Polskie Sieci Elektroenergetyczne – Value Creation Model

1. Active involvement in shaping market mechanisms in the process of building the European energy market, taking into account the conditions of the domestic electricity market.

2. Development of favourable market conditions to ensure effective and secure operation of the Polish Power System as an element of the European market.

3. Supporting active participation of customers in market mechanisms.

Active involvement in shaping market mechanisms in the process of building the European energy market, including the conditions of the domestic electricity market

Involvement in the process of building the electricity market in Europe, in particular with regard to the creation of:
- Flow-Based Market Coupling for day-ahead and Intraday markets,
- the cross-border balancing market.
Activities towards strengthening the coordination of cross-border exchange in Europe, including the reduction of unscheduled flows though the PPS .

Our input

Implementation of the Single Intraday Coupling mechanism on Polish borders ─ after two years of intensive preparations, on 19 November 2019, the Polish bidding zone joined the Single Intraday Coupling (SIDC) mechanism implemented with the use of the XBID platform. Initially, the SIDC mechanism was deployed on four Polish borders (CZ-PL, DE-PL, LT-PL, PL-SE).
Development of the Concept Note containing key assumptions for the methodology under Article 76 of SO GL in the Core Capacity Calculation Region The Concept Note assumed, among other things, that remedial actions to eliminate constraints from the entire transmission network of the Core region would be optimised in the Core region within the framework of the Regional Coordinated Operational Security Analysis.
In-house indicator Involvement of PSE representatives in the work of European institutions and agencies
- The European Network of Transmission System Operators for Electricity - (ENTSO-E). ENTSO-E groups together 42 transmission system operators from 35 countries. The Turkish operator TEIAS has been an Observer Member since 2016
  The main components of the working structure of ENTSO-E:
  - System Operations Committee,
  - System Development Committee,
  - Market Committee,
  - Research, Development and Innovation Committee.
    PSE is represented on each of them.
- European Commission. Cooperation in the identification of critical infrastructures in accordance with Council Directive 2008/114/EC of 8 December 2008 on the identification and designation of European critical infrastructures and the assessment of the need to improve their protection.
- European Parliament, ACER. The cooperation concerns the coordination of work in the Council of the European Union.
- More than 100 PSE representatives are engaged in ENTSO-E work.
- In 2019, as part of commercial exchange, a total of 1,153 GWh was exported from the Polish power system, while electricity imports amounted to 11,546 GWh. Compared with the 2018 data, the excess of electricity imports into Poland over electricity exports to the neighbouring countries continued to persist. The difference between the value of imports and exports was 10,393 GWh to the advantage of imports (in 2018 – 5,654 GWh). The largest volumes of electricity were exported as part of parallel exchange with the systems of Germany, the Czech Republic and Slovakia – 558 GWh, whereas the largest quantity of electricity was imported also as part of parallel exchange – 4,735 GWh and over the DC link from Sweden: 3,116 GWh.
- The cross-border exchange capacity offered by PSE in 2019 totalled:
  - parallel exchange (synchronous profile):
    - export: 11,239 GWh,
    - import: 5,081 GWh;
  - non-parallel exchange – LitPol Link interconnection with Lithuania:
    - export: 3,579 GWh,
    - export: 4,380 GWh;
  - non-parallel exchange – SwePol Link interconnection with Sweden:
    - export: 3,428 GWh,
    - import: 4,506 GWh;
  - non-synchronous exchange – interconnection with Ukraine (Zamość-Dobrotvir line); auctions concern only the import direction:
    - import: 1,450 GWh.
The data presented concern offered transmission capacity. They do not take into account the capacity offered through the single intraday coupling process launched on 19 November 2019.

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Development of favourable market conditions to ensure effective and secure operation of the Polish Power System as an element of the European market

Involvement in the process of building the electricity market in Europe, in particular with regard to the creation of:
- the Capacity Market.
Implementation of segments of the Target Model of the European electricity market within the PPS
Effective balancing of the power system, in particular
- failure-free execution of the balancing market processes,
- development of balancing market mechanisms.

Our input

The fourth main auction in the Polish capacity market was held on 6 December 2019 for the delivery year 2024. As a result, 103 capacity agreements were concluded for 1, 2, 5, 7, 15 and 17 delivery periods.

Delivery year	Auction closing price, (in PLN/kW/year)	Number of capacity agreements concluded	Capacity obligation volume resulting from capacity agreements concluded, (in MW)	Auction closing round
2024	259.87	103	8,671.154	5.

Tab. Summary of the main auction conducted in 2019

As a result of additional auctions in the Polish capacity market conducted in 2020, a total of 54 capacity agreements were concluded for the individual quarters of the delivery year 2021.

Quarter of 2021	Auction closing price, (in PLN/kW/year)	Number of capacity agreements concluded	Capacity obligation volume resulting from capacity agreements concluded, (in MW)	Auction closing round
I	286.01	25	880.931	1.
II	286.01	7	303.260	1.
III	286.01	5	156.010	1.
IV	286.01	17	616.760	1.

Tab. Summary of additional auctions conducted in 2020

Number of borders covered by the market mechanism consistent with the European Target Model – four borders:
- Poland-Sweden,
- Poland-Lithuania,
- Poland-Germany,
- Poland-Czech Republic.

Number of fall-back procedures used in the balancing market – 0 (zero).

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Supporting active participation of consumers in market mechanisms

Developing mechanisms for customers' active participation in the PPS balancing.
Developing mechanisms for customers' active participation in the electricity market.
Supporting various forms of market operation of customers such as prosumers, aggregators, energy clusters

Our input

In order to ensure the current operational security of the power system, in 2019 our company entered into 48 demand-side response service (DSR) contracts including:

Guaranteed Programme (payment for readiness and utilisation):
- 6 contracts in the winter package for the period from 1 January 2019 to 31 March 2019 with a guaranteed capacity volume of 510 to 535 MW in individual hours,
- 12 contracts in the summer package for the period from 1 April 2019 to 30 June 2019 with a guaranteed capacity volume of 372.5 to 558 MW in individual hours (with the option to obtain a maximum of 633 MW by shifting flexible products),
- 9 contracts (including 5 for the entire country and 4 in defined areas) in the summer package for the period from 1 July 2019 to 30 September 2019 with a guaranteed capacity volume of 593 to 715.4 MW in individual hours,
- 7 contracts (including 2 for the entire country and 5 in defined areas) in the winter package for the period from 1 October 2019 to 21 December 2019 with a guaranteed capacity volume of 442.8 MW in individual hours.
Current Programme (payment for utilisation):
- 5 contracts for the period from 1 January 2019 to 30 June 2019;
- 4 contracts for the period from 1 July 2019 to 31 December 2019.
The Simplified Current Programme (payment for performance) for the period from 1 April 2019 to 31 December 2019 – 5 contracts.

Expansion of infrastructure necessary for the operation of the company and the PPS through investments

Transmission infrastructure development.
New build and upgrade projects.
Ensuring the continuity electricity transmission.
IT investments.
Expenditure on improvement of contractors' work safety, of which:
- supervision of contractors,
- preparation of project implementation procedures,
- contractor training in HSEQ ,
- social communication activities.

Our input

Historical net electricity demand:

Forecast of net electricity demand in Poland for 2020-2040 (in TWh):

Forecast of net electricity demand in Poland for 2020-2040 (in TWh)
	2025	2030	2035	2040
Base load	168.8	177.5	185.0	193.1
Electric vehicles and heat pumps	1.5	3.5	6.9	11.1
Total net electricity demand	170.1	181.1	191.9	204.2

8.4 bn – PSE’s planned capital expenditure for 2020-2024

PLANNED EXPENDITURE BY INVESTMENT GROUP /PLN ‘000s/*
GROUP	NAME OF THE GROUP	2021	2022	2023	2024	2020-2024
I	ICT	181,418	120,798	75,653	48,375	559,229
II	Construction, expansion and upgrade of substations and power lines	1,130,983	1,545,806	1,309,134	1,936,889	6,925,246
III	List of investment proposals for conditional or later implementation	-	-	-	-	0
IV	Buildings and structures	107,981	166,830	164,359	153,399	607,541
V	Purchase of finished capital goods	9,628	2,977	765	246	55,535
VI	Purchase of grid assets and clarification of the legal status of properties	90	90	90	90	450
TOTAL Groups I – VI		1,430,100	1,836,500	1,550,000	2,139,000	8,148,000
VII	Provision	50,000	50,000	50,000	50,000	250,000
TOTAL		1,480,100	1,886,500	1,600,000	2,189,000	8,398,000

* values calculated taking into account rounded amounts in PLN

162 network infrastructure investment projects implemented with respect for the natural environment*

* as at 15 June 2020
PLN 1,513.3 m – capital expenditure incurred by PSE on the construction, expansion and upgrade of electrical substations and power lines*

* Total value of expenditure incurred in 2019.
In-house indicator PLN 66,539 k – expenditure incurred on IT security

* in 2019
2,662 information meetings with residents for projects undertaken in 2016 – 2019, including 746 meetings in 2019,

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Transmission network maintenance and repair

Maintenance and repair of the transmission network.
Expenditure on improvement of contractors' health and safety, including:
- supervision of contractors,
- contractor training in HSEQ,
- social communication activities (activities pursued by PSE and by subcontractors).

Our input

PLN 109,184.5 k ─ maintenance and repair expenditure incurred in 2019, of which the amount spent on maintenance of grid assets was PLN 87,974.8 k, and that spent on repair projects was PLN 21,209.7 k.

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Social communication around projects in progress

Social communication activities (activities pursued by PSE and by subcontractors).

Our input

We analyse the impact of our investment projects on the local community in 100 percent of the cases.

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1. Management of human resources, creation of a responsible and friendly workplace.

2. Competence building (ensuring employee development opportunities, strengthening innovation).

3. Active cooperation with the company's environment.

4. Social education.

Management of human resources, creation of a responsible and friendly workplace

Ensuring an attractive employee remuneration system and non-pay benefits as well as care of social security.
Care of safety at work.
Internal organisation culture based on specific values: reliability, credibility, responsibility and respect.

Our input

Attractive social benefit package.
100 percent of employees covered by the pay incentive system.
Broad access to diverse forms of professional development.

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Competence building (ensuring employee development opportunities, strengthening innovation)

Training and development of employees in all functional areas of the organisation, relating to both technical issues and soft skills.
A team of internal trainers who train employees in key positions.
Running internship programmes, subsidising employees’ studies, etc.

Our input

Implementation of e-DEK ─ an educational and development platform for employees, which is also an e-learning management tool.
51 internal trainers delivering training in 2019.

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Active cooperation with the company's environment

Improving the new investment project implementation model.
Knowledge and unique corporate know-how sharing at meetings with contractors.
Cooperation with local and central administration at the project preparation and implementation stages.
Cooperation with industry organisations.

Our input

Improvement of the investment project implementation model. Its coordination is the responsibility of the Central Investment Unit (Centralna Jednostka Inwestycyjna, CJI) operating within the PSE's internal organisation structure.

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Social education

Implementation of educational and social projects.
Publication of the Elektroenergetyka magazine.

Our input

Information meetings with local communities were held in 100 percent of communes situated along the routes of planned line projects.
Launch and execution of the national grant programme “EmPower Your Environment” to be implemented in the years to come. Link to programme website page: wzmocnijotoczenie.pl.
Implementation of local social projects, in particular the “Ping-pong Dreams with PSE” programme with the Polish Table Tennis Association.
Publication of the Elektroenergetyka magazine.

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1. Active involvement in shaping market mechanisms in the process of building the European energy market, including the conditions of the domestic electricity market.

2. Development of favourable market conditions to ensure effective and secure operation of the Polish Power System as an element of the European market.

3. Supporting active participation of customers in market mechanisms.

Active involvement in shaping market mechanisms in the process of building the European energy market, including the conditions of the domestic electricity market.

Performance of statutory obligations of PSE as an independent national transmission system operator.
Maintaining the reliability of the power system.
Increasing electricity import and export opportunities.

Outputs of our activities

Electricity supply continuity index (defines the certainty of supply to all customers connected to the transmission network) ─ 99.99 percent.
Failure-free operation of the Balancing Market – 100 percent.
129 participants of the Balancing Market in 2019.
The cross-border exchange capacity offered by PSE in 2019 totalled:
- parallel exchange (synchronous profile):
  - export: 11,239 GWh,
  - import: 5,081 GWh;
- non-parallel exchange – LitPol Link interconnection with Lithuania:
  - export: 3,579 GWh,
  - import: 4,380 GWh;
- non-parallel exchange – SwePol Link interconnection with Sweden:
  - export: 3,428 GWh,
  - import: 4,506 GWh;
- non-synchronous exchange – interconnection with Ukraine (Zamość-Dobrotvir line); auctions concern only the import direction:
  - import: 1,450 GWh.
The data presented concern offered transmission capacity. They do not take into account the capacity offered through the single intraday coupling process launched on 19 November 2019.
Volume of cross-border exchange (in the import and export direction) in all market segments (GWh)* for 2019:
- parallel exchange (synchronous profile):
  - export: 558 GWh,
  - import: 4,735 GWh;
- non-parallel exchange – LitPol Link interconnection with Lithuania:
  - export: 405 GWh,
  - import: 2,296 GWh;
- non-parallel exchange – SwePol Link interconnection with Sweden:
  - export: 190 GWh,
  - import: 3,116 GWh;
- non-parallel exchange – interconnection with Ukraine (Zamość-Dobrotvir line); commercial exchange concerns only the import direction:
  - import: 1,399 GWh.

*The indicators have been calculated as a sum of cross-border commercial exchange based on agreed nominations from the annual, monthly, daily and intraday market timeframes. The above data do not include remedial actions agreed as part of inter-TSO exchange, mandatory compensation returns and exchange over 110 kV lines.

Development of favourable market conditions to ensure effective and secure operation of the Polish Power System as an element of the European market

Performance of statutory obligations of PSE as an independent national transmission system operator.
Maintaining the reliability of the power system.
Increasing electricity import and export opportunities.

Outputs of our activities

Electricity supply continuity index (defines the certainty of supply to all customers connected to the transmission network) ─ 99.99 percent.
Failure-free operation of the Balancing Market – 100 percent.
129 participants of the Balancing Market in 2019.
The cross-border exchange capacity offered by PSE in 2019 totalled:
- parallel exchange (synchronous profile):
  - export: 11,239 GWh,
  - import: 5,081 GWh;
- non-parallel exchange – LitPol Link interconnection with Lithuania:
  - export: 3,579 GWh,
  - import: 4,380 GWh;
- non-parallel exchange – SwePol Link interconnection with Sweden:
  - export: 3,428 GWh,
  - import: 4,506 GWh;
- non-synchronous exchange – interconnection with Ukraine (Zamość-Dobrotvir line); auctions concern only the import direction:
  - import: 1,450 GWh.
The data presented concern offered transmission capacity. They do not take into account the capacity offered through the single intraday coupling process launched on 19 November 2019.
Volume of cross-border exchange (in the import and export direction) in all market segments (GWh)* for 2019:
- parallel exchange (synchronous profile):
  - export: 558 GWh,
  - import: 4,735 GWh;
- non-parallel exchange – LitPol Link interconnection with Lithuania:
  - export: 405 GWh,
  - import: 2,296 GWh;
- non-parallel exchange – SwePol Link interconnection with Sweden:
  - export: 190 GWh,
  - import: 3,116 GWh;
- non-parallel exchange – interconnection with Ukraine (Zamość-Dobrotvir line); commercial exchange concerns only the import direction:
  - import: 1,399 GWh.

*The indicators have been calculated as a sum of cross-border commercial exchange based on agreed nominations from the annual, monthly, daily and intraday market timeframes. The above data do not include remedial actions agreed as part of inter-TSO exchange, mandatory compensation returns and exchange over 110 kV lines.

Supporting active participation of consumers in market mechanisms

Reducing the risk of inability to balance capacity and energy in the PPS.
Acquisition of a tool designed to increase the security of electricity supply.
Increasing the operational flexibility of the PPS.

Outputs of our activities

In order to ensure the current operational security of the power system, in 2019 our company entered into 48 demand-side response service (DSR) contracts including:

Guaranteed Programme (payment for readiness and utilisation):
- 6 contracts in the winter package for the period from 1 January 2019 to 31 March 2019 with a guaranteed capacity volume of 510 to 535 MW in individual hours,
- 12 contracts in the summer package for the period from 1 April 2019 to 30 June 2019 with a guaranteed capacity volume of 372.5 to 558 MW in individual hours (with the option to obtain a maximum of 633 MW by shifting flexible products),
- 9 contracts (including 5 for the entire country and 4 in defined areas) in the summer package for the period from 1 July 2019 to 30 September 2019 with a guaranteed capacity volume of 593 to 715.4 MW in individual hours,
- 7 contracts (including 2 for the entire country and 5 in defined areas) in the winter package for the period from 1 October 2019 to 21 December 2019 with a guaranteed capacity volume of 442.8 MW in individual hours.
Current Programme (payment for utilisation):
- 5 contracts for the period from 1 January 2019 to 30 June 2019;
- 4 contracts for the period from 1 July 2019 to 31 December 2019.
The Simplified Current Programme (payment for performance) for the period from 1 April 2019 to 31 December 2019 – 5 contracts.

1. Expansion of infrastructure necessary for the operation of the company and the PPS through investments.

2. Transmission network maintenance and repair.

3. Social communication around projects in progress.

Expansion of infrastructure necessary for the operation of the company and the PPS through investments

Replacement and development of grid assets.
Management of the reliability and continuity of electricity transmission.
Ensuring the operational cybersecurity of the PPS systems.
Improving the PPS operation security through the implementation of PSE investment projects.

Outputs of our activities

ENS – 601.26 MWh, AIT – 111.50 (minutes). Such low 2019 ratios testify to a high level of operational reliability of the transmission system and the certainty of supply to consumers connected to our network.
The condition of the transmission network is confirmed by a high collective transmission equipment availability factor (DYSU) which reached 99.77 percent in 2019.
1.38 percent – transmission losses (the lowest ever) as percentage of total energy fed into the system.
• Average age of equipment: 22 years for EHV , substations, 42 years for EHV lines.
PLN 1.95 bn – total value of contracts awarded to contractors in 2019.
Main groups of PSE’s contractors:
- contractors for new build, upgrade and repair projects performing work on grid assets,
- equipment and hardware suppliers and service providers.

Transmission network maintenance and repair

Maintaining grid assets in due state of repair.
Improving the reliability and operational security of the transmission network through its ongoing maintenance and repair.
Building and maintaining reputation for PSE's care of network operation security.

Outputs of our activities

The availability index for transmission facilities ( DYSU ) in 2019 was 99.77 percent.

Social communication around projects in progress

Winning social acceptance.
Timely completion of projects.
Increased awareness and sense of security of local communities with regard to projects in progress.
Optimisation of line routes for their acceptance by local communities.

Outputs of our activities

2,662 information meetings with residents for projects undertaken in 2016 – 2019, including 746 meetings in 2019.
Increasing the awareness of the significance of power infrastructure in investment areas. Social communication is performed on the basis of a participation model engaging all interested parties in the project implementation process.
Public awareness of the current status of the energy sector and energy projects is not a frequent subject-matter of sociological surveys in Poland, but available data and real-life experience acquired in the course of projects suggest that energy awareness is low among the general public in Poland.

1. Management of human resources, creation of a responsible and friendly workplace.

2. Competence building (ensuring employee development opportunities, strengthening innovation)

3. Active cooperation with the company's environment.

4. Social education.

Management of human resources, creation of a responsible and friendly workplace

Increased employee satisfaction and motivation.
Promoting work-life balance.
Safe workplace – negligible number of accidents at work.

Outputs of our activities

As an employer, PSE takes a number of measures aimed to build the work-life balance approach among employees, including special events for employee’s children under the so-called Kolorowy KDM initiative, financial support for housing purposes, medical care, subsidising leisure for employees and their children, subsidising sports, recreational, cultural and educational activities.
The average length of service of employees carrying out maintenance work in substation maintenance teams (ZES) is 24 years.
Full implementation, knowledge and application by employees of work safety procedures for EHV electrical substations.

Competence building (ensuring employee development opportunities, strengthening innovation)

Improving the competence of employees.
Improving employee motivation, competence retention in the organisation.
Partnering with universities.

Outputs of our activities

0.95 percent – percentage of employees with the doctor's degree.
84 percent – percentage of employees with higher education.
57.57 percent training budget performance in 2019.
Electricity supply continuity index (defines the certainty of supply to all customers connected to the transmission network) – 99.99 percent.
47 training sessions on the Polish Power System Simulator, including:
- 34 training sessions and 2 examination sessions with the participation of 338 PSE O&M employees. The sessions were conducted by 4 trainers from the National Power Dispatch Centre with support from PSE Innowacje trainers.
- 11 sessions with the participation of the Distribution System Operators’ O&M personnel, in which 127 DSO and TSO Dispatchers participated. The training sessions were conducted by 10 TSO trainers and 4 DSO trainers with support from PSE Innowacje trainers.

Active cooperation with the company's environment

Increased effectiveness of mutual cooperation with the environment, including electricity market participants.
Maintaining partner relations with the environment.
Increased effectiveness of the implementation of industry initiatives.

Outputs of our activities

37 industry conferences, debates, seminars and congresses with the participation of PSE's experts.
69 PSE experts involved in conferences, debates, seminars, forums and industry congresses (increase by 21 percent YoY).
51 reports (including PPS operation data and BM actions) generated automatically on the PSE website.

Social education

Building understanding and social acceptance for PSE as an independent national power system operator.

Outputs of our activities

Social Communication Programmes are implemented in 100 percent of communes situated in PSE's investment areas.
Implementation of 5 local social projects, in particular the “Ping-pong Dreams with PSE” programme with the Polish Table Tennis Association. Under the programme, the company provided necessary sport equipment to more than 1,100 young players in 20 communes.
Launch and execution of the national grant programme “EmPower Your Environment” wzmocnijotoczenie.pl, to be implemented in the years to come.