In 2021, the Polish power sector was still influenced by the COVID-19 pandemic and the actions taken by the Polish government and other governments to mitigate its health effects (including lockdowns, mobility restrictions, etc., and the resulting changes in energy supply and demand). The impact of the pandemic on the economy was felt in the spring and autumn of 2021. However, unlike in 2020, the scale of the slowdown caused by the reduction in mobility was small and its impact on the power system was negligible. In the second half of the year, political and economic tensions in relations with Russia also began to rise, which had an impact on the prices of energy resources.

The operation of the power system was affected by global and regional market-driven factors (prices of energy, energy resources, technology) and regulatory changes influencing the framework in which PSE operates. Discussion was also in progress about the shape of the EU energy market in the future. In 2021, the prevailing view was that at most minor adjustments and short-term crisis moderation measures were needed to improve its operation. This view has evolved in 2022 as a result of the energy crisis the EU is experiencing – there have been successive proposals for solutions to change the functioning of the market, including proposals to reform its entire organisation. The primary stimulus for these discussions comprised price speculations in the energy market, dynamic increase in end-user energy prices and the so-called infra-marginal profits of companies ─ generators and distributors.

In the medium to long term, technological trends relating, most of all, to the decarbonisation of the sector will play a fundamental role in the evolution of the power system and its environment. Already in the last year, the renewable energy, energy storage and electromobility sectors continued to develop strongly, and the introduction of new metering technologies that open up opportunities for the use of high frequency data (HFD) was in progress.

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, play an increasingly important role. With technological advancement in metering, it is becoming increasingly possible to collect and analyse data from the real economy, including energy suppliers. PSE acts as the Energy Market Information Operator and supervises the establishment of the Central Energy Market Information System, which will soon enable the collection and analysis of detailed high frequency data from the Polish energy market and its development.

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

Until recently, the development of RES primarily included the dissemination of the onshore wind power generation industry. For several years, new RES technologies have been gaining ground as well: 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 Polish Baltic coast offers medium-term potential for the development of this type of power generation industry.

The growth of photovoltaics is primarily based on the development of small, residential prosumer installations and small commercial installations. 2021 was the last year in which the current support rules for prosumers were maintained. In 2022, the rules have been changed. Government and local government support programmes have contributed to the development of this form of distributed civic energy and the emergence of a group of active prosumers. Serving this group of consumer-generators within the existing distribution and transmission network infrastructure is an increasingly serious challenge, which is reflected in new regulatory solutions.

A barrier to the development of renewable power generation industry remains the problem of energy storage during periods of its overproduction, so that the energy gained can be used at times when generation from RES sources is not possible (when the wind is not blowing, at night, etc.). Until recently, the lack of efficient storage technologies prevented this problem from being solved. In recent years, the commercial use of energy storage has become increasingly common. Technology development 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. 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. Since it began to play a noticeable role in the national energy mix in 2020, its importance has been growing. Generation companies are gearing up for off-shore wind power projects. The first commercial energy storage facilities, such as the BESS storage facility in Pomerania, are already in operation. 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 and the transmission network 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. Until recently, the effect was still the progressive convergence of energy prices in Europe. From the second quarter of 2021 onwards, however, it has been disrupted by turbulence in European and global energy resources markets. 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 operators, due to the need for more frequent use of remedial actions taken outside the market, such as redispatching.

The energy crisis triggered by the decrease in the supply of energy resources and the abrupt increase in their prices (see below) has triggered an European discussion on the correction of the market model. In the second half of 2021, the discussions focused on ad hoc remedial solutions, leaving issues of systemic change outside the debate.

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 also by EU climate policy. The primary tool of this policy is the ETS – emission allowances, the prices of which are determined by the market. ETS prices have been rising for several years now. In the first half of 2021, the CO2 ETS price level exceeded EUR 50, and in the second half of the year EUR 80. This resulted in a significant increase in the price of energy generated in emission sources, triggering a price increase effect caused by the situation in the energy resources market. The ultimate effect thereof was a significant increase in prices in European markets.

The imbalance in the gas and coal markets has led to spectacular increases in the raw material prices

The ARA market price of coal almost doubled in 2021 (with a short-lived autumn peak at more than 3 times the price at the beginning of the year) and the price of gas increased 3 times (with an autumn peak when prices were 7 times higher than at the beginning of the year).

As a result of Russian natural gas supply constraints and very high price levels, the uncertainty regarding the medium-term role of natural gas in Europe as an intermediate fuel increased in the second half of 2021. The growing energy crisis already suggested that the still relatively high share of gas power generation industry in the EU energy mix would have a negative impact on the EU energy independence and price levels in the short to medium term. In 2022, as a result of Russia's aggression against Ukraine, sanctions and Russia's export policy, there were further very sharp increases in energy and gas prices in commodity markets, which began to affect end-user prices from the second half of the year under review.

PSE is currently implementing a number of measures to ensure the proper functioning of the NPS now and in the future, under conditions of dynamic technological and regulatory changes.

The company's activities comprise, in particular:

1. Works at the international forum (ENTSO-E, CCR) relating to the development and agreement of methodologies, tools and method to conduct regional (international) processes implemented under EU law to protect the interest of PSE and Polish market participants.
2. Optimisation of the implementation of European market regulations (CEP, Network Codes), including the CEP70 trajectory.
3. Implementation of the OIRE function – construction of a metering data centre (CSIRE).
4. Implementation of changes in the manner of the balancing market operation, including the way the system services are procured, and the resulting modification of operational processes, in IT applications, data management and hardware infrastructure.
5. Development of methods and tools for short- and medium-term forecasting, with particular focus on the implementation of tools and a process for forecasting photovoltaic generation and the transition from gross demand forecasting to net demand and ultimately also to nodal forecasting.
6. Development of methods and implementation of tools for static and dynamic simulation between facilities and between facilities and the NPS. The need to develop methodologies to optimise the operation of the NPS and to assess the safety of power system operation under different conditions (network models, SCUC process, SCED) is also indicated, for the targeted implementation of the nodal market.
7. Development of NPS metering, including obtaining measurements from reference photovoltaic farms and increasing the possibility of assessing the condition of the NPS in real time (new SCADA-EMS system), obtaining information on the status of flows at each node of the transmission network and obtaining detailed data (including generation of local sources) from DSOs (in accordance with the SOGL code).
8. Exploration of the feasibility of HVDC connections, including a comparison of different configurations of such connections (point-to-point, multi-terminal connections) and their technical and economic assessment.
9. Actions to facilitate the investment process, optimisation of shutdowns and management of network assets, including the application of BIM technology in the investment project life cycle phases and integration of BIM technology with spatial information systems, asset management and shutdown planning.
10. Testing and introducing new methods of controlling network operation in emergency situations, testing the use of energy storage facilities in the NPS, etc.
11. New tools to support dispatching activities; identification of reasons for failures, optimisation of phase shifter settings, use of synchrophasors (PMUs), etc.
12. Construction of a cross-border submarine interconnection with Lithuania (700 MsW interconnectors).
13. Connection of offshore wind farms (10.9 GW).

The measures outlined respond to the changes taking place and cover virtually all areas of PSE operations. An effective response from our organisation to the new challenges requires action in nearly every organisational unit of PSE involved in NPS operations and development planning.

Implemented projects in the area of research and technical development (applied, development and industrial works)

Definition of rules for the selection and setting of new excitation criteria for commercially available disturbance recorders

The aim of the works was to determine the rules for selection and setting of new Excitation Criteria of Disturbance Recorders which are commercially available, enabling the recording of types of disturbances appearing in the Power System – determined by the changing structure and operating conditions of this system (new network, generation and receiving facilities) – previously unidentified by the Disturbance Recorders. Determination of the rules for selection and setting of new Excitation Criteria of Disturbance Recorders will make it possible to monitor and record dynamic phenomena during disturbances occurring in networks saturated with power electronic components. It is emphasised that such disturbances can be caused by, i.a., failures or mismatches in the control systems of converter elements. The project ended in May 2021.

Development of a pilot virtual station and line environment

The aim of the works was to identify in practice and in detail the most significant benefits for the PSE CG of using 3D models (including BIM models and geoinformatics data) acquired in the investment process in a virtual reality (VR) and augmented reality (AR) environment, to identify the necessary IT tools and competence development needs relating to the development of a virtual substation and line environment for use in the PSE CG. The project concluded with the development of a prototype solution in October 2021. Efforts are currently underway to implement the solution in the company. The completion of works is scheduled for December 2022.

Pilot implementation of a VR360 substation in the Substation Simulator training area

As part of the works, a training module in VR360 technology was created and implemented into the Operation Services Simulator installed at ZKO in Warsaw. VR360 technology allows for visual presentation of the implementation process for the control of a given network element, as well as the activities performed by the substation's duty officer on site. As part of the project, a virtual section of the Miłosna 400/220/110kV substation was developed, extended to include the possibility of controlling switches in the AT-3 400/220 kV autotransformer feeder. The project ended in July 2021.

RES generation forecasting

The aim of the works was to develop and test a prototype of a proprietary tool for forecasting generation of renewable energy source (RES) wind sources (WF) and photovoltaic sources (PV) with enhanced resilience to external disturbances, particularly in terms of communications, characterised by a mild degradation of forecast quality with increasing scale of disturbance or failure. The project ended in July 2021. We plan to continue our efforts to implement this solution at PSE.