Business strategy

The power sector is awaiting a deep transformation. This is influenced by the increasing role of consumers, new energy generation technologies and their increased share in meeting domestic demand. Market and regulatory changes are taking place.

Actions in the field of climate neutrality result in an increased demand for green energy. Challenges are emerging in the form of the need to ensure balancing of the system with a significant share of distributed generation.

All these issues are the cornerstone of PSE Strategy for 2020-2030.

Business strategy

Summary of the implementation of the Strategy for 2017-2019

Our strategy for 2017-2019 included 62 initiatives broken down into 24 specific objectives. The implementation of each initiative was monitored quarterly. As many as 51 initiatives were completed in their existing status, in line with the strategy application timeframe, and set to be performed and developed within the framework of PSE’s operating activities. The remaining 11 initiatives, owing to their priority and importance, will be implemented under PSE’s new strategy for 2020-2030.

Fending off external threats
1. Management of the risk of loss of ability to control/manage the operation of the PPS, related to cyber-attacks against IT/OT systems of the transmission system operator and distribution system operators, generators, traders, exchanges or industrial consumers.
2. Management of the risk of unavailability of infrastructure by developing cooperation with government administration in order to ensure joint and several responsibility for the physical security of the Company's facilities and for ensuring adequate measures to protect IT and technical resources, and protection from hostile actions.
Key initiatives executed under the strategy:
PSE CG Cybersecurity Programme Educational initiatives, events and actions promoting the security of critical power infrastructure
Representing interests of the national electricity market
1. Reducing tariff costs by decreasing unscheduled flows, achieved through coordination of the capacity calculation process, including the management of phase shifter settings and costly remedial actions such as redispatching, covering all PPS borders with the DA and ID Flow-Based Market Coupling mechanism.
2. Management of the regulatory risk arising from the provisions of the “Clean Energy for All Europeans” package.
Key initiatives executed under the strategy:
Development of the methodology for remedial actions related to capacity allocation and congestion management (CACM Article 35) and the methodology of cost sharing related to those actions (CACM Article 74) Development of the Concept Note containing key assumptions for the methodology under Article 76 of SO GL in the Core CCR Implementation of the Single Intraday Coupling mechanism on Polish borders Cooperation with government administration in the process of implementing the provisions of the Clean Energy Package for All Europeans package
Security for future generations
1. Long-term security of electricity supply. Implementing the capacity market and supporting tools.
2. Pursuing the Strategy for Sustainable Development. Responsibility for the impact of the Company's operations on the national economy, natural environment and society.
Key initiatives executed under the strategy:
Capacity Market
Responsible development
1. Full network model with integrated acquisition of electricity and ancillary services as a basis for efficient electric power markets. Introduction of locational pricing as a mechanism that coordinates the functioning of generating and load resources and improving the quality of investment signals.
2. Avoiding the transfer to future generations of the stranded costs of depreciation of assets that have lost their usefulness due to a change in the operation of the power system.
3. PSE's care of public interests (system data and metering information).
4. Innovations aimed at adjusting the system to a new shape of markets and new technologies (electromobility, multi-agent systems, local balancing zones, IoT, energy storage, distributed generation, and change of the energy mix).
5. Facilities covering electricity demand in periods of insufficient generation at sources (electricity storage facilities or peak sources).
6. Provision of the Polish Power System resources for electricity supply to consumers.
Key initiatives executed under the strategy:
Supporting the government administration in preparing legal arrangements concerning the Electricity Market Information Operator Development of the business process model of the electricity retail market for the purposes of the Central Electricity Market Information System Performing financial and optimisation feasibility analyses of the use of energy storage facilities Performing a feasibility analysis of the use of heuristic algorithms for scheduling outages of network elements in production run of medium-term coordination planning processes
Stable operation of the system
1. Operation continuity – planning, implementing, testing and improving procedures related to the Company's day-to-day operations.
2. Improving, through the continuous improvement process, the transmission infrastructure operation model of the Polish Power System based on Predictive Maintenance (PdM) Techniques.
3. Intervention DSR service.
Key initiatives executed under the strategy:
Approval of the updated Business Continuity Plan and update of the Business Continuity Management Book Development of DSR IP services and contracting reduction capacity Development and rollout of new functionalities of the IP-DSR system
Money spent better
1. Implementing investment projects and improving the New Investment Implementation Model.
2. Improving the balancing market model.
3. Automation of business processes.
Key initiatives executed under the strategy:
Conceptual work in designing new balancing market operation rules
PSE resources
1. Smart PSE.
2. Adaptive capacity of the Company: know-how, structures and internal procedures prepared for quick legislative changes taking place in the energy market, and the technical and organisational requirements of new solutions.
3. Human capital: employee development, competence management, job evaluation, strengthening the organisational culture based on responsibility and professionalism.
4. PPS and energy market data.
5. Finance transformation at PSE as a project aimed to streamline and modify the operation of the finance area at the Company.
6. New Health Safety Environment Quality (HSEQ) management model.
Key initiatives executed under the strategy:
Improvement of the integrated environmental, health and safety management system

Security dimension

External dimension
Economy dimension

External dimension
Security dimension

Future dimension
Economy dimension

Future dimension
Security dimension

Internal dimensionn
Economy dimension

Internal dimension
Security dimension

Future dimension

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PSE CG Cybersecurity Programme

Due to its significant impact on the security of the Polish power system, cybersecurity plays a key role in PSE's business strategy. One of the strategic initiatives defined in PSE’s Strategy are activities involving in particular the management of the risk of loss of ability to manage the operation of the PPS, related to cyberattacks against IT/OT systems of the transmission system operator and distribution system operators, generators, traders, exchanges or industrial consumers.

The actions taken respond to the growing cybersecurity risks. This approach increasingly gains in importance in the light of increasingly extensive use of new technologies and communication methods. Recent years have seen an increase in hazards accompanying new solutions and an intensification of targeted attacks with the use of dedicated tools, especially against critical infrastructure. Phishing attacks are also more common, showing an increasing level of sophistication in response to higher awareness among users. The additional intensification of attacks is also related to the present epidemic situation and increasing digitisation of everyday life, which consequently leads to attempts at taking advantage of new solutions.

As part of the actions taken, we adjust organisational and technical solutions to applicable legal requirements and current ICT security standards as well as industry standards.

By adopting the cybersecurity strategy, we have managed to identify in advance the possible directions of situation development and build a portfolio of measures necessary to manage defined risks. The growing volume cyber threats and specialised attack tools confirmed the accuracy of the assumptions made in the strategy.

ICT security and cyber threat management

In 2017, we developed and have since been implementing the ICT (Information and Communications Technology) Strategy of the PSE Capital Group. The strategy highlights the unavoidable and mutual dependence of cybersecurity of our company, its market partners at home and abroad, and entities of the Capital Group, and subcontractors. It also describes the overall impact of cybersecurity on the PPS operational stability.

The pillar of the strategy is ICT security – business continuity defined as availability and resilience of systems as well as data integrity and confidentiality in IT solutions. The ICT strategy defines the following areas as priorities:

Network Segmentation – in this area, projects are implemented which are aimed to ensure adequate separation of resources with different sensitivity levels; both through actions at infrastructure level and through appropriate design of business projects.
Workstation – covers projects providing secure work tools, allowing performance and functionality to be maintained according to business needs, while ensuring protection from malicious software, and rights and data flow control.
Internet Interface – functional and unified access to the Internet (including a secure Wi-Fi network deployed in 2017 at the company’s head office in Konstancin-Jeziorna) for the company’s employees and guests, and secure remote access adequate to needs.
Detection and response – in order to ensure current ICT security, the dedicated Security Operations Centre (SOC) team performs the monitoring of threats on a 24-hour basis. In the case of incidents involving IT or OT networks, it takes relevant actions and remedial measures. The Computer Emergency Response Team (CERT) forms another line of support. CERT was set up in 2016, and in 2017 it became an accredited member of the Trusted Introducer organisation. It is involved in enhancing employees’ awareness through the publication of threat alerts and warnings, publication of ICT security bulletins and reporting information on incidents. It is also engaged in cooperation with third parties in incident handling coordination and exchange of information on threats with third parties (e.g. CERT NASK, Government Security Centre, cert.gov.pl).

In collaboration with our stakeholders, we continuously carry on activities aimed to ensure common ICT security and harmonisation of the efforts undertaken. We closely cooperate with entities responsible for cybersecurity of the country and the power sector. To be able to enhance the cooperation, build awareness of threats to cybersecurity and an approach to counteracting such threats, we actively participate in numerous conferences, seminars, as well as national and international industry cooperation forums.

In the process of promoting ICT security and tightening cooperation in the power sector, in 2019 we held the Cyber Conference For Energy Sector, with the participation of foreign industry experts.

The key forum for international cooperation is the European Network of Transmission System Operators for Electricity within which PSE's representatives engage in projects aimed at ensuring energy security in Europe, developing new solutions or concepts and principles concerning critical infrastructure in different ENTSO-E working and project groups. Some of them are presented below:

Digital Committee Cyber Security Task Force – a team responsible ENTSO-E’s cybersecurity strategy, headed by the director of PSE’s ICT Department;
Critical System Protection (CSP) – the group deals with the protection of critical infrastructure;
Cyber Security Special Interest Group – the group deals with ICT security issues. Its task is to monitor information on global threats, cooperate under projects where care of security is required, and shape the rules for secure operation of systems and operators.
ENTSO-E’s Electronic Data Interchange (EDI) Working Group – a group that has prepared electronic information standards in the European electricity market.

PSE members also participate in the work of other groups, supporting them with their expertise in the management of the inter-TSO IT network and designing future ones that will be created to address growing needs of operator and market systems. In the course of that work, concepts of new connections for data exchange between transmission system operators are created and the existing connections are developed. Cooperation in the above-mentioned groups significantly contributes to the security and stability of the power systems in Europe. It also helps to improve employee skills and support partners in the process.

Employees of PSE's ICT Department actively participate in the work the International Council on Large Electric Systems (International des Grands Réseaux Électriques, CIGRE). Working groups on ICT security prepare technical brochures which influence the direction of work of other committees responsible for the creation of global standards. As early as the document preparation stage, joint conferences of CIGRE and IEC teams are held, which lead to setting a uniform line of action at an early stage of the document creation process. Owing to those activities, our employees influence the establishment of global standards of ICT security of industrial systems and significantly improve their competence in the area, which translates into easier adjustment of the ICT community to the growing security requirements and increasing immunity to threats.

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Educational initiatives, events and actions promoting the security of critical power infrastructure

PSE actively participates in events organised by public administration, the academic community and international institutions. Our company has taken many initiatives to promote the awareness of people involved in the improvement of the country’s energy security:

In January 2019, on PSE’s initiative, the Council of Ministers adopted the Regulation amending the Regulation on facilities of particular importance for the security and defence of the state and their special protection (Journal of Laws of 2003, No 116, item 1090, as amended). In the new regulation, “load dispatch centres and electrical substations of strategic significance for the national power system” were recognised as Category I facilities of particular importance for the security and defence of the state.
In September 2019, PSE, in coordination with Tauron Polska Energia, hosted the first conference for experts and individuals responsible for ensuring the security of critical power infrastructure. The Security of Power Facilities conference brought together more than 80 representatives of power companies, the Ministry of Energy, the Internal Security Agency, the General Police Headquarters and voivodeship Police headquarters, the General Fifer Service Headquarters, as well as representatives of Security and Crisis Management Departments of voivodeship authorities.
In September 2019, we co-hosted the 3rd SAFE PLACE National Scientific Technical Congress “Anti-terrorist Security of Public Utility Buildings”. The subjects of the congress included the issues of anti-terrorist protection of facilities critical to national security and unprotected buildings, anti-terrorist education, and the issue of public resilience against terrorism. PSE representatives participated in workshops and discussions during expert panels.
In November 2019, PSE hosted the participants of the 7th Congress of Postgraduate Studies for the Police Academy students majoring in Strategic Management of Internal Security of the State. The lectures discussed the issues of counteracting terrorist hazards to facilities of strategic significance for the state. The practical component included operational demonstrations by the National Power Dispatch Centre (PSE), the National Gas Dispatch Division (Gaz-System), and the Liquid Fuel Depot in Emilianów (PERN).
In December 2019, we co-hosted the 7th Congress of Postgraduate Studies for the Police Academy students majoring in Strategic Management of Internal Security of the State. The lectures discussed the roles and tasks of critical infrastructure owners and related legislative changes. The event provided an opportunity for the exchange of views and experience sharing, and to discuss relevant security issues related to facilities of critical importance for the state.

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Development of the methodology for remedial actions related to capacity allocation and congestion management (CACM Article 35) and the methodology of cost sharing related to those actions (CACM Article 74)

According to the CACM Regulation (Commission Regulation (EU) 2015/1222 of 24 July 2015) and the schedule adopted by the Commission, transmission system operators in the Core region were to submit for approval to their national regulatory authorities, at the beginning of 2019, the methodology for remedial actions (Article 25 of the CACM Regulation) and the cost sharing methodology for those actions (Article 74). PSE participated in the development of both methodologies.

Owing to the objective complexity of the problem and a lack of detailed analyses, the methodologies presented were of a general nature and did not prejudge the majority of key aspects of the described processes.

The basic provisions of the methodology for remedial actions, developed by TSOs (Article 35):

cost sharing covers exclusively the cost of eliminating overloads on cross-border relevant network elements (interconnectors and internal elements with PTDF>5 percent),
cost sharing covers exclusively the cost of remedial actions ordered (energy only, without the capacity component),
the implementation is dependent on other methodologies (the capacity calculation methodology, the methodology under CACM Article 74 and SOGL Article 76), and the deployment of IT tools.

The basic provisions of the cost sharing methodology (Article 74):

the cost sharing process requires: the identification of flows by category (loop flows, internal flows, import/export flows, transit flows and PST flows), the mapping of the costs of remedial actions onto other elements (total cost split between specific lines), and calculation of the aggregate cost to be covered by the country (bidding zone) concerned,
the methodology does not prejudge the sequence cost assignment to particular flow categories or details of mapping, decomposition, etc.,
the cost of eliminating overloads on network elements other than cross-border relevant are covered by the element owner,
the cost on uncoordinated remedial actions are covered by initiators of uncoordinated actions,
TSOs have the right to use PTS to reduce loop flows,
the costs generated by non-Core countries are to be identified, but covered by Core operators.

The Core transmission system operators and regional security coordinators (RSCs) needed time to carry out analyses to gain in-depth knowledge on key parameters of the methodologies. For this purpose, national regulatory authorities obtained ACER’s consent to extend the time for evaluation and acceptance of the methodologies from 6 to 12 months, i.e. until 27 March 2020, so as to enable the results of the analyses performed to be also taken into account.

The analyses were planned and performed in the latter part of 2019 and in the beginning of 2020. Core TSOs submitted preliminary analysis results on 20 February 2020, and the final report on 13 March 2020. Owing to divergent interests of the countries, incompleteness of the methodologies, simplified analysis results (due to limitations of the existing tools and algorithms) and the fact that the provisions of the CEP were not taken into account, the national regulatory authorities decided to refer both methodologies to ACER for further processing. As announced, ACER will prepare final versions of both methodologies by the end of 2020. The implementation of both methodologies is envisaged by ACER in approx. 3 years.

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Development of the Concept Note containing key assumptions for the methodology under Article 76 of SO GL in the Core CCR.

In April 2019, the transmission system operators in the Core region prepared and provided to the national regulatory authorities the Draft for common concept note for regional operational security coordination for the Core CCR in accordance with Article 76 of Commission Regulation (EU) 2017/1485 of 2 August 2017 (“Concept Note”). The document sets forth the main assumptions of the methodology for regional operational security coordination in the Core region (Core ROSC). The need to prepare the above methodology arises from Article 76(1) of Commission Regulation (EU) 2017/1485 of 2 August 2017 establishing a guideline on electricity transmission system operation (SOGL), which provides that “by 3 months after the approval of the methodology for coordinating operational security analysis in Article 75(1), all TSOs of each capacity calculation region shall jointly develop a proposal for common provisions for regional operational security coordination”.

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. Other relevant elements of the Concept Note include:

the principle of avoiding the aggravation of the situation on selected (observed) elements outside the region,
the method of determining cross-border impact remedial actions, i.e. remedial actions subject to coordination,
definition of information on remedial actions which has to be exchanged between TSOs and RSCs,
designation of the hours for performing security analyses in intraday processes (00:00, 08:00, 16:00), with the option to add a fourth hour (fixed or on-demand),
determination of the basic rules for the operation of the remedial action optimiser (RAO),
providing preliminary assumptions on the method of activation and rejection of remedial actions and the initial description the fast activation process.

The CSA methodology pursuant to Article 75 of SOGL (CSAM) was approved and published by ACER on 19 June 2019. Owing to significant changes in the methodology, introduced by the Agency, ENTSO-E requested the European Commission to extend the time limit for the development of the Core ROSC methodology until 21 December 2019, and the Commission granted the request.

The purpose of the methodology (along with CSAM under Article 75 of SOGL) is to create a regional process aimed to identify hazards in the transmission network to eliminate them by selecting optimal remedial actions. The methodology concerns the short-term timeframes: day-ahead and intraday.

In order to ensure the identification of the most effective and economically efficient remedial actions, the ROSC methodology in the Core region provided for the use of the remedial action optimiser (RAO). Once approved by TSOs, the optimiser results will provide a basis for cost sharing in accordance of the methodology under Article 74 of CSAM.

The methodology was subject to public consultations and preliminary opinions by regulators. In the course of work, it was supplemented, among other things, with a detailed description of the implementation, including individual implementation stages and deadlines. Finally, in December 2019, the Core ROSC methodology was referred for approval to national regulatory authorities.

Although national regulatory authorities have 6 months to approve the methodology, it is likely to be also referred to ACER, as, for the most part, it regulates the same subject-matter areas as the methodology under Article 35 of CACM, due to which both methodologies should be consistent and approved at the same time. The implementation of the methodologies is envisaged by ACER in approx. 3 years.

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Implementation of the Single Intraday Coupling mechanism on Polish borders

On 19 November 2019, the Polish bidding zone was included in 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).

On 4 February 2020, a temporary solution was launched for the Intraday Market on the PL-SK border, based on the explicit auction mechanism. The solution will be used until Slovakia joins the SIDC mechanism. Covering the PL-SK boarder by the SIDC mechanism will be possible after the mechanism is implemented in the Slovak bidding zone. For this purpose, in the first half of 2020, work started under Local Implementation Project LIP17 covering the SK-CZ, SK-HU and SK-PL borders. The operational rollout of LIP17 is scheduled for the fourth quarter of 2021.

The SIDC mechanism is based on continuous trading and implicit allocation. Market participants perform electricity purchase and sales transactions until 1 hour before the period of its physical delivery, using both bids available in the country and those originating outside the Polish system. The ability to adjust a trading position at a short notice is of particular importance for entities managing portfolios characterised by high variation of demand and generation, e.g. RES. The use of cross-border bids is possible owing to interconnection capacity made available for trading purposes is performed in the background of transactions concluded.

The SIDC launch has opened up new opportunities for national market participants. The mechanism provides access to energy bids and offers from outside the country, which will translate into increased liquidity of the national Intraday Market. From the point of view of energy security, providing access to intraday allocation will ensure better utilisation of cross-border interconnections, in particular when new transmission capabilities emerge after the closure of the Day-Ahead Market or when operating conditions of power systems change in respective countries.

Fig. Volume of commercial exchange in the Polish bidding zone under SIDC

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Cooperation with government administration in the process of implementing the provisions of the Clean Energy Package for All Europeans package

On 4 July 2019, EU legislation included in the Clean Energy Package for All Europeans package entered into force, which directly affect TSOs’ operations, i.e.: Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (hereinafter: Regulation 2019/943) and Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (hereinafter: Directive 2019/944).

The objective of Regulation 2019/943 is to accelerate the completion of the internal electricity market and to adapt market operation rules to changing operating conditions of the power sector. Therefore, PSE has started work and activities to adapt to the new regulations, in particular with regard to the rules for making available cross-zonal capacity and the balancing market operation rules, in parallel with the ongoing advanced process of implementing codes and guidelines adopted under Regulation (EC) No 714/2009 of the European Parliament and of the Council on conditions for access to the network for cross-border exchanges in electricity.

With regard to the new requirement related to the obligation to make available a minimum level of available capacity for cross-zonal trade, as defined in Regulation 2019/943, the Polish State adopted, pursuant to the Regulation, an action plan aimed at gradually achieving the required level of available cross-zonal capacity by 31 December 2025 according to the linear trajectory specified in the plan. PSE has also made parallel efforts to obtain temporary derogation from the obligation to make available cross-zonal capacity in accordance with the requirements of Regulation 2019/943 in order to guarantee that the system remains within prescribed operational security limits. On 30 December 2019, the President of the Energy Regulatory Office decided to grant PSE the requested derogation from the obligation to make available cross-zonal capacity in accordance with the requirements of Regulation 2019/943 for 2020.

In performing those activities, PSE was simultaneously preparing for the implementation of requirements for the operation of the balancing market, set forth in Regulation 2019/943, with the simultaneous process of harmonisation and integration of European balancing markets, as part of implementation of Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing. As part of the above work, PSE also entered into cooperation with the government administration in connection with amendments to national legislation in order to enable the application of Regulation 2019/943 to the extent necessary to implement the new rules of balancing market operation.

In 2019, cooperation with the government administration started on the implementation in national law of new Directive 2019/944, the objective of which is to continue building the single electricity market and to empower consumers and promote their activity, including the development of the flexibility services market.

The development of the flexibility services market is a very broad issue, the preparation and implementation of which requires the involvement of many PSE employees, as well as coordination with third parties such as DSOs, the Ministry of Climate, or the Energy Regulatory Office. The flexibility services market is created by each Member State, but as Directive 2019/944 has been in force for a short time so far, no single line of action has been set in this respect. Work to create the flexibility services market requires the involvement of employees from different fields, ranging from designing a business model for the operation of the market, including settlements, congestions, ensuring the operational security of the entire power system, to legal measures and the definition of technical conditions that will make it possible to implement standards arising from Directive 2019/944 and to establish a legal framework covering the flexibility services market. PSE continuously liaises with government administration bodies, forming a kind of expert body for the power system.

On 4 July 2019, Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk-preparedness in the electricity sector (forming part of the Clean Energy Package for All Europeans package). It sets forth the rules for preventing critical situation and tools ensuring cross-border cooperation, including the obligation of Member States to prepare risk-preparedness plans in the electricity sector. In performing the obligations under the regulation, in particular the obligation to develop methodologies for the identification of regional crises, and then regional crisis scenarios, PSE actively participated in the work of ENTSO-E. Besides, our company started working with the government administration on the coordination of measures relating to the fulfilment of obligations under the regulation.

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Capacity Market

One of the basic obligations of our company as a transmission system operator is to ensure operational security of the power system. The implementation of the capacity obligation make it possible to guarantee generation adequacy in stress events, and it will also support the potential development of renewable energy sources without a negative impact on the security of electricity supply to final consumers.

The capacity market should generate necessary investment incentives supporting the construction of new generating capacity, restoration of withdrawn capacity and upgrades of existing units. It should also make it possible to implement an effective, competition-based mechanism for the coordination of the construction and withdrawals of generating capacity and the development of the demand side response services, while ensuring the optimisation of costs incurred by final consumers.

The Capacity Market Act

The capacity market in Poland was established by the Act of 8 December 2017 consolidated text of 2020, item 247, hereinafter: “the Act”). The Act entered into force on 18 January 2018. According to Article 82, PSE developed the Capacity Market Rules aimed to set forth specific terms and conditions for the cooperation of the operator with other participants of the Capacity Market. In addition, pursuant to Article 55 PSE, PSE keeps the Capacity Market Register (hereinafter: “register”). The register is an electronic platform used to operate the capacity market, to collect, process and exchange commercial, settlement and technical data pertaining to the Capacity Market. It is a medium for communication between the operator and market participants.

Launching further functionalities of the ICT system supporting the Capacity Market operational processes

All processes of the Capacity Market are conducted exclusively in electronic form, with the use of the register. As further processes are implemented, the register is successively expanded with new, necessary functionalities. As part of work on the register, in 2019 PSE was obliged to create functionalities making it possible to report transactions entered into on the secondary market and preliminary auctions within timeframes prescribed by the Act. In addition, our company established functionalities for the submission of declarations as part of monitoring the performance of capacity agreements.

Carrying out further Capacity Market processes, including the main auction for the delivery year 2024 and additional auctions for the delivery year 2021

Our organisation, acting as operator within the meaning of the Act, is responsible for the management of Capacity Market processes. Since the beginning of 2019, a number of processes have been performed which allow capacity agreements to be concluded for delivery periods falling in 2021 and 2024.

The execution of processes withing the Capacity Market in 2019 started with the general certification conducted between 3 January and 8 March. Participation in general certification is obligatory for all existing physical generating units with a gross maximum capacity of not less than 2 MW, and the fulfilment of this obligation is monitored by the President of the Energy Regulatory Office (hereinafter: “President of ERO”). A physical unit that has successfully completed the general certification process is entered in the register. The participation of planned physical generating units, demand side response physical units and planned demand side response units is not obligatory, but it is prerequisite for subsequent participation in main certification.

Under general certification, in 2019 applicants submitted 1,103 applications for entry in the register. 1,092 units were successfully verified and entered in the register, including 985 physical generating units and 107 demand side response units.

Tab. 1. The number and net maximum capacity of units entered in the register as a result of general certification in 2019.

-	Number of units entered in the register	Total net maximum capacity of units entered in the register, MW
Existing generating physical units	900	37,267.446
Planned generating physical units	85	14,587.115
Demand side response physical units	36	413.190
Demand side response physical units	71	2,120.000
Total	1092	54,387.751

The charts below show the structure of physical generating units entered in the register in the course of 2019 general certification, by basic energy source.

Net maximum capacity of existing and planned physical generating units entered in the register

Within 14 days of the end of general certification, PSE submitted to the minister in charge of energy and the President of ERO a detailed report summing up the general certification. In addition, within 28 days of the end of the general certification, our company prepared a proposal for the main auction parameters for the delivery year 2024 and the additional auction parameters for each quarter of 2021, and submitted it to the President of ERO and the minister in charge of energy.

The final parameter values were published in the Regulation of the Minister of Energy of 2 August 2019 on the parameters of main auctions for the delivery year 2024 and the parameters of additional auctions for the delivery year 2021.

Another Capacity Market process was certification for the main auction for the delivery year 2024. Participation in the main certification is not obligatory, but it is necessary to establish capacity market units and to enable them to participate in the auction or in secondary trading for a particular delivery period. As a result of positive verification of applications, PSE issued certificate authorising capacity market units to participate in the above processes. Following the certification, PSE submitted to the minister in charge of energy and the President of ERO a detailed report summing up the main certification.

Another Capacity Market process performed in 2019 was the main auction for the delivery year 2024. A capacity market auction is performed in the form of Dutch auction, with a uniform clearing price for all capacity market units that have won the auction. It consists of a defined number of rounds during which the participants must submit exit bids. Non-submission of an exit bid declaration is treated as acceptance of the starting price for the next round. The Capacity Market units that have won a given auction conclude capacity agreements. The term of the capacity agreement depends on the type of Capacity Market unit and the duration of the capacity obligation offered by it. Existing generating Capacity Market units may offer a capacity obligation for only one delivery period. Refurbishing generating Capacity Market units and demand side response Capacity Market units that will declare to invest and incur unit capital expenditure levels (as specified by regulation) may offer the capacity obligation for not more than 5 delivery periods. On the other hand, new generating Capacity Market units declaring unit capital expenditure levels specified by regulation may offer the capacity obligation for not more than 15 delivery periods. In addition, the term of the capacity agreement may be extended by an additional 2 years for low-emission generating Capacity Market units (“green bonus”).

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. Tab. shows a summary of the main auction conducted.

Tab. 2. Summary of the main auction conducted in 2019.

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

Tab. 3. Number of capacity agreements concluded in the main auction conducted in 2019.

Duration of the capacity obligation in years	Number of agreements concluded in main auction for delivery year 2024
1	71
2	1
5	15
7	12
15	1
17	3
Total capacity agreements concluded	103

In compliance with the time limit under the Act, after the capacity auction, PSE entered in the register and published preliminary results of the auction. Then our company submitted a detailed report summing up the course of the auction to the minister in charge of energy and the President of ERO. The final results of the main auction were published by the President of ERO in the Public Information Bulletin on 30 December 2019.

As a result of the capacity agreements concluded, capacity obligations were contracted for the years 2024-2040.

The chart below presents capacity obligations under capacity agreements concluded as a result of main auctions conducted in 2018-2019.

The Act provides for holding main auctions for successive delivery periods during the period between 1 and 22 December in the fifth year before the delivery period. The next main auction for a delivery period falling in 2025 will be held on 14 December 2020.

At the same time, between 25 November 2019 and 19 February 2020, PSE carried out the first certification for additional auctions for individual quarters of the delivery year 2021. As in certification for the main auction, participation was not obligatory, but it was necessary in order to establish capacity market units and to enable them to participate in additional auctions for individual quarters of the delivery year 2021 or in secondary trading for a particular delivery year. As a result of positive verification of applications, PSE issued certificate authorising capacity market units to participate in the above processes. Following the certification, PSE submitted to the minister in charge of energy and the President of ERO a detailed report summing up the certification for additional auctions.

In 2019, work started within the next Capacity Market process, i.e. the verification of documents submitted as part of the monitoring of capacity agreements. The process was performed by PSE for the first time. Pursuant to the Act, the capacity provider who has concluded a capacity agreement relating to a new or refurbishing generating Capacity Market unit shall be required to demonstrate, no later than 12 months after the announcement of the final results of the main auction, that the Capacity Market unit in its disposal has achieved the Financial Commitment Milestone (hereinafter: “FCM”). The achievement of the FCM is demonstrated by proving that capital expenditure has been incurred in the amount of at least 10 percent of the total investment cost and that investment contracts have been concluded with an aggregate value of at least 20 percent of the total financial expenditure (Article 52 (1) and (2) of the Act). In order to meet these requirements, the capacity providers who concluded capacity agreements as a result of main auctions for the delivery periods 2021, 2022, 2023, submitted statements through the registry confirming the achievement of the FCM.

In 2019, PSE verified FKM statements for 60 capacity market units. The next step in the process of monitoring the performance of capacity agreements will be the delivery by capacity providers of the first reports presenting the current progress of projects (between 1 July and 7 July 2020).

At the beginning of 2020, PSE started another general certification which was conducted between 2 January and 6 March. In the course of certification, the applicants submitted 1,210 applications for entry in the register. 1,188 units were successfully verified and entered in the register, including 1,019 physical generating units and 169 demand side response units.

Tab. 4. The number and net maximum capacity of units entered in the register as a result of general certification in 2020.

-	Number of units entered in the register	Total net maximum capacity of units entered in the register, MW
Existing generating physical units	920	38,551.128
Planned generating physical units	99	12,096.266
Demand side response physical units	60	527.565
Planned demand side response units	109	3,681.000
Total	1188	54,855.959

The charts below show the structure of physical generating units entered in the register in the course of 2020 general certification, by basic energy source.

Net maximum capacities of existing and planned physical generating units entered in the register

Within 14 days of the end of general certification, PSE submitted to the minister in charge of energy and the President of ERO a detailed report summing up the general certification in 2020.

In addition, within 28 days of the end of the general certification, PSE prepared a proposal for the main auction parameters for the delivery year 2025 and the additional auction parameters for each quarter of 2022. The parameter proposal was submitted to the President of ERO and the minister in charge of energy.

On 18 March 2020, PSE conducted the first additional auctions. Four additional auctions for each quarter of the delivery year 2021 were held simultaneously. The rules for conducting additional auctions are identical with the rules for main auctions.

As a result of additional auctions, 54 capacity agreements were concluded for the individual quarters of the delivery year 2021. Tab. 5 shows a summary of the main additional auctions conducted.

Tab. 5. Summary of the additional auctions conducted in 2020.

Quarter of 2021	Auction closing price (PLN/kW/year)	Number of capacity agreements concluded	Capacity obligation volume resulting from capacity agreements (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.

The chart below presents capacity obligations under capacity agreements concluded as in the course of capacity auctions conducted in 2018-2020.

In compliance with the time limit under the Act, after the additional capacity auctions, PSE entered in the register and published preliminary results of the auctions. Then our organisation submitted a detailed report summing up the course of the auction to the minister in charge of energy and the President of ERO. The final results of the additional auctions for delivery quarters of 2021 were published by the President of ERO in the Public Information Bulletin on 9 April 2020.

Immediately after the publication of preliminary results of additional auctions for individual quarters of the delivery year 2021, implementing the provisions of Article 48(1)(1) of the Act, PSE launched the option to report in the register secondary market transactions concerning the delivery year 2021. Each secondary market transaction must be reported to PSE for verification of meeting the requirements specified in Article 48(2) of the Act. The minimum volume of a transferred capacity obligation covered by a single transaction is 0.001 MW, whereas its minimum duration is one hour between 7:00 and 22:00 on working days. Until June 2020, PSE verified and entered in the register a dozen or so transactions as part of secondary trading in the capacity obligation.

Challenges for 2020 and beyond

The coming years will see a number of challenges for PSE in the context of the Capacity Market. These include, inter alia:

continuation of the monitoring of capacity agreements concluded,
management of transactions concluded in the secondary market, including the reallocation of the capacity obligation,
replacement of planned demand side response units,
performing tests of demand side response units,
implementation of mechanisms supporting the participation of foreign capacity in the Capacity Market,
collection of the capacity fee,
integration with metering/billing data acquisition systems,
verification of the performance of the capacity obligation,
implementation of the Capacity Market settlement model.

Supporting the government administration in preparing legal arrangements concerning the Electricity Market Information Operator

PSE actively participates in the work of the Team for the introduction of smart metering in Poland established in October 2019, attached to the Minister of Energy (and currently attached to the Minister of Climate). The work is related to the draft amendment of the Energy Law Act in the legislative pipeline. The objectives defined for the team include the preparation of assumptions for draft regulations setting forth detailed conditions for the operation of the metering system and additional conditions for the functioning of retail energy market processes. From the point of view of PSE – designated in the draft amendment as the party responsible for the establishment of the Electricity Market Information Operator (Operator Informacji Rynku Energii, OIRE) and the implementation of the Central Electricity Market Information System (Centralny System Informacji Rynku Energii, CSIRE) – involvement of the company in the Team’s work aimed to agree a list of functionalities of electricity market processes to be performed through CSIRE.

We expect that by launching CSIRE a number of important processes of the retail electricity market, the participants of which are today in particular entities dealing with the sale and supply of electricity and consumers, will be simplified and streamlined, and process management itself will be standardised and based on uniform solutions.

Development of the business process model of the electricity retail market for the purposes of the Central Electricity Market Information System

In our company, we are continuing a project aimed to build and implement the Central Electricity Market Information System (CSIRE) – a centralised system for the acquisition, collection, processing and provision of electricity market information (including metering data) and to establishment the Energy Market Information Operator (OIRE) within PSE. In accordance with the proposed legislation (amendment of the Energy Law Act), PSE, acting as OIRE, is to be responsible for the management of CSIRE, including in particular the implementation, operation and development of the ICT system. We perform our work respecting and ensuring equal treatment of the interests of all parties interested in using CSIRE. We take into account opinions of the market participants with whom we work in the Team attached to the Minister of Climate.

Implementing the OIRE project, we seek to achieve objectives which are significant from the point of view of electricity market participants in Poland, in particular to ensure the effective and secure information exchange in the retail electricity market in such a manner as to enable individual market players to exercise their statutory rights and obligations in this respect.

Thanks to the implementation of CSIRE, consumers will be able to use the effects of improved management of the seller change process – owing to the involvement of CSIRE in the market process, it will be possible to change the seller much quicker than today (eventually even within just 24 hours). In addition, consumers will obtain access to their metering data supporting informed decision-making about the way of using electricity. Consumers’ rational decisions on electricity purchase will contribute to a better competitiveness in the market and make it possible to adjust electricity consumption to the costs of its supply resulting, among other things, from the variability of electricity generation from renewable sources.

The model of market processes supported by CSIRE and entrusting the management of the system to PSE (OIRE) – a third party independent of electric utilities dealing with electricity trading or distribution – will yield an additional benefit by reducing the risk of unequal treatment of market participants. Uniform rules, ensuring equal access to information for individual types of market participants, will be implemented through standardisation and rules of access to electricity market information processes in CSIRE.

We are continuing work on an optimal information exchange model for CSIRE, which is necessary for the execution of basic processes of electricity supply and consumption by final consumers in the retail market. What will be a significant, positive change for market participants, in particular for trading companies, is the unification of processes and simplification of operations in connection with the functioning of a “one stop shop” in the market for data exchange. The existing “many-to-many” communication model will be replaced with a simpler, transparent “one-to-all” model.

We expect that CSIRE will finally be integrated with the balancing market in the metering data processing area, in particular for settlement purposes, as well as the development network analyses and creation of market signals.

Performing financial and optimisation feasibility analyses of the use of energy storage facilities

In May 2018, the Investment Committee established the Energy Storage Facility Construction project. The objective of the project was to increase the flexibility and operational security of the Polish Power System. In the course of project work, the preferred storage capacity range was defined and potential locations were identified. At the next stage of work, legal analyses of the possibility of PSE owning and operating an energy storage facility were performed. The analyses showed that in the present legal system the TSO may own energy storage facilities only if such facilities operate exclusively for system purposes, i.e. where the storage facility performs functions which are necessary for the correct and secure operation of the power system.

In the event a storage facility performs market functions (price arbitrage by third parties), our company may not be an owner and operator of such facilities. It is legally permissible for such operations to be performed by an SPV subsidiary belonging to the PSE Group, taking into account the rules of unbundling (legal ban on combining electricity transmission or distribution with electricity trading or generation, mainly to prevent the formation of monopolies to the disadvantage of final consumers). In such a case, the operations of the storage facility would have to be profitable to an extent enabling the SPV to be self-sustainable, as it is not possible to include related investment and operating costs in the tariff.

In order to select an optimum business, technological and locational option for the planned energy storage facility, a Feasibility Study for the energy storage facility project was prepared. Owing to the economic results of the Feasibility Study as well as legal circumstances and the regulatory environment, on 20 September 2019 the Investment Committee decided to abandon the project.

Performing a feasibility analysis of the use of heuristic algorithms for scheduling outages of network elements in production run of medium-term coordination planning processes

Changes taking place in the environment and in processed performed by PSE, as well as an increasing risk of inadequacy of existing solutions from the point of view of changes around and within PSE, necessitate the development and implementation in our organisation of an IT support system for coordination planning processes carried out by the TSO.

The development of target support for coordination planning processes, including a system supporting decision-making on outages of network elements and generating sources, led to performing a feasibility analysis of the use of heuristic algorithms for scheduling outages of network elements in production run of medium-term coordination planning processes. Based on the above analysis, a concept of support for the use of the above algorithms was developed, which will make it possible to optimise the cost of covering demand in the power system in the course of creation and approval of a schedule of outages of network elements. Taking additional attributes of outage notifications into account in the scheduling process, such as flexibility (time windows), cost of outage, cost of lack of outage, outage priority, readiness or sequence dependences, allows a greater number of reported needs to be taken into consideration in outage plans.

GRI 103-1

Approval of the updated Business Continuity Plan and update of the Business Continuity Management Book

In our company, we maintain and improve the Business Continuity Management System in compliance with the PN-EN ISO 22301:2012 standard.

As of September 2019, we adopted a modified Business Continuity Management Book at PSE S.A. The procedure, being a formal fulfilment of the PSE’s Business Continuity Policy, mainly identifies those responsible for the different elements of the Business Continuity Management System, emphasises the role of unit managers, and sets standards for training, testing and improvement of the system.

Updated in 2019, the Business Continuity Plan is a guarantee of the continuity of processes necessary to ensure the operation of the Polish Power System and the maintenance of critical infrastructure.

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Development of DSR IP services and contracting reduction capacity

Changes taking place in the electricity sector, including an increase in the share of renewable sources in the generating structure, with the growing consumption of electricity at peak demand hours, result, among others, in the increased risk of a difficult balancing situation in the PPS. This situation requires the deployment of new tools available to the TSO, including the activation of the demand side, i.e. electricity consumers. This is ensured, among other things, by means of reduction of consumers’ demand on instructions from the TSO, i.e. the Demand Side Response (DSR) service.

Between September 2016 and July 2017, we developed and implemented new DSR service, called DSR Intervention Programmes (DSR IP). The new DSR IP service started the activation of the demand side on the electricity market based on new rules adapted to the capabilities of consumers and the needs of the PPS. The work produced outcomes in the form of contracting increased capacity volumes. The agreements for the provision of the DSR service concluded for the period from 1 July 2017 to 30 June 2018 under the Guaranteed Programme covered the aggregate reduction capacity volume of 361 MW in the summer season and 315 MW in the winter season. An additional, non-guaranteed reduction volume was acquired by concluding relevant agreements under the Current Programme. The first agreements for the provision of the DSR service, concluded under new rules, entered into force on 1 July 2017 and applied until the end of June 2018.

In 2018, PSE allotted another tender for the purchase of the DSR service under the Current Programme and the Guaranteed Programme for the period from 1 July 2018 to 30 June 2019. The total acquired guaranteed capacity, which can be reduced on instructions from the TSO was 362.5 to 534.5 MW in the summer season (with an option to obtain 609.5 MW), and between 510 and 535 MW in the winter season. An additional, non-guaranteed reduction volume was acquired by concluding 5 agreements under the Current Programme.

In the first half of 2019, PSE had contracts concluded as a result of tendering procedures held in 2019 for the purchase of the DSR service – Current Programme and the DSR service – Guaranteed Programme.

The Guaranteed Programme (payment for readiness and utilisation) included:

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,
10 contracts in the summer package for the period from 1 April 2019 to 30 June 2019 with a guaranteed capacity volume of 362.5 to 534,5 MW in individual hours (with the option to obtain a maximum of 609,5 MW by shifting flexible products).

The Current Programme (payment for performance) included 5 contracts for the period from 1 January 2019 to 30 June 2019.

In order to acquire an additional potential demand side response capacity for Q2 2019, PSE performed an additional tendering procedure for the purchase of the DSR service: Guaranteed Programme, for the period from 1 January 2019 to 30 June 2019. Our company selected 2 bids under which it obtained an additional 23.5 MW.

In 2018, PSE implemented a new intervention DSR service – the Simplified Current Programme (DSR SCP). The DSR SCP concept is based on solutions developed under the current programme, but its formula is less complex and more accessible for contractors (one method of baseline profile calculation, no penalties for non-performance of service, common technical certification of reduction facilities, and the location parameter – the option to use the service split into zones). On 4 March 2019, PSE awarded another contract for the purchase of DSR SCP services. All correctly submitted bids were accepted. For the period from 1 September 2019 to 31 December 2019, the DSR service was acquired from 5 contractors.

PSE, in coordination with DSOs, introduced to the Instruction of Transmission System Operation and Maintenance (hereinafter: Transmission Network Code) the obligation of power system operators concerning the certification of reduction facilities without an application. In 2019, in accordance with the provisions of the Transmission Network Code, DSOs and the TSO performed the certification (in the basic mode) of consumers subject to constraints in electricity supply and consumption. The process was performed in an optimum way from the point of view of DSOs and the TSO (no complications were recorded in the course of the process). Mass certification in the basic mode facilitated the consumers’ participation in the provision of the DSR service, in particular within the framework of activities pursued by aggregators. In addition, extensive communication contributed to building consumers’ awareness of the possibility of participating in the DSR Programmes offered the TSO.

In February 2019, PSE issued three public contract notices for open procedure for the provision of the DSR service under the respective programmes: the Current Programme and Guaranteed Programmes: GP II (dedicated areas) and GP III (country).

Developing the DSR programmes – towards functionality expansion with a simultaneous improvement of performance – a locational parameter was introduced to enable the activation of the DSR service under the Guaranteed Programme and the Current Programme in a dedicated area defined as a set of electrical substations. In 2019, the above functionality was also introduced to the conditions for service provision under the Simplified Current Programme.

The procedure for the purchase of the DSR service under GP II was divided into 6 packages corresponding to selected areas (Poznań, PAK, Łódź, Lublin-Zamość, Zielona Góra, Kraków), to which available capacity volumes were assigned planned for purchase in the summer and winter packages.

The procedure for the purchase of the DSR service under GP III, covering the country excluding 6 areas defined in GP II was divided into the summer package and winter package. Under GP III, PSE was planning to purchase the following respective reduction volumes: 640 MW for the summer package and 400 MW for the winter package.

The summer packages of Guaranteed Programmes II and III concern the service provision period from 1 July 2019 to 30 September 2019, and the winter packages – from 1 October 2019 to 31 December 2019. The Current Programme concerns the period from 1 July 2019 to 31 December 2019.

On 10 May 2019, PSE awarded a contract for the purchase of the DSR Current Programme service. The DSR Current Programme services was provided from 1 July to 31 December 2019 by 4 contractors.

On 23 March 2019, PSE awarded a contract for the purchase of the DSR Guaranteed Programme II service (i.e. dedicated areas according to the needs of the PPS).. The service was provided between 1 July and 31 December 2019. In the summer season, the aggregate guaranteed capacity was 7.8 MW, whereas in the winter season it was 15.8 MW.

On 31 May 2019, PSE awarded a contract for the purchase of the DSR Guaranteed Programme III service (i.e. the country excluding dedicated consumers in GP II). The service was provided between 1 July and 31 December 2019. In the summer season, the aggregate guaranteed capacity was 588.2 to 707.6 MW, whereas in the winter season it was 427 MW.

GP V Package No 1L (PPS excluding 5 areas from GP IV Areas ) – service provision period from 1 April to 30 September 2020 – expected capacity of 715 MW, contract awarded on 17 December 2019, with 683.7 to 764.5 MW of guaranteed capacity acquired;
GP V Package No 1Z (covering the entire PPS) – service provision period from 1 February to 31 March 2020 and from 1 October to 30 November 2020 – expected capacity of 600 MW, contract awarded on 17 December 2019, with 612 MW of guaranteed capacity acquired;
GP IV covering packages 2L÷6L, i.e. 5 packages corresponding to dedicated areas (Poznań, PAK, Łódź, Lublin-Zamość, Zielona Góra) – service provision period from 1 April to 30 September 2020 – the contract was awarded on 25 October 2019, with 25.5 MW of guaranteed capacity acquired;
CP with the service provision period from 1 January to 31 December 2020. Contracts under the tendering procedure were awarded on 26 September 2019 – the service will be provided by four companies: Enspirion Sp. z o.o., Enel X Polska Sp. z o.o., Tauron Polska Energia S.A. and Lerta Sp. z o.o.;
PBU with the service provision period from 1 January to 31 December 2020. Contracts under the tendering procedure were awarded on 26 September 2019 – the service will be provided by four companies: Enspirion Sp. z o.o., Enel X Polska Sp. z o.o., Tauron Polska Energia S.A. and Lerta Sp. z o.o.

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Development and rollout of new functionalities of the IP-DSR system

Continuous development of the systems supporting the management of the DSR service under the Guaranteed and Current Programme is in progress, aimed to implement new functionalities in the service provision concept. In addition, IT systems were modified for the purposes of launching a new Simplified Current Programme and a new functionality (location parameter). Implementation of changes to the system is performed in stages.

Development of the DSR service

The PSE expert team conducts work on the development of the DSR service by modifying the concept and operating rules of the DSR Intervention Programmes. Changes in the rules of the programmes – both the guaranteed one (with payment for readiness to provide the DSR service and for reduction) and the current programme and the simplified current programme (with payment for reduction) – developed on the basis of existing experience will allow us to maximise the utilisation of the consumers’ reduction capacity. The basic modifications developed in 2019 in the guaranteed and current programmes include the location parameter, i.e. the capability to use the service in defined areas.

Conceptual work in designing new balancing market operation rules

The dynamically changing operating conditions of the power sector, which arise both from new EU regulations on the operation of the electricity and ancillary services market, as well as the growing share of new electricity generation technologies, necessitate the modification of the rules of balancing market operation. The development of renewable energy, energy storage facilities and an active demand side influence the conditions of electricity balancing in the power system. New electricity market resources represent a significant, and as yet untapped potential, for the effective balancing of the PPS. In the power sector transformation period, conventional power plants remain a component of national generation assets, necessary to ensure the security of electricity supply to final consumers, although their share in meeting electricity demand will be increasingly determined by intermittent sources dependent on variable weather conditions, increasing demand for the flexibility of conventional generating sources in the system.

The ability of flexible operation must become a strength of the balancing market participants. Its development and effective management of a dynamic environment are stimulated by the electricity price formation mechanism which will correctly reflect in prices the costs of electricity supply, including the costs of activating conventional sources and providing reserve capacity.

The new Balancing Market Operation Concept developed and presented by PSE to market participants takes into account the change considerations mentioned above and ensures the adjustment of the solutions adopted to the provisions of the Clean Energy Package for All Europeans and Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing (EBGL). The objective of the concept is to fulfil the commitments made by Poland in the process of notification to the European Commission of the implementation of the Capacity Market in Poland. The commitments are stated in Section 16 of the Commission notification decision (No SA. 46100 of 7 February 2018).

The expected benefits of implementation of the changes presented in the Concept result in an increased effectiveness of the Polish power sector through:

acquisition of balancing energy and balancing capacity based on market mechanisms;
integration of the national balancing market with the European platforms for the exchange of balancing energy;
creation of price signals reflecting the balancing situation in the PPS and providing a basis for taking correct (from the point of view of the effectiveness of the whole sector) modernisation decisions.

Improvement of the integrated environmental, health and safety management system

As part of activities related to the maintenance and development of the integrated environmental management system and the occupational health and safety management system, new objectives were developed in 2019 for the years 2019-2021. They involve, in particular, improving HSEQ performance, fire protection and respect for the natural environment (e.g. by reporting observations of the working environment, training and other educational actions), accident prevention, and improving employee skills in pre-medical first aid. Other objectives were related to reducing the negative environmental impact, e.g. by developing and upgrading the network infrastructure with the use of modern technological solutions and reducing the probability of environmental damage arising from hazardous substance leakage. The performance of the objectives was presented to the Management Board of PSE during a review of the operation results of the integrated system. 90 percent of the objectives were achieved (including tasks in progress). In May 2020, the objectives of the integrated system were updated by the company owing to the coronavirus pandemic and restrictions on events.

In 2019, a review was carried out of the Integrated Environmental, Health and Safety Management System Policy, as well as environmental aspects. Measures were implemented to adjust the integrated OHS system to the requirements of PN-ISO 45001 – a newly published international standard released in 2018. The measures included an update of internal documentation and training in the modified requirements for a wide group of employees.