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.

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.

PSE’S STRATEGIC OBJECTIVES

  • 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

GRI 103-1 GRI 103-2 GRI 103-3

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.

GRI 103-1 GRI 103-2

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.
GRI 103-1 GRI 103-2

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.
GRI 103-1 GRI 103-2

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”.
GRI 103-1 GRI 103-2

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).
Fig. Volume of commercial exchange in the Polish bidding zone under SIDC
GRI 103-1 GRI 103-3

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).

GRI 103-1

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.
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.

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.

GRI 103-1

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.
GRI 103-1

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.

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.