addition, NES is characterised by available power, that is, the maximum power output of the system when all generating units work continuously for at least one hour. It is smaller than attainable power and the difference is a result of scheduled outages (e.g. overhauls) and non-scheduled outages (e.g. failures).

 

The Polish generating sources produce about 160 000 GWh of electricity in a year, which corresponds to about 4 129 kWh per capita (in 2014). Poland is the 6th largest energy producer in the European Union. In 2014, on a nationwide scale, 151 027 GWh were consumed in total, 13 508 GWh were imported and 11 342 GWh were exported, which gives 10 086 GWh of balance losses and differences. Thus, over one year the difference is nearly identical to consumption of electricity in Łódź voivodeship. Conventional sources based on fossil fuels have the largest share in electricity generation in Poland.

 

 

A serious problem in the generation subsector of NES is a high level of wear of units that, for the power plants in operation – mainly those coal-based – is estimated at 70%. According to estimates by the Ministry of Economy, the installed power that can be withdrawn from generating units of NES by 2030 is 12.26 GW in total, and by the end of 2017 at least 4.4 GW - mainly from power plants and combined heat and power plants fired with hard coal or brown coal (96%). By 2050, from the existing generating resources only about  5 GW will survive, mainly in hydroelectric power plants. The rate of shutting down generating units should decrease after 2018. At that time, the commissioning of larger projects is expected. Information about the generating resources of NES according to types of power plants is presented in the table below.

 

 

In Poland renewable energy industry has successively developed, and in particular the wind power sector (65% of installed power in all RES in Poland, i.e. about 4 times more than in biomass fired power plants), mainly in north western regions. Currently, more than 2000 RES systems are connected to the national electricity  grid, including more than 90% with power above 1 MW, and the share of small RES systems connected to low voltage grids (i.e. with power above 200 kW) is 0.6%. Thus, the situation is different from that in Germany where 90% of RES work in low voltage grids. Twenty largest Polish producers of energy from RES derive from four domestic energy concerns and account for 70% of the market.

 

Uneven distribution of the largest power plants is characteristic of the territory of Poland (with regard to the location of the main resources in the south). For instance, more than 90% of electricity consumed in Warmia and Mazuria voivodeship is supplied from other regions. Electricity generated in generating units within the system can be transported via overhead and cable power lines forming the power grid.

 

Power grids

 

The national power grid supplies electricity to more than 17 million customers. In 2014 in Poland:

  • 368 customers were connected to high voltage systems,
  • 35 569 customers were connected to medium voltage systems,
  •  17 001 880 customers were connected to low voltage systems, including 14 754 412 households and farmsteads.

 

According to Polish Power Transmission and Distribution Association, in 2014 Polish power grids were equipped with 260 069 transformers with a total capacity of 152 849 MVA operating 

in 258 194 transformer stations. In total, overhead power lines were 596 582 km long and the length of cable power lines was 235 118 km. To compare, the length of the Earth’s equator is 40 075 km.

 

The structure of domestic power grids is hierarchical. The peculiar backbone of the structure is the transmission system. In Poland, this grid, managed by PSE S.A., consists of (according to the statement of assets as at 01.01.2016):

  • 1 line with voltage of 750 kV, length 114 km (shut down),
  • 89 lines with voltage of 400 kV, total length 5 984 km,
  • 167 lines with voltage of 220 kV, total length 7 971 km,
  • 106 ultra-voltage stations (UV),
  • offshore line 450 kV DC Poland – Sweden, total length 254 km (including 127 km owned by PSE S.A.).

 

Incidentally, in NES some of the 110 kV lines are also transmission lines. 400 kV grids are considered prospective. In total, the national transmission grid comprises 257 lines with a total length of 14 069 km. NES is connected to the grids of the neighbouring countries, namely:

  • Germany: Krajnik-Vierraden and Mikułowa-Hagenverder – these are two-track 400 kV power lines;
  • Czech Republic: Wielopole-Albrechtice and Wielopole-Nosovice – single 400 kV power lines and Bujaków-Liscovec and Kopanian-Liscovec – single 220 kV power lines;
  • Slovakia: Krosno-Lemesany – two-track 400 kV power line;
  • Ukraine: 220 kV Dorotwór-Zamość power line and 750 kV Rzeszów-Chmielnicka power line (inactive);
  • Belarus: 220 kV Wólka Dobrzyńska-Brześć power line and 220 kV Białystok-Roś power line (inactive);
  • Sweden: offshore DC cable line: +/- 450 kV Słupsk-Starno.

 

At the end of 2015 the connection to Lithuania (Ełk-Alytus), consisting of 400 kV overhead power lines on both sides of the direct current transformer station in Alytus (Lithuania), was put into service. In addition, cross-boundary connections exist at the level of the 110 kV distribution grid: one with Germany, four with the Czech Republic and one with Belarus. The construction of a third connection with Germany is planned but the project was postponed until 2030.

 

Distribution grids are built with the following voltage:

  • high voltage (HV): 110 kV,
  • medium voltage (MV): 30 kV, 20 kV, 15 kV, 10 kV, 6 kV, whereas 30 kV is deemed non-prospective, while 6 kV and 10 kV are used in industrial systems,
  • low voltage (LV): up to 1 kV, usually 230/400 V.

 

Reliable operation of the technical infrastructure of power grids, ensuring physical performance of contracts concluded between participants of the energy market, is the responsibility of system operators (TSO and DSO). Activities connected with ongoing trading in electricity are carried out by market operators – commercial operators (CO) and commercial and technical operators (CTO).