It was a May full of records. Despite the highest ever volumes of non-market reduction of renewable generation (239 GWh for the month), the share of RES in electricity generation was almost 36%, a record result. Production from photovoltaic farms reached historic maxima. 

(06.06.2024) 

Production from renewable energy sources  

In May 2024. 35.9% (4.7 TWh) of the electricity generated came from renewable sources. This is 5.2 percentage points more than a year ago and 4.6 percentage points more than in April.  

Almost half of the renewable energy generation came from photovoltaic installations - 2.3 TWh. This is 42.5% more year-on-year and 56.9% more than April this year. PV installed capacity increased by around 33% between March 2023 and March 2024 to 17.4 GW. 

The second place in production from RES sources was taken by wind in May with 1.5 TWh, an increase of 40.0% year-on-year. Wind capacity grew by +10% to 9.3 GW in March 2024 compared to March 2023. 

Biomass installations produced 0.6 TWh in March this year, and hydropower produced 0.2 TWh. 

The maximum share of RES in national electricity production was 67% in May (16 May at 10-11 a.m.), while the smallest share was instead 9% (23 May at 20-21 a.m.). 

Meanwhile, the largest share of RES in electricity consumption was 79% (17 May at 10-11am).  

 

In the Polish electricity system, the share of RES in electricity consumption (i.e. the ratio of generation from RES to the sum of production from all sources plus imports and storage) is customarily higher than the share of renewable sources in production. In situations where the sum of power supplied in a given hour is higher than the current demand, it is necessary to charge electricity storage, export or even shut down RES sources. 

In May, the need for such non-market redispatch of generation units by the NPS operator occurred during 13 days. A total of 239.4 GWh of electricity generation was curtailed (of which 224.0 GWh from large photovoltaic installations and 15.4 GWh from wind farms).  

However, curtailments of RES sources occur as a last resort. Before that, the operator makes use of so-called intervention exports, i.e. non-commercial exchanges between operators from neighbouring countries.  In May, the volume of such exports, which occurred during hours of restricted RES operation, amounted to at least 60 GWh.  

Since the beginning of the year, production from RES has been curtailed by 433 GWh, and at least 158 GWh were exported in intervention during restricted hours. This means that 591 GWh, representing 2.7% of potential RES production, did not reach the NPS.

 

The chart shows the cumulative annual values (from the beginning of the year to the last day of the reported month) of non-market redispatch (so-called curtailment) of electricity from wind and solar farms (prosumers have not been affected so far). Curtailment, i.e. forced curtailment of electricity production by the transmission system operator (PSE), has so far only been introduced for balance reasons (i.e. too much electricity production relative to consumption and storage and export capacity), not network reasons. Limiting the operation of sources is aimed at preventing the loss of regulatory capacity of the national electric power system (NPS) and, consequently, the deterioration of safety parameters and network stability.  

It is worth noting that the volumes of RES power cut from the grid would be lower if conventional sources of electricity - coal- and gas-fired power plants and CHPs - were more flexible (i.e. had lower technical minima and could switch off/on more quickly). If more electricity storage facilities were connected to the Polish NPS, and if flexible demand, capable of increasing consumption at low electricity prices (which occur during hours of high RES supply), such as electrolyzers or heating equipment charging heat storage, were used.

 

Production from fossil fuels 

In May 2024, electricity generation from conventional sources relied less on natural gas than in April. Gas-fired power plants produced 0.9 TWh (down 38.2% m/m and 17.3% y/y). Coal generation also fell by 9.3% year-on-year (to 4.4 TWh), while lignite generation increased by 7.5% (to 2.9 TWh). Nevertheless, in the generation mix, coal's share fell by 3.4% year-on-year to 7.2 TWh. Currently, the combined share of hard coal and lignite in electricity generation is 55.6%.  

 

 The graph shows the electricity generation mix in Poland by different technologies using fossil fuels or renewable sources. The primary source of electricity is hard coal and lignite, but the share of natural gas and RES continues to grow. Depending on the season, wind power or photovoltaics provide the most energy among renewable sources. 

 

Emissions, demand and imports 

Emissions from the electricity sector in May 2024 were down 3.1% on May last year to 6.9 million tonnes of CO2, and down 5.5% on the previous month (from 7.3 million tonnes of CO2). May was the month with the lowest emissions this year. 

Electricity demand was 13.0 TWh in May, with a maximum average hourly demand of 21.9 GWh/hour. The balance of imports was small at 0.2 TWh, or 1.5% of demand for the month. 

 

May 2024 - details 

  • The average monthly power demand in May 2024 was 17.5 GW (0.1 GW more than in May a year ago), reaching a maximum of 21.9 GW (minimum - 11.8 GW). 
  • Electricity consumption was 13.0 TWh (1.0% higher than last year), while gross generation was 13.0 TWh (2.8% higher year-on-year). 

 The power demand in the Polish power system varies between 10 GW and 28 GW. The average value illustrates the system situation in a given month. By observing the monthly minima and maxima, it has so far been noticeable that the summer months are characterised by significant power demand variability and high demand peaks around midday. However, these profiles are now changing, due to the dynamic emergence of heat pumps, which increase demand during the winter months, and air conditioners and photovoltaic installations, whose greatest impact can be observed during the summer months. 

 

  • Net electricity imports amounted to 0.2 TWh, or 1.5% of domestic demand. 

 

 In the graph we observe the physical cross-border exchange of electricity, i.e. from which country we import and to which country we export energy in a given period. Addition values indicate that imports were the main direction in a given month and a negative value indicates that energy was mainly exported. Physical exchanges can be forced by system conditions or result from trade flows. The direction of electricity trade is mainly influenced by the price difference in the markets (energy flows from a country with a lower price to a country with a higher price). Cross-border exchanges with Germany, the Czech Republic, Slovakia, Sweden and Lithuania take place within the Single Day-ahead Coupling, as well as inter-operator exchanges. The exchange with Ukraine, which became possible from May 2023 thanks to the ENTSO-E decision, takes place within the framework of unilateral monthly auctions announced by PSE. Previously, the exchange only took place unidirectionally from Ukraine to Poland on the Zamość-Dobrotwór connection. Energy exchange with Sweden and Lithuania takes place via a direct current connection (HVDC). The electricity systems of the other countries are synchronised, hence the exchange takes place using alternating current lines (HVAC) and these are physical (not commercial) flows. 

 

  • Electricity production from RES accounted for 35.9% of the generation mix, a share that increased by 5.2 p.p. compared to last year. 

 

 The graph shows the share of renewable electricity in total production for a given month and year. The share of renewables in consumption may differ minimally from the visible values due to imports and exports. Since 2015, an expansion of wind sources is visible (higher % of RES in autumn and winter), while a dynamic expansion of photovoltaics (higher % of RES in spring and summer) is visible since 2020. 

  • Among renewable sources, 12.1% of electricity was produced by wind farms (1.6 TWh, or 33.5% of RES production), 17.8% was accounted for by photovoltaics (2.3 TWh - 49.4% of RES), 1.3% came from hydropower (0.2 TWh - 3.7% of RES), and 4.8% from biomass (0.6 TWh - 13.4% of RES). 
  • Pumped storage power stations were responsible for the production of 0.1 TWh of electricity. This is 16.2% less than in April (0.12 TWh). 
  • Fossil fuels provided the remaining 64.1% of electricity: hard coal 33.7% (4.4 TWh), lignite 22% (2.9 TWh), natural gas 6.7% (0.9 TWh), and other fossil fuels 1.7% (0.2 TWh). 

 

 In the graph we see the percentage shares of electricity production by source. 

  • Coal prices for power plants (PSCMI1 index) increased by 5.9% during the month to 23.8 PLN/GJ (approx. 513 PLN/t). Coal for heat plants (PSCMI2 index) costs 25.0 PLN/GJ (approx. 615 PLN/t), down 1.9% on the previous month. 
  • The weighted average price of natural gas delivered in May increased by 10.5% compared to April, to PLN 194.9/MWh, 49.1% less than a year ago. 

 

 The chart shows coal, gas prices on Polish and international markets, converted to a common unit (PL/MWh of energy in fuel) for comparability.  
*For coal, the domestic market is represented by the PSCMI1 index and the international market by the ARGUS-McCloskey CIF ARA API 2 index.  
*Natural gas in the domestic market is the weighted average (from POLPX data) delivery price for the month, while the international market for pipeline gas is represented by the TTF exchange index and for LNG by the Henry Hub index. 
For completeness, the chart also shows the price of CO2 emission allowances from the primary market (trading on EEX). 

 

  • Emissions from the electricity sector were estimated at 6.9 million tonnes of CO2, 3.1% less than in May last year and 5.5% less than in April. 

 

 Knowing the structure of electricity generation allows carbon dioxide emissions from electricity generation to be calculated. CO2 emissions are calculated on the basis of reference fuel benchmarks adopted by the Energy Forum and calibrated to the reported emissions of the previous year. 

 

  • A price rebound has been observed on the power exchange. Equalised supply in each hour of the day ahead (in the so-called strip - BASE instrument) was traded 2.6% higher, at an average of 479 PLN/MWh, and in peak hours (PEAK5) 2.4% higher, at 513.4 PLN/MWh. The pricing of supplies on the SPOT market (DAM) increased by 2.9%, to 370.5 PLN/MWh. 

 

 The graph shows a comparison of the weighted average monthly prices on the POLPX. The Commodity Forward Market covers approximately 80% of the energy sales volume on the Polish Power Exchange.  
The two most important instruments relate to the delivery of energy around the clock (BASE) and from 7 a.m. to 10 p.m. (PEAK5). The contracts are concluded with delivery in the future (max. 3 years). The vast majority of transactions on the exchange are for the purchase of energy with delivery in the coming calendar year (n+1). 
On the basis of the contracts concluded in a given month, the volume-weighted average BASE_n+1 and PEAK5_n+1 indexes were calculated. This reflects the long-term situation on the electricity market. 
In contrast, the TGeBase Index relates to the Day-Ahead Market (with next-day delivery) - it reflects the current market situation and is characterised by high volatility. The weighted monthly average is usually lower than the prices in the Forward Market and seasonal dependencies are negligible.

 

  • The weighted average price of CO2 emission allowances (EUAs) on the primary market was EUR 70.8/tCO2, i.e. 11.1% higher than a month earlier. In April, Poland's budget received PLN 1.4 billion as a result of the sale of CO2 emission allowances on the primary market (EEX exchange), and PLN 6.2 billion since the beginning of the year. 
  • The CDS (Clean Dark Spread), an indicator of the margin of coal-fired power plants, amounted to PLN-18.3/MWh in May, representing -3.9% of the weighted average wholesale price of electricity delivered in that month. Over the course of the year, the index has fallen by approximately 128.7 PLN/MWh (it was 110.5 PLN/MWh at the time). According to the current forecast, the CDS in 2024 will average 75.7 PLN/MWh, representing 13.7% of the weighted average wholesale price of electricity delivered. 

 

The graph shows the Clean Dark Spread calculated from: historical contracts (BASE, PEAK, OFFPEAK) weighted by the share of deliveries in a given month (POLPX Commodity Futures Market), spot market contracts (POLPX Day-Ahead Market), coal prices (PSCMI1) and CO2 emission allowance prices (EEX primary market).  
The Clean Dark Spread (coal-fired power plant variable cost spread indicator) is the difference between the electricity price and the estimated variable costs associated with coal-fired power generation (fuel and emission allowances). The Clean Dark Spread is an indicator correlated with the profit of the generator, producing electricity from coal (in reality, it is still necessary to take into account transport costs, operating costs, incurred and planned investment costs, etc.). The analysis of the evolution of this value, together with the CSS, allows the estimation of the current financial situation of the generating companies.  
The beginning of the bands corresponding to fuel or entitlements under the horizontal axis is due to the negative value of the CDS. The values in grey represent the forecast for 2024.

 

  • The CSS (Clean Spark Spread), which is the equivalent of the CDS for gas-fired power plants, was 38.1 PLN/MWh this month. In May 2023, it was around 38 PLN/MWh lower (then 0.1 PLN/MWh). According to the current forecast, the CSS in 2024 will average 87.5 PLN/MWh, representing 15.8% of the weighted average wholesale delivered price of electricity. 

 The graph shows the Clean Spark Spread calculated based on: historical contracts (BASE, PEAK, OFFPEAK) weighted by the share of deliveries in a given month (POLPX Commodity Forward Market), spot market contracts (POLPX Day-Ahead Market), natural gas prices (POLPX Commodity Forward Market) and CO2 emission allowance prices (EEX primary market).  
Clean Spark Spread (gas power plants' variable cost spread indicator) is the difference between the price of electricity and the estimated variable costs associated with the production of electricity from natural gas (fuel and emission allowances). Clean Spark Spread is an indicator correlated with the profit of the generator producing electricity from natural gas (in reality, it is still necessary to take into account transport costs, operating costs, incurred and planned investment costs, etc.). The analysis of the evolution of this value, together with the CDS, makes it possible to estimate the current financial situation of generation companies.  
The beginning of the bands corresponding to fuel or entitlements under the horizontal axis is due to the negative value of the CSS. The values in grey represent the forecast for 2024. 

 

  • The weighted average price of electricity delivered in a given month is made up of past forward contracts and spot market transactions (DAM and RDB). The spot price of electricity was 370.5 PLN/MWh and reduced the average price of delivered electricity to 471.2 PLN/MWh. If electricity had been supplied solely on the basis of futures contracts concluded last year, the value would have been 544.9 PLN/MWh. 

 

 The chart shows the price profiles of electricity traded in three ways: 
*RTT - Commodity Futures Market, where electricity is traded in contracts executed at a contracted future, in weekly, monthly, quarterly and annual contracts; 
*RDN+RDB spot market (Day-Ahead Market and Intraday Market), where electricity is traded for delivery today or tomorrow; 
*OTC (Over-the-Counter) - over-the-counter (OTC) trading, mostly contracts concluded within energy groups. 
The price of electricity delivered in a given month is the average of these three prices, weighted by the volumes of electricity delivered at that price (shown in the chart below). 

 

  • On the exchange, turnover (the sum of volumes traded in futures contracts) was 4.6 TWh in May, 16.3% less than a year ago (5.4 TWh). This is still 70.6% less than the average for May in 2018-22, which is 15.5 TWh. 

 Knowing the structure of the origin of the delivered volumes makes it possible to determine what proportion of the weighted average price is the result of trading on spot markets, where there is a clear correlation between the structure of the hourly electricity production mix and the price (the greater the production of photovoltaic installations and wind farms, the lower the price). Contracts traded on forward markets, where it is the physical delivery of electricity that takes place many months in advance, allow the risk of future price changes to be priced in. 

 

  • The balance of the cost of importing coal, oil, gas and fuels for March (the latest figures) was PLN 5.9 billion. In the previous 12 months, we paid a total of almost PLN 120 billion for net imports. 
     

The graph shows the nominal (excluding inflation) monthly cost of imports of energy raw materials and fuels into Poland. This is a net import, i.e. it also includes exports from Poland of these products. 
*The coal category includes: anthracite, lignite, hard coal (thermal and coking coal) and hard and lignite briquettes. 
*The oil category includes crude oil and natural gas condensates. 
*Gas includes both pipeline gas and LNG. 
*Under the fuel category are motor petrol, diesel, LPG (fuel, not reagent) and various types of aviation fuel.