POWER GRID DEVELOPMENT IN POLAND IN THE CONTEXT OF EU CLIMATE AND ENERGY PACKAGE
Krzysztof Żmijewski / Public Advisory Board for National Emission Reduction Programme Maciej M. Sokołowski / Public Advisory Board for National Emission Reduction Programme
1. INTRODUCTION
Power grid is an irreplaceable part of any power system. It interconnects all the elements and enables a system’s primary duty – providing electricity to the national economy. At the beginning of the 21st century nothing indicates that the share of electricity in energy balances could drop, so also the need for grid opera- tion is not going to diminish. This of course does not rule out development of new energy sources1, or research aimed at improving energy efficiency2, storage and transfer3.
The industrial revolution which started at the turn of the 19th and 20th centuries initiated a rapid populari- zation of electric equipment, requiring constant development of power supply systems. Those processes were interconnected with growing demands of societies and economies. In the 21st century further extension of po- wer grids is still a must – although now the extension has somewhat changed its meaning. The key issues are internal and external aspects of grid development – the ideas will be discussed further in this paper.
Another issue discussed by the authors of this study are regulations of the Climate and Energy Package, as well as Polish actions and the situation resulting from that package. Its impact on the investment needs in the Polish grid will be identified, together with development problems, obstacles and concepts for intensification of real actions in this field.
2. DUALISM IN GRID DEVELOPMENT
The internal aspect of a power grid development, defined as an internal (domestic) investment need, primarily consists of actions aimed at proper grid structure management by increasing its density and topology (physical development of transmission and distribution connections), improving existing grid management (in- stallation of modern grid control systems), and upgrading systems for operation monitoring and failure preven- tion (sensors and instruments installed at individual lines and stations). Internal grid development also includes maintenance operations and replacement of depreciated and obsolete power lines.
The internal development aspect results mainly from the national electricity demand, investment needs of individual investors and necessity to assure security of electricity supply to every consumer. This development should be carried out according to the plans created by each Distribution System Operator (DSO) and the Trans- mission System Operator (TSO) according to the regulations of the Act of 10 April 1997 – Energy Law4 (further referred to as the “Energy Law”). In Article 9c, Section 3 of the Energy Law, which defines the general duties
1 E.g. large-scale nuclear fusion power generation.
2 For example by increasing efficiency of individual devices (at both generating and consumption side).
3 E.g. research on high-efficiency, high-capacity batteries.
4 Consolidated text of 2006, Dz.U. Nr 89, poz. 625 as later amended.
Abstract
There are many internal and external aspects affecting power grid development in Poland in the context of the Climate and Energy Package. Internal grid develop- ment aspects are mainly caused by the domestic electri- city demand, investments and the requirement to assure
security of supplies. External aspects of grid development result from international multilateral agreements and decisions made by international organizations. In this pa- per its authors try to explain those issues and share their evaluation of the general grid situation in Poland.
5 See M. Czarnecka, T. Ogłódek, Prawo energetyczne. Komentarz, Warsaw 2009, p. 234.
6 Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community.
Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC.
Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No. 1013/2006 Regulation (EC) No. 443/2009 of the European Parliament and of the Council of 23 April 2009 setting emission performance standards for new passen- ger cars as part of the Community’s integrated approach to reduce CO2 emissions from light-duty vehicles.
Directive 2009/30/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 98/70/EC as regards the specification of petrol, diesel and gas-oil and introducing a mechanism to monitor and reduce greenhouse gas emissions and amending Council Directive 1999/32/EC as regards the specification of fuel used by inland waterway vessels and repealing Directive 93/12/EEC.
Decision No. 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020.
OJ L 140, 5.6.2009.
of the operators5, Item 11 stipulates that a DSO is responsible for planning distribution grid extensions, while applying rules assuring equal rights of all system users and environment protection principles, and taking into account energy efficiency projects, electricity demand management and development of generation capacity connected to a distribution grid. As for the TSO (Article 9c, Section 2, Item 4), the legislator makes it responsible for assuring the long-term ability of the power grid to meet justified needs of electricity transmission in domestic and international trade, including transmission grid development and – wherever applicable – construction of cross-border connections to other power systems.
There are also other significant regulations concerning operation of TSO and DSOs which directly and indirectly affect power grid development. One of these is Article 9c, Sections 2 and 3 on security of electricity supplies by assuring reliable operation of the power grid and appropriate transmission capacity in the trans- mission and distribution power grids, operation and maintenance of the grid and related equipment including interconnections with other grids, in a way which guarantees operational reliability, cooperation with other grid operators and power industry companies aimed at assuring cohesive operation of grids and coordination in their development, as well as reliable and efficient operation of those systems.
Those regulations are interconnected with stipulations of Article 16, Section 1, which state that power industry companies which operate in areas of electricity distribution or transmission shall create development plans for their business area, with focus on meeting current and future electricity demand, taking into account local spatial development plans and municipal development directions defined by a study of conditions and directions of a municipality’s spatial development. According to Article 16, Section 3 a key part of those plans shall be projects of modernization, extension or construction of the grid and possible new electricity sources, including renewables.
It needs to be said here that in real life the requirements presented above are only enforced in a formal respect (e.g. development plan creation), while the material requirements – real modernization or investment actions – are not enforced at all.
In other words the Energy Law only imposes obligations to create development plans, but does not requ- ire them to be executed. There are no sanctions against inactivity in this respect (except for the general regula- tion which commits the Operator to accomplish its duties – Article 56, Section 1, Item 24).
The presented legal environment creates a framework for internal reasons for power grid development. By contrast, the external aspects result from circumstances which are not directly related to the domestic energy situation. The main drivers here are international multilateral agreements and decisions made by international organizations. The authors of this study would like to particularly highlight conditions specific for Europe and decisions made by European Union entities, including regulations which affect the development and situation of the Polish grid and its extension. One such element is certainly the so-called Climate and Energy Package.
3. CLIMATE AND ENERGY PACKAGE
The Climate and Energy Package is a set of official documents6 enacted in 2009 with which the European Union imposed pro-climate and pro-environmental commitments in the form of compulsory quantitative targets
set for the year 2020. They are supposed to be reached jointly by all EU member states. Those targets are: gre- enhouse gas emission reduction, increase of renewable energy sources (further referred to as “RES”) share in the final energy balance, and decrease of energy consumption (the so-called 3 × 20% targets).
Starting in 2013, all efforts of the European Union aimed at greenhouse gas emission reduction in refe- rence to the 1990 level by 20% by 2020 will be divided between the sectors included in the EU ETS7and those which are not parts of the system (non-ETS8):
a) 21% emission reduction in EU ETS sectors in reference to the 2005 level,
b) approximately 10% emission reduction in non-ETS sectors in reference to the 2005 level.
When combined, those actions should result in a total reduction of approximately 20% in reference to the year 1990 and 14% to 2005. The European Commission expects larger reductions in the EU ETS sectors, as it considers appropriate measures to be more cost-effective than in non-ETS sectors9. Further commitments imposed by the European Union on its member states and related to the Climate and Energy Package are: de- creasing energy consumption by 20% compared to the EU forecasts for 202010 achieved by improving energy efficiency, and increasing the RES share to 20% of total EU energy consumption, including growth of the RES share in the transport sector to 10%11.
It needs to be emphasized that only some of those regulations are compulsory.
Regulation Field Compulsory Scope
Directive 2009/28/EC RES YES European
Directive 2009/29/EC ETS YES National
Directive 2009/30/EC FUELS YES National
Directive 2009/31/EC CCS YES National
Regulation 443/2009/EC FUELS YES National
Decision 2009/406/EC non-ETS YES National
Directive 2006/32/EC EFFICIENCY NO -
A significant issue for Poland which results from the stipulation of the Climate and Energy Package is so-cal- led derogation. Derogation is a result of negotiations of the key concepts of the Directive 2009/29/EC of the Euro- pean Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (further referred to as the “EU-ETS Directive”) carried out by the Polish government. As a result Poland received a concession in the area of mandatory purchase of all emission allowances by power plants via the auction system starting in 2013. According to Article 10c of the EU-ETS Directive some member states, among them Poland, may give a transitional free allocation to installations for electricity production in operation by 31 December 2008 or to installations for electricity produc- tion for which the investment process was physically initiated by the same date. Thanks to the derogation awarded to Poland the plants which existed on 31 December 2008 will only have to purchase some of the allowances they need by auctioning. In 2013 it will be 30% of the average emission in the 2005-2007 period – which is a reference level – or based on weighted emission indicators for different fuels. Then, between 2014 and 2019 the pool of free allowances will be gradually decreased, so in 2020 the full auction system is reached12.
7 ETS – Emissions Trading System. Sectors included in the ETS are electricity generation, production of metals, cement, ceramic materials, glass, pulp and paper, coking plants and refineries.
8 E.g. transport, construction industry, services, smaller industrial plants, agriculture, waste management.
9 Report from the Commission to the European Parliament and the Council. Progress towards achieving the Kyoto objectives. Brussels, 12 November 2009. COM(2009)630 final, p. 4-5.
10 The concept to decrease electricity consumption by 20% was raised during the European Council session held on 23-24 March 2006.
The Council has called for the adoption as a matter of urgency of an ambitious and realistic action plan for energy efficiency, bearing in mind the EU energy saving potential of over 20% by 2020. As a result in October 2006 the European Commission presented the “Action Plan for Energy Efficiency:
Realising the Potential”, Communication from the Commission, Brussels, 19.10.2006. COM(2006)545 final.
11 See. M.M. Sokołowski, W stronę polskiej polityki klimatyczno-energetycznej. Polska polityka energetyczna – wczoraj, dzisiaj, jutro, Warsaw 2010, p. 67–69.
12 M.M. Sokołowski, Społeczne wsparcie rządu, czyli głos ekspertów w kwestii redukcji emisji, Nowa Energia 3/2010, s. 11, also ibidem.
The derogation rules require development of a national plan for infrastructure modernization and impro- vement, as well as clean technologies development13. In Polish conditions the role of such a plan will be played by the National Greenhouse Gas Emission Reduction Programme (or more precisely, its part on investments).
Recently, government circles have raised a proposal of changing the plan’s title (for example into a Low-Emis- sion Economy Development Programme).
4. POLISH CONDITIONS AND ACTIONS
The already mentioned targets of emission reduction in the non-ETS sector and increase of RES share in final energy balance are translated into country-specific targets for each EU member state. The only exception is the energy efficiency commitment, which does not set any compulsory target values. For Poland there are three country-specific requirements.
First of all Poland, like any other EU member state – in order to meet European commitments on greenho- use gas emission reduction by 2020 – shall restrict emissions of those gases (in the non-ETS sector) at least by the percentage value determined for this member state in Annex II of the non-ETS Decision14. The target value for Poland is 14% of the 2005 emission.
Secondly, the Polish national general target for the share of renewable sources in final gross energy con- sumption in 2020, according to the stipulations of the Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC, is 15%. When compared to the share of elec- tricity generated by renewable technologies in the final gross energy consumption in Poland in 2005 this means more than a twofold growth (in 2005 the share was 7.2%)15.
Thirdly, the presented derogation can only be applied if a national plan that provides for investments in retrofitting and upgrading of the infrastructure and clean technologies is developed.
Two substantial targets, and the third one of a combined character (formal and substantial) require si- gnificant effort, also in the areas of analyses and planning. In appreciation of the significance and scope of the required work, the Polish government decided to support the actions of the national administration by an independent public organization. This resulted in the foundation of the Public Advisory Board for the National Emission Reduction Programme (Polish: Społeczna Rada ds. Narodowego Programu Redukcji Emisji) in October 2009 (further referred to as the “Board”).
The Board, with almost 170 members, is an expert entity which formally advises the Minister of Economy.
Members of the Board are prominent experts from all branches which have direct or indirect influence on im- plementation of the targets specified by the Climate and Energy Package. They work organized into 17 working groups16, divided according to the tasks related to the issue of greenhouse gas emission reduction17. The mission of the Board is to prepare analytical materials for the National Greenhouse Gas Emission Reduction Programme.
Those materials include:
• The Green Paper – a document which identifies primary obstacles and problems which interfere with greenhouse gas emission reduction in Poland
• The White Paper – a document which proposes solutions and concepts for preparation and implemen- tation of the greenhouse gas emission reduction programme in Poland
13 According to Article 10c, Section 5 c), in relation to Article 10c, Section 1, paragraph two of the EU-ETS Directive application of the derogation depends on submitting to the European Commission a national plan that provides for investments in retrofitting and upgrading of the infrastructure and clean technologies.
14 According to the Article 3, Section 1 of the Decision 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020.
15 Maciej M. Sokołowski, W stronę polskiej polityki…, op. cit., p. 69.
16 Working Group on Legal Regulations, Working Group on Power Technology for Baseload Sources, Working Group on Construction, Working Group on Economy, Working Group on Nuclear Fuel and Safety, Working Group on Climate and Energy Package, Working Group on Science and Education, Working Group on Strategic Communication, Working Group on Civic Society, Working Group on Organization and Management, Working Group on Environmental Footprint, Working Group on Energy Efficiency, Working Group on Renewable Energy Sources, Working Group on Clean Coal Technolo- gies, Working Group on Grids, Working Group on Market and Working Group on Transport.
17 M.M. Sokołowski, Społeczne wsparcie rządu…, op. cit., p. 12.
• Assumptions and rules for the National Greenhouse Gas Emission Reduction Programme – position of the Board which includes the key rules to be used during development of the National Programme (like the subsidiarity principle, market primacy principle)
• Road Maps, or in other words, schedules for actions in various areas.
The Board also participates in the development process of governmental acts (like the draft of the Energy Efficiency Act) by presenting its non-binding opinions, supports the government in evaluation of expert reports (like the McKinsey curve report) and carries out international activity (like foreign study visits of the Board’s Secretary General or organizing the visit of Connie Hedegaard, European Commissioner for Climate Action in Poland). Members of the Board actively participate in numerous seminars, debates and conferences, presenting the position of the Board and discussing issues related to greenhouse gas emission reduction18.
5. GRID INVESTMENTS IN POLAND
The Polish commitment to reduce greenhouse gas emissions, develop the renewable energy sector and create an investment plan have one common element – the power grids. This is so because the grid develop- ment is a condicio sine qua non for meeting all those targets resulting from European legal regulations.
Unlocking or making effective use of the RES potential which exists in Poland will require intensification of actual power grid development. In particular it should focus on constructing a grid of distribution lines al- lowing to connect new generation capacity in eastern and north-eastern areas of Poland. This will additionally allow indentifying “theoretical” investors and separate them from those who really wish to be connected to the system. Optimization of RES usage by effective connection of new sources also increases security of supplies in the country. Despite depreciation of the infrastructure, such sources, which are constructed in much shorter periods than traditional baseload power stations, will allow maintaining reliability of the national power grid in locations where the system is flawed because of its age. In future, however, this unreliability can result with blackouts and outages.
Except for the benefits of introducing RES into the national power grid mentioned above, renewables can also adversely affect that system. The negative impact is mainly an effect of natural energy carriers’ limitations – first of all wind (and to some extent the sun; however, using solar sources will have a rather minimal impact on the Polish system). This results in a necessity to stabilize the grid operation, so the variation of voltages, as well as active and reactive power do not affect operational reliability.
Grid development which enables RES connections will therefore require further development of systems and equipment assuring cooperation of renewable sources and baseload plants within the power system. Ful- filling European commitments in the RES area also helps to meet a specific target of greenhouse gas emission reduction. In this way RES get a unique “double” right to be prioritized in development plans created by the government, DSOs and the TSO.
In this context it is also necessary to mention the need to connect nuclear power plants to the Polish grid.
Sources of this type, due their low-emission character, fit well in the range of power technologies which help to meet the pro-reduction commitments. Actual connection, however, requires construction of appropriately strong transmission lines (e.g. dual-circuit 400 kV lines with a total capacity exceeding 3200 MVA). Those lines will be of strategic importance for the grid development and security of supplies of high-quality electricity. The same comments apply to the necessary construction of the so-called Northern Bus – a transmission line running parallel to the Polish coastline, which will enable construction and connection of off-shore wind farms with a target output of some 5000 MW.
18 K. Żmijewski, M.M. Sokołowski, Efektywnie o energetyce cz. 1, Energia i Budynek, 07(38)/2010, p. 13.
6. GRIDS – PROBLEMS AND OBSTACLES
Experts of the Board have identified problems and obstacles for grid extension and modernization, and presented them in the Green Paper19. According to their findings, Poland has a technically obsolete transmission system, which significantly affects the ability to reduce greenhouse gas emissions, control electricity demand and change the structure of energy sources. This also restricts construction and connection of new power plants, among them zero-emission sources. In most cases, lines and transformers are twenty-thirty years old, therefore new investments in construction of new grid elements and modernization of the existing ones are badly needed.
According to the data collected for the document “Poland 2030”20 estimated power losses are approximately 12-15%, and that additionally affects reliability of the entire system.
Therefore, according to the Board experts, development of the transmission grid in general – and closing transmission line rings around main Polish urbanized areas (a significant condition of their economic develop- ment) as well as grid development in north-eastern Poland in particular – are the key problems. Technical ana- lyses made for the Development Plan Draft created by PSE Operator SA (Polish TSO) revealed that one of the regions which urgently need investments increasing reliability of the national grid is the north-eastern part of Poland. Investigation of the current system’s emergency operations showed that a failure of a 400 kV line in the northern or north-eastern part of the system will cause a blackout in that part of the country, spreading further towards western areas. This results from the poorly developed network of 400 kV connections and insufficient source diversification. This situation is extremely dangerous and requires immediate action21.
Unfortunately, complete findings of the Board show Poland as an island system. Existing cross-border transmission lines are so weak that they do not allow significant flows or exchange. According to the available data their capacity is now approximately 7% of the generation capacity installed in the country, and should be increased to 15% in 2015, 20% in 2020 and 25% in 2030. When analyzing those ambitious targets it needs to be remembered that not only the power industry, but also consumers need development of both Polish and pan- -European grids.
It needs to be pointed out, however, that the capacity available for electricity import by AC lines declared by the TSO is only 100-200 MW. Bearing in mind the maximum possible capacity of the Sweden-Poland cable link, it only gives a total capacity of approx. 700 MW available to support the Polish power grid – only 0.28%
of the generation capacity installed in Poland. Capacity available for import operations in December 2010 (Net Transfer Capacity) was 0 MW, and the Transmission Reliability Margin during recent years was 500-700 MW22.
No steps aimed at creating appropriate legal regulations supporting smart grid and smart metering de- velopment have been taken yet. Implementation of the so-called Third Energy Package, particularly Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC, has not been started.
Experts of the Board also point out that functionality of transmission and distribution grids is being to- tally transformed now. New needs increase usage of the power grids. RES connections, remote measurements, electric cars, smart grids – all those factors accelerate grid technology development processes. Zirconium grids and the option of replacing AC lines (on all voltage levels) with DC links using thyristor converters open new possibilities.
At this time advanced projects involving energy technologies in distribution grids related to development of electric vehicles (micro- and pico-grids) are being carried out. Electric cars will require development of a network of public and individual (private) charging points, powered by a distribution grid.
Additional obstacles for grid development are posed by the absence of a clear strategy for transmission grid investments in the area of:
19 The Green Paper was published in October 2010 and is available at: www.rada-npre.pl/index.php?option=com_docman&task=doc_downlo- ad&gid=38&Itemid=
20 http://www.polska2030.pl/
21 Program rozbudowy Krajowej Sieci Przesyłowej w zakresie połączenia Polska – Litwa, Warszawa 2010, p. 7.
22 http://www.pse-operator.pl/index.php?dzid=51
• Cross-border links
• Internal N-S and E-W lines
• Closing N-E and S-W loops
• Rings around metropolitan areas
• Transmission for new baseload capacity
• Connection of nuclear power plant
• Connection of large wind farms, particularly off-shore sites.
There is also no clear investment strategy for 110 kV distribution grids in the fields of:
• Closing loops
• Connecting distributed sources, including RES
• Transmitting power from new CHP plants and biogas/biomass power plants
Finally, a clear investment strategy for medium (15 kV) and low (230/400 V) voltage networks. Problems here are:
• Supplying power for new investment sites
• Re-electrification of rural areas and small towns
• Delayed connection of distributed sources
• Absence of support mechanisms for household generation23.
To recapitulate: fostering investments in up-to-date grid infrastructure is a key task for decision makers.
The problems with that include permitting procedures for accelerated grid construction (as transmission grid development is a process of many years) and development of bilateral connections in a European transmission grid. Lower requirements for power reserves will also lower emission and cost levels. Unfortunately, we lack solutions for financial support of investments and the legal framework (e.g. right-of-way, using road corridors, access to infrastructure, return on capital as a base for tariff drafting etc.).
7. SOLUTIONS AND CONCEPTS
At this time the Board is at an advanced stage of developing its White Paper. The grid issues are covered in Chapter 2. Scope of investments and Chapter 3. Scope of legislation actions. They are discussed in detail in the following sections: 2.1. Electricity system, 2.1.7. Grids, 2.1.7.1. Cross-border links, 2.1.7.2. Transmission grids, 2.1.7.3. Distribution grids (110 kV), 2.1.7. 4. Distribution grids, 2.1.8. Smart grids, 2.1.8.1. Smart metering, 2.1.8.2. Grid sensoring, 3.2. Act on implementation of strategic investments of key importance for national de- velopment, 3.10. Grid investment legislation, 3.10.1. Public roads act, 3.10.2. Spatial planning and management act, 3.10.3. Fixed property management act, and 3.10. 4. Civil code.
Those parts of the White Paper will be extended with the executive part – the planned Road Map for Grids.
This map will be an extension of previous road maps presented in June 2010.
Based on the findings made during development of the Green Paper it can be stated that the grid develop- ment in Poland will require actions aimed at development and implementation of:
• New tariff creation mechanism based on return from investment
• New mechanism for connecting distributed sources, including RES
• Facilitations in investment process, particularly in the right-of-way area within the energy and road corridor
• Current grid monitoring system with special focus on crisis management (icing in the winter, elonga- tion in the summer); implementing new technologies in grid design (FACTS, multi-conductor cables) is a must
23 So-called prosumers according to terminology proposed by J. Popczyk.
• Improvements of the existing RES support system (green certificates) by the introduction of an in- vestment certificate category (short term) for new investments and optional long term certificates to support operational activity of this proves necessary; in both cases the right to obtain certificates should be time limited and awarded within an auction system24, preferring those operators who require lowest support.
8. CONCLUSIONS
Implementation of the Climate and Energy Package in Poland forces us to investigate the technical infra- structure in a comprehensive manner – while earlier studies had been usually narrow-focused. One of the conc- lusions of the new analysis carried out by the Board is highlighting the key role of power grids in the processes of developing low-emission economy, improving electricity generation and consumption efficiency, and improving security of energy supplies to end customers.
The final success of proposals will be proven by the application of innovative solutions in:
• Technology (smart solutions, sensoring)
• Tariff creation process (return from investments)
• Regulation (mandatory connection to the grid)
• Integration (microgrids, microsources).
These will bring new quality into the process of supplying electricity to customers.
24 As mentioned in the Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC (OJ L 176, 15.7.2003., also Article 16, Section 1, Energy Law).
