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Poland’s Power Sector: At the crossroad of taking vital decisions [free access]

August 21, 2019

To drive progress towards sustainability, Europe has set an ambitious target for its energy sector. The continent targets setting up enough clean energy projects to meet 20 per cent of its total energy requirements by 2020 and 40 per cent by 2030 (compared to 1990 levels).

 

Poland’s power mix is currently dominated by fossil fuels, mainly coal. The country will, however, see a decline in the share of coal between 2020 and 2035, as about 60 power plants constructed in the 1970s are expected to be retired, accounting for more than 50 per cent of the current installed capacity. The fossil-fuelled country thus stands at the crossroads of driving significant shifts in its energy mix.

 

According to the Ministry of Finance, Poland’s gross domestic product (GDP) will range between 2.5 per cent in 2019 and 1.7 per cent in 2027. On this basis, a growth of 13.4 per cent in electricity demand is estimated for the 2017-2027 period. In order to ensure energy security and bridge the generation deficit, the country is planning to develop other relatively low-emission or carbon-neutral sources including gas, nuclear and solar. In parallel, the country also plans to develop substantial offshore wind energy off the Polish coast in the Baltic Sea.

 

Additionally, to reap the full benefits of this energy transition, Poland, like other European countries, has developed significant power transmission expansion plans. The country’s transmission system operator (TSO), Polskie Sieci Elektroenergetyczne S.A. (PSE S.A.), envisages an investment of over PLN10.3 billion for the construction and modernisation of high voltage (HV) grid assets in the country between 2019 and 2027.

 

Regulatory and market structure

Urzędu Regulacji Energetyki (URE) or the Energy Regulatory Office (ERO), created in 1997, is responsible for the regulation of the electricity sector. ERO’s responsibilities include determining tariffs, formulating regulations and ensuring competition. The Ministry of Energy or Ministerstwo Energii, created in late 2015 (as part of the broader reorganisation of government ministries), frames policy guidelines for the sector. Earlier, the Ministry of Economy and Ministry of Infrastructure and Development were responsible for this role.

 

Presently, Poland’s power generation scenario is dominated by two major state-run generators—Polska Grupa Energetyczna and Tauron Polska Energia. These two operators, along with ENEA S.A. and Energa S.A., account for 65 per cent of the total electricity produced in the country. Further, the four utilities cumulatively cater to more than 84 per cent of the distribution sales in the country. Uniquely, Poland has allowed international power utilities such as the France-based Electricité de France SA (EDF), the Czech Republic-based CEZ and the Sweden-based Vattenfall to completely own generation units and operate them within the country.

 

Poland’s TSO, PSE S.A., operates within the territory of the Republic of Poland and is wholly owned by the State Treasury. PSE has been appointed as the TSO for the period from July 2, 2014 to December 31, 2030. PSE undertakes operation and maintenance of the transmission grid through five subsidiaries: PSE-Centrum S.A. (central region), PSE-Polnoc S.A. (north), PSE-Poludnie S.A. (south), PSE-Wschod S.A. (east) and PSE-Zachod S.A. (west).

 

Existing transmission network

The Polish transmission network (at 400 kV and 220 kV), together with a large part of the 110 kV distribution network, operates in the meshed network configuration. Presently, Poland’s transmission grid comprises 750 kV to 110 kV transmission lines and grid stations, including 450 kV high voltage direct current (HVDC) grid assets. However, a large part of Poland’s transmission infrastructure is ageing and is in need of modernisation.

 

At the end of 2018, Poland’s grid comprised 14,893 km of transmission lines, the majority or 52 per cent of which were at the 220 kV levels. This was followed by around 46 per cent at 400 kV, and the remaining at the 110 kV, 450 kV HVDC and 750 kV levels.

 

There are 12 major transmission lines connecting Poland’s power system with the networks of neighbouring countries including Sweden, the Czech Republic, Slovakia, Belarus, Ukraine and Germany. This includes the 254-km-long, 450 kV DC underground connection with Sweden. Half of this line length is owned by the PSE S.A.

 

Table 1: Growth in transmission network in Poland (2014-2018)

 

2014

2015

2016

2017

2018

Line length (km)

13,667

14,268

14,325

14,393

14,893

450 kV HVDC

127

127

127

127

127

750 kV

114

114

114

114

114

400 kV

5,383

5,984

6,139

6,326

6,826

220 kV

7,971

7,971

7,873

7,755

7,755

110 kV

72

72

72

71

71

Transformer capacity (MVA)1

47,399

51,776

53,906

56,035

59,250

Number of substations

103

105

106

106

106

Note: AC – alternating current; HVDC – high voltage direct current

1 – 2018 figure for transformer capacity is based on CAGR between 2014 and 2017. The 2016 figure is estimated based on the assumption that the addition between 2015 and 2017 is split equally between 2016 and 2017.

Source: Polskie Sieci Elektroenergetyczne S.A; Ministry of Economy, Poland; ENTSO-E; Global Transmission Research

 

Recent investments

In the five-year period spanning 2013 and 2017, PSE’s annual investment in the electricity transmission network grew steadily, increasing significantly from around PLN701 million to PLN1,460 million. In 2015 alone, PSE made PLN679 million more in investments as compared to those made in 2014. The majority of these investments have been directed towards the construction and expansion of power lines and substations, followed by upgrade of power lines and substations, information and communications technology (ICT) and others.

 

Figure 1: Growth in Poland’s capital expenditure on transmission network (PLN million)

 

Source: Polskie Sieci Elektroenergetyczne S.A; Global Transmission Research

 

Grid development plans

Poland, being one of the Europe’s biggest exporters and the second biggest consumer of coal, is cautiously embracing renewables to improve the security of its energy supply and to meet the European Union (EU) climate and CO2 emissions reduction targets.

 

However, this will require the transmission grid to adjust to the change in the energy-mix. In this regard, PSE is investing in augmenting and strengthening the transmission network in order to integrate new capacities as well as to ensure smooth cross-border energy exchanges.

 

Specifically, PSE’s latest development plan for meeting the current and future electricity demand for 2018-2027 (PRSP) focuses on the modernisation and expansion of the ageing transmission network.

 

To strengthen its European ties, PSE is undertaking several cross-border transmission projects, which are at various stages of development. A key cross-border project is LitPol Link Stage II, which is the continuation of the construction of an interconnection between Poland and Lithuania. The project aims to achieve a transmission capacity of 1,000 MW in both directions. It will require the construction of additional transmission network in both countries. Specifically, in Poland, it includes the construction of the 400 kV Olsztyn–Mątki–Ostrołęka and the Ostrołęka–Stanisławów lines. The project is slated for completion by the end of 2023.

 

Another key project is the construction of a new subsea HVDC interconnector between Poland and Lithuania, namely, the Harmony Link. The Harmony Link is directly linked to the political roadmap for synchronising the Baltic States’ electricity grid with that of Continental Europe. It is expected to help the Baltic countries to fully control their electricity network and ensure security of energy supply. In December 2018, the two TSOs signed a cooperation agreement for the project.  

 

Recently, in July 2019, the Polish and Lithuanian TSOs decided to liquidate their joint subsidiary LitPol Link, which concluded the first Poland–Lithuania interconnection project in September 2016. From now onwards, the two TSOs have decided to cooperate directly on the construction of the Harmony Link between the two countries.

 

One of the projects included in the European Network of Transmission System Operators for Electricity (ENTSO-E) TYNDP 2018 is the GerPol improvements project, which aims to increase the cross-border transmission capacities in the synchronous area (covering interconnections at the borders with Germany, the Czech Republic and Slovakia) by switching the 220 kV Krajnik–Vierraden line to 400 kV and installing phase-shifters on the existing Poland–Germany interconnections.

 

Another project focused on reinforcing the Polish transmission network is the GerPol Power Bridge I project. The project aims to reinforce the network in the western part of the country near the Poland-Germany border. It involves the construction of the 400 kV Krajnik–Baczyna–Plewiska and Mikułowa–Świebodzice lines. The project is scheduled for completion by the end of 2023. 

 

On the same lines, ENTSO-E’s TYNDP 2018 also proposes two projects for the potential development of cross-border capacity on the synchronous profile post 2030. One is the GerPol Power Bridge II, which will increase grid transfer capability along the Poland-Germany border.  The project involves the construction of a new 400 kV Poland–Germany double-circuit interconnector on the Eisenhuttenstadt–Gubin–Zielona Góra–Plewiska route. The second project proposes the construction of the first 220-km-long, HVDC connector between Avedøre (Denmark-East) and Dunowo (Poland).  Both of the aforementioned projects are scheduled for commissioning beyond 2030.

 

In addition to setting up international connections, the grid operator has also developed a detailed national grid expansion plan. Between 2018 and 2027, nearly 3,700 km of 400 kV lines will be built, while a reduction of 1,453 km of 220 kV line (retirement of 1,531 km and new builds of 78 km) has been planned. Moreover, 1,804 km of 400 kV lines and 2,649 km of 220 kV lines will be upgraded during the same period.

 

Table 2: List of key planned domestic projects

 

Project 

Voltage (kV) 

Length (km) 

Scheduled completion 

Żydowo Kierzkowo–Gdańsk Przyjaźń line

400

123

2019

Ostrołęka–Olsztyn Mątki line

400

138

2019

Czarna–Polkowice line

400

24

2019

Żydowo Kierzkowo–Słupsk line

400

61

2020

Grudziądz–Pelplin–Gdańsk Przyjaźń line

400

116

2020

Pątnów–Jasiniec–Grudziądz Węgrowo line

400

176

2020

Glinki–Reclaw line

220

32

2020

Krajnik–Baczyna line

400

70

2021

Chelm–Lublin line

400

70

2022

Mikułowa–Czarna line

400

133

2022

Czarna–Pasikurowice line

400

83

2022

Tucznawa–Tarnów (Skawina) line

400

3.5

2022

Rzeszów–Tucznawa (Skawina) line

400

NA

2022

Mikułowa–Świebodzice line

400

100

2023

Ostrołęka–Stanisławów line

400

106

2023

Baczyna–Plewiska line

400

142

2024

Pasikurowice Dobrzeń–Trębaczew–Joachimów line (reconstruction)

400

NA

2025

Plewiska–Piła Krzewina–Żydowo Kierzkowo–Dunowo line

400

250

2019/2027

Kozienice–Ołtarzew line

400

120

2028

Source: Polskie Sieci Elektroenergetyczne S.A. (PSE SA); ENTSO-E; Global Transmission Research

 

Connection of non-conventional sources to the grid

Recently, wind power in Poland made a comeback as the country announced its long-term objective of developing 8 GW of offshore wind capacity by 2035. At present, Poland's installed wind power capacity, including offshore, is about 6.4 GW.

 

PSE’s latest development plan for 2018-2027 (PRSP) envisages the expansion of the network in the northern part of the National power system (NPS) to prepare the grid to integrate both nuclear and offshore wind capacities.

 

In the first phase, it plans to connect 3.9 GW of nuclear and 2.2 GW of offshore wind capacities. This can be connected through two variants. The first variant assumes that no offshore networks will have to be built for further expansion of wind farms. The second variant assumes simultaneous connection of nuclear and 2.2 GW of offshore wind capacity taking into account the 8 GW target for the long term, which will necessitate the construction of offshore transmission networks. Under this option, it plans a seaport for connection of offshore wind farms at a later stage of development along with possible construction of submarine interconnectors.

 

In the second phase (integrating up to 8 GW of offshore capacity), PSE proposes five projects that need to be completed along with the projects of the second variant. These include a new 500-km-long HVDC line connecting the Baltic Rail and the new DC station to be located between the Warsaw agglomeration and Lodz.

 

Table 3: PSE’s proposed lines to connect offshore wind and nuclear capacity as per PRSP 2018-2027

Projects/Lines

Length (km)

Variant 1 (2.2 GW) (2.2 GW offshore wind and 3.9 GW nuclear capacity)

 

Żarnowiec–Żarnowiec Bis double-circuit line 

10-15

Pątnów–Ostrów double-circuit line

100

Żarnowiec Bis–Jasiniec double-circuit line

200

Żarnowiec Bis–Gdańsk Przyjaźń double-circuit line

60

Płock–Ołtarzew single-circuit line

95

Reconstruction of the Gdańsk Błonia–Olsztyn Mątki line as a double-circuit line

135

Reconstruction of the Grudziądz–Płock line as a double-circuit line

120

Adjustment of high voltage network to increase power transfer capability

850

Variant 2 (2.2 GW offshore wind and 3.9 GW nuclear capacity)

 

Żarnowiec–Żarnowiec Bis double-circuit line 

10-15

Żarnowiec Bis–incision of the Gdańsk Błonia-Grudziądz double-circuit line

110

Żarnowiec Bis–Gdańsk Przyjaźń double-circuit line 

60

Reconstruction of the Gdańsk Błonia–Olsztyn Mątki line as a double-circuit line 

135

Reconstruction of the Grudziądz–Płock line as a double-circuit line 

120

Switching one circuit from 220 kV to 400 kV on the Dunowo–Żydowo–Kierzkowo–Gdańsk Przyjaźń line

180

Switching one circuit from 220 kV to 400 kV on the Olsztyn Mątki–Olsztyn–Ostrołęka–Stanisławów line

250

Variant 3 (8 GW offshore wind and 3.9 GW nuclear capacity)

 

Reconstruction of the Słupsk–Dunowo–Morzyczyn–Krajnik double-circuit line

240

Switching one circuit from 220 kV to 400 kV on the Krajnik-Baczyna route

70

Polkowice–incision of the Baczyna–Plewiska double-circuit line

110

New DC station–Oltarzew double-circuit line

60

Baltic Rail–new DC station (located between Warsaw agglomeration and Lodz) HVDC line

500

Note: DC – direct current; HVDC – high voltage direct current

Source: PSE’s PRSP 2018-2027, Global Transmission Research


Conclusion

Over the past decade, Poland has made significant progress towards changing its energy mix. The country stands at the crossroads of taking important decisions regarding its energy system in light of rapid and fundamental change. On the power generation front, although the replacement of Poland's obsolete coal power fleet is a concern at both the regulatory and political levels, how far the country can actually move away from its coal addiction remains to be seen. In such challenging times, Poland’s TSO will have an ambitious objective to fulfil in view of the country’s ageing asset base, intensifying renewable generation and the call for enhanced regional energy support.