CURRENT ISSUES OF THE ENERGY SECTOR
IN POLAND
Krzysztof Żmijewski
Technical University of Warsaw
OPTI_ENERGY
Advisory Board Meeting
Gliwice, March 2003
I.
The main and basic problem of the Polish energy sector is its low productivity, which is
coupled with the low efficiency of energy use.
Energy consumption per capita in Poland is twice as low as in the EU;
Energy consumption for GDP unit in Poland is twice as much as in the EU;
Efficiency of power plants in Poland is 36.5%;
Efficiency of power plants in the EU is 46.5%;
Number of employees
Installed capacity
Sales *
E.ON
39.5 thousand
34 GW
318 TWh
Poland
120 thousand
34 GW
106 TWh
*In addition, E.ON sells about 95 TWh of gas and more that 200 mln m3 of water.
II.
There is an enormous technical disproportion in the Polish energy sector, i.e. its technical
structure isn’t quite tailored for the functional needs and expectations of the end-users.
Power sector
•
There is an excess of active installed capacity: 34 GW installed capacity versus 22 GW
of peak capacity demand, i.e. 155% with UCTE expectations of 125% and European
trends of 110%;
At the same time, a huge part of this over-capacity is worn out not only morally, but also
technologically;
In consequence, in the situation of great necessity for modernisation, the possibility for
capital concentration for this goal is blocked.
•
Incorrect topology of the transmission grid of 400 kV – failure to close the north-eastern
loop (Olsztyn/Mątki-Ełk-Białystok/Narew) and the north-western one (Szczecin/KrajnikPoznań/Plewiska-Ostrów Wlkp.);
•
Weak topology of the generation- lack of sources in the north and their concentration in
the south;
•
Lack of a back-up measurement system regarding transfer between energy distribution
companies on the lines of 110 kV;
•
Open topology of the distribution grid of 15 and 3 kV resulting in weak power supplies
to rural regions;
-
big power drops even to 170 V
frequent breaks in supplies
instability of the voltage
Gas industry
•
Inadequate retention of the system;
•
One-sided charging of the system (only from the East);
•
Backing out of the construction of the second branch of the Jamal gas-pipeline through
Poland;
•
Inadequate capacity of border links;
•
Lack of technical access to the first branch of the Jamal gas-pipeline (there is only one!
connection), which practically means that the above pipeline is an exterritorial gas
corridor;
•
Inadequate development of the distribution network (low-pressured ) – white spots on the
map of gas supply;
District heating
•
The district heating network has the structure (technology, potential and topology) dating
from the period of increased heat demand and old programmes of urban investments,
which were not always completed;
•
Lack of possibility to adjust proper regulation increases heat losses;
•
Speed of the flow is very much different from that estimated during the design, which
leads to heat losses;
•
Proper qualitative/quantitative regulation is rare;
•
Less than 20% of pipes are exchanged for pre-isolated ones;
•
Peak sources and own CHP sources are rare;
•
Efficiency of heat sources is 50-93% (in the EU- 75-93%);
•
Water leakage in the district heating systems is 7 replacements/a (in the EU 1-3 replacements/a);
•
Efficiency of heating sources 50-86% (in the EU 70-91%).
III.
The Polish power industry is experiencing a serious economic crisis.
Power sector
•
The internal (domestic) price of electrical power is higher than prices in the neighbouring
countries (this is due to costs of maintenance of non-productive capacities and high cost of
energy from the Purchase Power Agreements – Long Term Contracts);
•
Export is possible only with prices resulting from marginal costs of the power-and-mining
sectors, which can lead to accusations of dumping;
•
The possibility of cheap power supply from neighbouring countries of up to 20 TWh//a
without any grid investments (those are also planned, which will lead to the increase of
the aforementioned numbers);
•
Return on investments in the Polish power industry does not even reach minimum of 7%;
•
Tariffs are regulated mainly on a social basis;
•
The open market, where the best could be winners, is not functioning;
•
Low employment efficiency, necessity for outplacement of 60-80% of employees;
•
Lack of penalty for non-efficient activity (but the other way round);
Gas sector
•
The national gas price for heavy chemical- or power industry is higher than, for example,
in Germany;
•
An open market does not exist, neither does any competition;
•
PGNiG is very “strong” in relation to domestic users, and very “weak” in relation to the
foreign supplier;
District heating
•
A permanent trend of clients to run away from heating from centralised sources;
•
High burden of energy costs, especially heating, (about 10%) in domestic budgets (in
the EU 3-5%);
•
Very low return on investments;
•
Lack of financial sources for modernisation and reconstruction, existing sources
(depreciation fund plus profit) are not always fully used;
•
Weak diversity of profit sources (about 5%);
•
Necessity for outplacement of at least 50% of employees.
Mining industry
•
High debt burden;
•
Only few mines register profits on operational activity;
•
National price (loco harbours) is higher than the price of foreign coal;
IV.
Polish power industry is facing an enormous challenge related to the necessity of
adjustment to the environmental requirement (derivatives of the Kyoto protocol, SO2
protocol and EU regulations).
•
•
•
•
•
•
Lack of green certificates;
A conservative tax system (lack of coal/power tax);
Lack of Emissions Trading Mechanism (lack of such systems as ATS, ETS, lack of
Emissions Trading Platform, lack of legislation);
Lack of BAT supporting mechanisms;
Lack of Voluntary Agreements or any other similar mechanisms;
Discrimination of ESCO-type companies ( executing TPF).
V.
Legislation is non-complete or non-functional, some solutions are only partial while others
are non-existent.
•
Energy planning in gminas –
binding – but not functioning;
•
TPA principle in the power and gas grids, as well as district heating networkbinding – but not functioning;
•
Grid codes – introduced by the “side-door”, i.e. illegally
not binding – but functioning (blocking the
market);
•
Power exchange –
exists- but hardly functions;
•
Obligation to possess 2,5% energy from renewable sourcesexists- but does not function;
• DSM, ESCO –
exists – but does not function;
•
Desolate costs – long-term contracts –
unsolved problem;
•
Transparency of the regulation –
non-existent;
•
Mechanisms of support for energy efficiencydo not exist or do not function;
•
Energy labels and certificatesdo not quite function or do not exist;
•
Innovative systems of energy management in industry and buildingsnon-existent;
•
Linear infrastructure investment regulating law –
does not exist;
VI.
In the Polish power sector, especially in its grid part, there is still a monopolistic and even
authoritarian culture.
•
•
•
•
Energy enterprises are not client-oriented;
Marketing services and techniques, such as CRM, Call Centre, Key Account Managers
do not exist at all or do not function;
There is a lack of segmented offers which are tailored to fulfil the client’s expectations;
existing segmentation is based exclusively on the volume of power bought and voltage or
pressure at the connection point;
Loyalty and promotion programmes do not exist.
VII.
Power sector does not have a definite functional (development, restructurisation and
privatisation) strategy, which means that it does not execute this strategy, or executes a lot
of different ones, which leads to the same conclusion.
From the aforementioned seven points we can conclude that the Polish energy industry does
not have a good housekeeper who cares about its condition and would allow it to fulfil its
prime function of being a blood-system of the national economy. Independently from the
ruling political option, the Polish state does not seem to be able to fulfil the role of a proper
owner, using this for reaching of short-term goals of a non-economical character; the horizon
does not stretch further that coming elections.
Unfortunately, the privatisation process also does not take into account the demands of the
strategy – which naturally results from its non-existence. Just for the record, let me remind
you that the strategy should identify goals/problems and suggest methods to reach/solve them;
strategy is not a slogan about securing the power safety of the state and protecting legitimate
interests of the end-users. Thus, strategy must also describe ways to reach these, undoubtedly
correct, goals.