Annual report 2017

We want to shape a responsible energy industry of tomorrow in our country.

Energy security

In accordance with its Statutes, PGE performs tasks related to ensuring the country's energy security. Providing energy security has multiple dimensions and is relevant to both on-going operations and long-term investment plans. Generation units from the Conventional Generation and the Renewables segments are deployed in ensuring energy security. The Distribution segment also plays an important role.

Energy system foundations

The deployment of generation units in the National Power System depends on energy demand, which fluctuates around the clock and changes seasonally. The Transmission System Operator issues work or stand-by orders to generation units in accordance with the rule that units with the lowest variable cost are deployed first. As demand grows, the operator engages other (increasingly expensive) generation units, which makes the wholesale energy price go up. PGE Group's portfolio includes competitive generation units based on lignite, which thanks to a cost advantage and access to their own fuel are engaged by the operator also during off-peak hours, which in practice means around the clock, all week, which has an impact on these generation assets' production volumes and economies of scale. This is why high availability of PGE's generation assets has a direct impact on energy security and competitive energy pricing for the Polish economy.

Regulatory system services

PGE Group's generating fleet is distributed throughout the country, which is why we are an important partner for the Transmission System Operator. The operator's role is to balance the system, i.e. to match demand for electricity with electricity supply. PGE Group provides the following services to the Transmission System Operator:

  1. Operational Capacity Reserve, i.e. generation capacities of active units that constitute a surplus of capacities over contracted volumes (if needed, the operator may increase these units' workload).
  2. Intervention Cold Reserve, i.e. maintenance of generation units in readiness to start up at the operator's request in order to balance capacities on an emergency basis.
  3. Forced operation, i.e. use of cogeneration units to ensure the quality of energy supply in response to system limitations (of a local nature).
  4. Use of pumped-storage plants to ensure equilibrium of capacity balance and the quality parameters of energy. Pumped-storage plants are activated at the operator's request and depending on the needs they can either generate or receive energy.
  5. Demand management (DSR) – if a shortage or lack of reserves takes place in the system, the operator may try to reduce demand, which consists of voluntary limiting energy intake by energy-intensive customers (e.g. lignite mines).

In 2017, PGE Group's revenue from Regulatory System Services reached PLN 551 million, up by 7% from 2016.

Investment plans and capacity market

PGE Group is also involved in long-term projects intended to re-build and gradually replace capacities in the system. Growing production from renewable sources means that the profitability of an investment in generation assets may not be based solely on the volume of energy produced but also requires a support system. In 2021, a capacity market will begin operating in Poland, and PGE plans to participate in it.

Reliable distribution

Delivering electricity to customers is no less important than producing it. As Distribution System Operator, we are responsible for the reliability of energy supplies in the eastern and central parts of the country. We deliver energy to end customers over high-, medium- and low-voltage grids. Ensuring energy security means, above all, continuously maintaining the distribution network in proper shape, conducting essential modernisations and immediately removing failures caused by forces of nature. We want interruptions in energy supply to be as short and infrequent as possible. The quality of distribution services is measured using generally accepted indicators: SAIFI and SAIFI:

SAIDI – System Average Interruption Duration Index – measures the average system interruption duration in minutes per customer per year.  

SAIFI – System Average Interruption Frequency Index – measures the average frequency (number) of interruptions, expressed as the number of customers exposed to the effects of all interruptions in a given year divided by the total number of customers.

Our strategic target for 2020 is a 56% reduction in SAIDI and SAIFI, compared to 2015, and a 40% reduction in connection time. The achievement of quality targets is supported by development of monitoring and intelligent metering systems as well as automation.

2017 was an incomparably more difficult year in terms of weather conditions than the previous year. The deterioration in SAIFI and SAIDI results from an increase in unplanned interruptions, which were related to a more frequent than usually occurrence of adverse weather conditions such as storms and high winds. The President of the Energy Regulatory Office requires distribution system operators to systematically improve quality indicators, tying this to the level of regulated revenue. The tariff process includes the option to adjust network operators' remuneration due to objective difficulties caused by weather conditions.


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