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, District Heating 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 further (increasingly expensive) generating units, thereby increasing the wholesale price of energy.

PGE Group has in its portfolio competitive generating units operating on lignite that, owing to their cost advantage and access to their own fuel, are engaged by the operator also during off-peak hours, in practice 24 hours a day, all week long, which accordingly translates into production volumes and economies of scale in the operation of power generating complexes.

Hence, the availability of PGE’s generating assets directly affects energy security and a competitive price of energy for the Polish economy.

Ancillary 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. The most important services provided by PGE Group to the Transmission System Operator include:

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. The most important services provided by PGE Group to the Transmission System Operator include:

PLN mln
PGE Group's revenue from ancillary system services in 2022
  • Forced operation, i.e. use of cogeneration units to ensure the quality of energy supply in response to system limitations (of a local nature).
  • 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.
  • Demand side response (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).

These revenues constitute stable part of the Group’s revenues, and with the launch of the capacity market, their role increases even more. Thus, PGE’s exposure to the electricity market will become relatively lower.

Capacity market

The Capacity Market was entered into operation from 2021. In November and December 2018, three auctions were held – for the periods starting in 2021, 2022, 2023.

The main auction for 2024 took place in December 2019, the main auction for 2025 took place in December 2020, the main auction for 2026 took place in December 2021 and the main auction for 2027 took place in December 2022.

The additional auctions took place in March 2020, 2021 and 2022 – concerning deliveries for the particular quarters of 2021, 2022 and 2023.

2021 2022 2023 2024 2025 2026 2027
Clearing price (PLN/kW/year) 240.32 198.00 202.99 259.87 172.85 400.39 406.35
Volume contracted (MW) 22,427 10,580 10,631 8,671 2,367 7,189 5,379
Multiyear contracts (MW) 12,459 125 853 5,669 166 2,678 1,468

Revenue estimate based on the contracted auction clearing price. The price of the capacity obligation for multi-year capacity contracts will be subject to annual adjustment with the annual average consumer price index (assumption 3.4% for 2022, 5.1% for 2023, 14.5% for 2024, 13.1% for 2025, 3.5% for 2026 and 2.5% in subsequent years).

In addition, the remuneration for the new and modernised capacity market unit is reduced by the amount of public investment aid. PGE has minimised the risk of significant reduction of revenues from the capacity market due to public aid granted.

As a result of the above auctions, the PGE Group concluded agreements, securing a revenue of more than PLN 2.5 billion per annum during the next 8 years (2021-2028). Multiyear auctions concern new units (at Opole, Turów, Dolna Odra and Rybnik power plants) or modernized ones. Low-emission units (like Dolna Odra or Rybnik) benefit from the extension of the contracted capacity supply period by 2 years.

Significance of the capacity market for our investments

PGE Group is engaged in long-term projects. The construction of new generation capacities and their diversification are some of the key objectives in the Group’s strategy.

The profitability of investments in generation assets cannot be based solely on the volume of energy produced, but requires an additional support system. The solution is the capacity market in which generating units are remunerated not only for the volume of energy produced but also for their willingness to supply it.

Obtaining 17 years of support for the construction of new gas-fired capacity at the Dolna Odra plant and at Rybnik power plant will provide a solid rate of return on investment, while guaranteeing stable revenues.

Electricity 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 – SAIDI and SAIFI.

System Average Interruption Duration Index

System Average Interruption Frequency Index 

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.

In 2022, the SAIDI and SAIFI indicators and the time to connect new customers to the grid were as follows:

PGE is committed to increasing supply reliability and lowering SAIDI and SAIFI indices and is taking a number of measures resulting in faster and more effective outages. The increase in SAIDI and SAIFI in 2022 is due to the deterioration of weather conditions in Poland compared to previous years.

Weather anomalies such as strong winds, snow, icing and storms (Orkan Dudley and Orkan Eunice) at the beginning of the year and storms in the middle of the year caused a lot of damage, including damage to electricity grids.

The increase in the number and scope of investment works increased the average duration of scheduled outages for energy supply by approx. 3 minutes

Impact of war in Ukraine on PGE Group's activities

PGE Group is the largest energy group in Poland.

The Group’s units meet over 40% of the country’s electricity demand and serve over 5.5 million customers in Supply segment, while PGE Group’s distribution area covers over 40% of Poland’s territory, including areas on the border with Ukraine and Belarus.

The Group’s activities are therefore of exceptional importance for the country’s energy security. It is crucial for PGE Group to secure the continuity of operation of power plants and CHPs and distribution infrastructure so as to ensure uninterrupted supplies of electricity and heat to residents, institutions and businesses.

In connection with the situation in Ukraine, a Crisis Team has been established at the central level of PGE Group to continuously monitor threats and identify potential risks. The Crisis Team’s work includes monitoring the security of electricity and heat generation and supply and the protection of critical and IT infrastructure.

Its tasks also include undertaking actions minimising the risk of a crisis situation, preparing the Company in the event of a crisis situation and planning, organising and coordinating works ensuring continuity of the Company’s and PGE Group’s operations.

Crisis teams have also been formed at the Group’s key companies, operating 24 hours a day, carrying out continuous monitoring and identifying potential risks in order to minimise risk to electricity and heat supplies.

All key PGE Group companies have adopted guidelines for developing business continuity plans.

On this basis, companies develop and then implement their own business continuity plans that take into account the specifics of the company. A key assumption of business continuity plans is the development of a catalogue of risks for critical processes, on the basis of which emergency scenarios (instructions, procedures) are developed and adopted.

The emergency scenarios are periodically tested and continuously updated. In the current situation, companies have been tasked with urgently updating and reviewing internal regulations and business continuity plans.

Cybersecurity has grown significantly in importance in the current geopolitical situation. PGE Group has implemented special procedures for monitoring Information and communication technologies (ICT) networks due to increased activity of criminal groups aiming to attack ICT and Operational Technology (OT) systems.

With the CHARLIE-CRP state of alert in force, the emergency plans have been reviewed. This significant change in the Group’s operating context triggered the launch of a threat analysis and risk estimation for cybersecurity incidents. There is also an increased focus on protecting the supply chain against cyberattacks.

The reality of cyber threats is confirmed by attacks carried out against the Group’s ICT infrastructure and users of information systems.

Targeted attacks aimed at phishing or attempting to install malware have attracted particular attention recently. DDoS (Distributed Denial of Service) attacks have also been identified, the aim of which is to seize all available and free resources in order to prevent the entire service from functioning. Identified attacks were documented, information about them was passed to the relevant State authorities.

The counter measures taken (monitoring, incident handling and system recovery) allow attacks to be successfully repelled. These actions, combined with adequate management, lead to the build-up of resilience in cyberspace. At the same time, development and improvement of security management appropriate to the identified risks is implemented.

The physical security of the Group’s facilities also has been strengthened. In order to protect key energy infrastructure, the Group cooperates with all services responsible for security in Poland, with a particular focus on the Internal Security Agency (ABW). In addition, PGE Dystrybucja is continuously supported by the Territorial Defence Forces (TDF).

  • fuel availability and prices,
  • disruption of the component supply chain,
  • rising inflation and interest rates and a weakening of the national currency,
  • prices of CO2 emission allowances,
  • improving energy efficiency,
  • greater pressure on the energy transition through RES development,
  • import of hard coal,
  • cybersecurity,
  • geopolitics,
  • counterparties (sanctions lists).
  • reduced availability of hard coal on the Polish market due to the planned embargo on supplies of this raw material from Russia,
  • increase in hard coal and gas prices on the international market,
  • logistical disruptions due to the high utilisation of rolling stock and changes to current travel routes,
  • reduced availability of biomass on the Polish market due to the suspension of feedstock imports from Belarus,
  • logistical disruptions in road transport related to fuel prices and the availability of service providers’ employees.
  • CHP Gorzów and CHP Zielona Góra are supplied with field gas (so-called Ln nitrogenous gas). Due to the use of dedicated transmission infrastructure between the mine and the CHP plant, these generating assets are neutral to supply disruptions to Poland’s National Gas Transmission System.
  • EC Toruń, EC Zawidawie, EC Czechnica, EC Lublin Wrotków, EC Rzeszów, EC Zgierz, EC Bydgoszcz, EC Kielce are supplied with high-methane gas (so-called gas E). Gas E taken from the National Gas Transmission System is secured in the form of adequate storage and in Poland this is at a relatively high level.

PGE Group has no influence over the directions of supply and management of fuel transmission therefore the risk of possible disruptions lies with Polski Koncern Naftowy Orlen S.A. (previously PGNiG) (PKN Orlen) and the Transmission System Operator (Gaz-System S.A.). PGE has established communication channels with PKN Orlen and Gaz-System S.A. in commercial and operational management in cooperation with the respective PGE Group location. In accordance with national gas supply constraint management programs, securing supplies for electricity and heat generation is favoured over other customers.

  • In the case of gas fuel, due to the lack of stock-holding capacities, a reduced availability translates into an immediate disruption in electricity and heat production. However, if there are back-up coal-fuelled water boilers at a CHP plant, it is possible to produce heat until these stocks are exhausted (this pertains to CHP Lublin Wrotków and CHP Rzeszów). In the case of CHP Gorzów, an OP-140 coal-fired steam boiler constitutes a back-up. At CHP Zielona Góra, oil boilers serve as back-up for heat production.
  • The main suppliers of hard coal for electricity and heat production are Polish mining companies and coal importing companies. Currently, CHP plant have reserves of hard coal to enable uninterrupted production of electricity and heat. Centrally Dispatched Generating Units (JWCD), due to significant load and problems on the hard coal market, have problems maintaining the minimum required stocks, resulting in the need to reduce production in order to maintain continuous operation of the units.

The electricity supply for PGE Dystrybucja and PGE Obrót is secured on a commercial basis. The physical supply of energy is conditioned by the current balancing and operation of the NPS. Disruptions in electricity generation will affect the energy supply depending on the location on the grid in the NPS. So far, PGE Group has not identified any risk associated with electricity or heat supply to residents, institutions and businesses.

The energy crisis has spread across Poland, Europe and the world.

The war in Ukraine is having a major impact on the heat and electricity market in Poland. It significantly affects the prices and availability of energy raw materials, which has translated into energy and CO2 prices and the prices of goods and services, thereby affecting margin levels and capital raising opportunities. The disruption or complete shutdown of many production sites in Ukraine has disrupted the supply chain of components for key investments, or significantly increased their prices. The war in Ukraine has also highlighted the huge role of renewable energy sources (RES), the development of which is a response to the cut-off of energy supplies from Russia and high energy prices. Renewable sources are not burdened by fuel and CO2 costs.

Instead, high energy prices are forcing improvements in energy efficiency and operational efficiency. There is also pressure mounting to accelerate the energy transition in line with the European Union’s climate policy, using the phase-out of fossil fuels to modernise the Polish economy. And as the leader of Poland’s national energy transition, PGE Group is integrating the need to achieve climate neutrality into its long-term business strategy. At the same time, PGE Group is making an important contribution to maintaining the country’s energy security by ensuring the import of hard coal from directions such as South America for the needs of both electricity producers and households. It is also inevitable that behavioural patterns of energy market customers will change, leading to economical energy consumption. This is in order to avoid heat shortage problems and electricity in the winter period. PGE Group mitigates these risks by continuing its policy of hedging electricity generation costs along with energy sales on the wholesale market, which is reflected both in hedging CO2 emission allowances and foreign currencies for transaction purposes.

In order to protect against major hikes in electricity prices for some customers, regulations have been put in place, resulting in the requirement to apply capped prices in the supply of electricity to eligible customers. The regulations provide for compensation for trading companies that sell electricity at capped prices. The method of calculating compensation generates the risk of not fully covering the costs of electricity generation and supply and limits the margins obtained on electricity sales.

Also, in line with the current decision to impose war sanctions on Russia and Belarus, PGE Group has introduced contractor compliance verification in its supply chains.

As a consequence, the aforementioned risks may have a material impact on individual areas of PGE Group’s operations and future financial performance. In particular, the recoverable amount of selected asset items, the level of expected credit losses and the measurement of financial instruments may change.

The introduction by the European Union of an embargo on oil supplies from Russia will not be without an impact on the wider energy market, not least because of potential fuel price increases.

In view of the dynamic course of the war on the territory of Ukraine and its macroeconomic and market consequences, PGE Group will monitor its development on an ongoing basis and any events that occur will be reflected accordingly in the Group’s future financial statements.

ICT security

Being aware of the importance of PGE Group’s infrastructure for the country’s energy system and due to progressing digitisation, PGE treats ICT security issues as a priority. PGE Systemy, a PGE Group company, is responsible for ICT infrastructure management and ensuring ICT security.

Infrastructure security is subordinated to the Cyber Security Department in PGE Systemy, which also includes a specialised PGE-CERT team responsible for handling ICT security incidents and minimising their potential effects.

Counteracting cyberattacks takes place on many levels. PGE-CERT monitors threats to system security, reacts to detected incidents and undertakes actions related to the coordination of incident handling. PGE Systemy continuously improves competences and skills of the Cybersecurity Department employees through training.

The PGE-CERT team has an international accreditation of the Trusted Introducer organisation, it is also a member of, a leading organisation associating teams responding to incidents. Since 2020, it has had the status of a certified CERT team. It has also undergone independent certification for compliance with ISO 22301 and 27001.

To secure the infrastructure, technical safeguards are in place to protect PGE Group against malware, targeted attacks and denial of service attacks. Thanks to the implemented software, computers operating in PGE Group network are monitored on a regular basis. Procedures regulating employees’ rights and obligations with respect to IT security have been implemented in the entire company. Among other things, it is prohibited to use company IT devices for private purposes, to use social media except when it is necessary (PGE Group profiles), to log into private email accounts and to use unsecured Wi-Fi networks.

It is exceptionally important to build IT security awareness among the employees of PGE Group through education and on-going information on possible and existing threats, reminding of the principles of safe use of computers, the Internet and company mobile phones. Articles and information on this subject are regularly published in internal company media.

Access to corporate resources from the Internet is provided via an encrypted VPN connection. In order to enable remote work by PGE Group employees, the VPN infrastructure and group communication and teleconferencing environment have been developed.

Employees are equipped with PKI (Public Key Infrastructure) certificates, which are used to secure e-mail messages and electronically sign documents. Computer equipment used for remote work has disk content encryption enabled.

Instructions and advice on IT security rules for remote working have also been created and are available on PGE Group intranet.

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