Electricity production

Changes in the structure of electricity generation are unprecedented in 2024.   

The chart below shows how the monthly shares of each source's electricity production in total production have changed over recent years. Between September 2015 and September 2024, the use of coal overall decreased by 35 p.p. The systematic development of renewable sources means that the gap between the use of coal and RES in the system is shrinking faster and faster. In addition, large natural gas units are beginning to play an increasingly important role. 

Production from renewable energy sources  

As of September 2024. 36.8% (4.8 TWh) of electricity generated came from renewable sources. This is 9.4 p.p. higher than a year ago and 1.9 p.p. higher than in August. The maximum hourly share of RES in domestic electricity production reached 65% in September and the smallest was 11%. Meanwhile, the largest hourly share of RES in electricity consumption was 77%. 

Nearly half of renewable energy generation (46.3%) came from wind sources - 2.2 TWh. This is 73.4% more year-on-year and 78.4% more than in August this year. Wind power capacity at the beginning of September was 10.4 GW. 

The second place in production from RES sources was taken by PV installations in September, with 1.5 TWh, a decrease of 34.1% m/m and a decrease of 4.2% y/y. PV installation capacity at the beginning of September was 19.6 GW, of which as much as 11.5 GW were prosumer installations (July data). 

Biomass plants produced in March this year. 1.0 TWh, and hydropower plants 0.1 TWh.

In the Polish power 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 delivered power in a given hour is higher than the current demand, it is necessary to use electricity storage, export or even shut down RES sources. 

In September, the need for such non-market redispatch of generation units by the operator occurred during 11 days, in large part for balance sheet reasons. A total of 59.2 GWh of electricity generation was curtailed (of which 39.7 GWh from large photovoltaic installations and 19.5 GWh from wind farms). This is 75% less than during the record May this year, however 25% more than a month ago (47.5 GWh in August). 

However, curtailment of RES sources occurs as a last resort. Before that, the operator uses so-called intervention exports, i.e. non-commercial exchanges between operators from neighboring countries. In September, the volume of such exports, carried out during hours with limited RES operation, amounted to at least 7.7 GWh.  

Since the beginning of the year, RES production has been curtailed by 692 GWh, and at least 233 GWh were exported on an intervention basis during restricted hours. This means that 925 GWh, representing 2.3% of potential RES production, did not enter the NPS. 

The graph 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.

Production from fossil fuels 

In September 2024, electricity production from conventional sources relied on natural gas to a much greater extent than a year ago. Gas-fired power plants and CHPs produced 1.8 TWh (up 3.3% m/m and 128.9% y/y) - mainly due to the operation of new CCGT units in Gryfino, and increased cogeneration operation in Warsaw's Żerań.  

However, there was a large decline in production from hard coal relative to September last year (37.9% to 3.4 TWh) and from lignite, down 3.1% (to 2.8 TWh); compared to August this year, these were declines of 5.0% and 8.1% respectively. Moreover, in the generation mix, coal's share fell by 2.2 TWh year-on-year, to 6.2 TWh, compared to September. 

Currently, the combined share of hard coal and lignite in power generation is 48.0%. September was the month with the lowest share of total coal on record, as well as the lowest volume of energy produced from hard coal. 

 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 

September was the month with the lowest emissions from the electric power industry on record. Estimated emissions fell 19.6% from last September to 6.2 million tons of CO2 , once down 5.6% from August (from 6.6 million tons of CO2).  

Electricity demand was 12.3 TWh in August, with a maximum average hourly demand of 21.2 GWh The balance of exports was small at 0.2 TWh, or 1.9% of the month's demand. 

September 2024 - details 

• The average monthly power demand in September 2024 was 17.1 GW (1.1 GW less than in September a year ago), reaching a maximum of 21.2 GW (minimum - 12.1 GW). 
• Electricity consumption was 12.3 TWh (5.9% less than last year), while gross generation was 12.9 TWh (0.1% less 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 1.6% 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 36.8% of the generation mix, a share that rose 9.4 p.p. from 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. 

•  Wind farms produced 17% of electricity (2.2 TWh, or 46.3% of RES production), photovoltaics were responsible for 11.3% (1.5 TWh - 30.8% of RES), 1% came from hydropower (0.1 TWh - 2.6% of RES), and 7.5% from biomass (1 TWh - 20.4% of RES). 
• Pumped storage power plants were responsible for producing 0.04 TWh of electricity. This is 8.9% less than in August (0.05 TWh). 
• Fossil fuels accounted for the remaining 63.2% of electricity: hard coal 26.4% (3.4 TWh), lignite 21.6% (2.8 TWh), natural gas 14% (1.8 TWh), and other fossil fuels 1.2% (0.2 TWh). 

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

•  Coal prices for power plants (PSCMI1 index) fell 0.2% during the month, to PLN 22.1/GJ (approx. PLN 479/t). Coal for district heating plants (PSCMI2 index) costs 23.5 PLN/GJ (about 562 PLN/t), up 1% on the previous month. 
• The weighted average price of natural gas delivered in September fell 1.3% against August, to PLN 202.8/MWh, 32.2% 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 6.2 million tons of CO2, 19.6% less than a year ago and 5.6% less than in August. 

 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. 

• The power exchange has seen a decline in the price of long-term instruments. Equal delivery in each hour of the day ahead (in the so-called strip - BASE instrument) was traded 5.6% lower, at an average of PLN 442.3/MWh, and in peak hours (PEAK5) 5.3% lower, at PLN 472.6/MWh. The pricing of supplies on the SPOT market (RDN) fell by 5.2%, to PLN 410.4/MWh. Prices in this market ranged from -193 PLN/MWh to 2087 PLN/MWh, and values equal to 0 PLN/MWh or negative values were recorded, the most ever. 

 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 65.2 EUR/tCO2, 6.9% less than a month earlier. In September, Poland's budget received PLN 1.6 billion as a result of the sale of CO2 emission allowances on the primary market (EEX exchange), and since the beginning of the year, PLN 12.5 billion has been received. 
• The CDS (Clean Dark Spread), an indicator of the margin of coal-fired power plants, amounted to PLN 39.1/MWh in September, representing 7.9% of the weighted average wholesale price of electricity delivered in that month. Over the year, the index has fallen by about 44.5 PLN/MWh (it was 83.6 PLN/MWh at the time). According to the current forecast, the CDS in 2024 will average PLN 68.5/MWh, representing 12.9% 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), the equivalent of the CDS for gas-fired power plants, was PLN 56.4/MWh this month. In September 2023, it was about 59.3 PLN/MWh higher (then 115.7 PLN/MWh). According to the current forecast, the CSS in 2024 will average 86.7 PLN/MWh, accounting for 16.3% of the weighted average wholesale price of delivered 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 consists of past futures contracts and spot market transactions (DAM and IDM). On the spot, the price of electricity was 410.4 PLN/MWh and reduced the average price of delivered electricity to 494.7 PLN/MWh. If electricity had been supplied solely based on futures contracts concluded last year, the value would have been 555 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 the volumes of concluded futures contracts) amounted to 9.3 TWh, 86.8% more than a year ago (5 TWh). This is still 53.5% less than the September 2018-22 average of 20.1 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 coal, oil, gas and fuel imports for June (the latest data) was PLN 9.3 billion. In the previous 12 months, we paid a total of nearly PLN 118 billion for net imports. It is worth noting that the cost of fuel imports from Russia for June amounted to PLN 123 million (or 1.3% of all import costs), compared to a total of PLN 1.6 billion in the 12 previous months Now only LPG fuel is imported from Russia. 

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.