On June 22 of 2020, Poland came very close to a countrywide power outage: Power plants with a capacity of thirteen gigawatts (out of which, only six planned) went down – and subsequently, balancing energy prices rose to record level.
It has been quite a regular Monday in Poland, but a chain of unforeseen events brought the Polish power system suddenly to its limits. Unplanned outages and failures of the power units in Bełchatów, Opole, Kozienice, Połaniec, Włocławek and others that occurred on that day led to a decrease in available capacity of about seven gigawatts, adding to the planned power output reduction of six gigawatts in several coal power stations. In total, this opened a gap of about thirteen gigawatts in Poland’s electricity supply. That day, Poland’s peak demand reached roughly 21 gigawatts, corresponding to one third of the unplanned outage. Though the Polish transmission grid operator Polskie Sieci Elektroenergetyczne (PSE) managed to avoid blackouts on a larger scale, the effects on the power markets were massive.
Especially the balancing reserve market reacted promptly: On Monday, June 22, the prices rose to about 1280 PLN per megawatt between 10 and 12 a.m., which equates roughly 285 Euros. For comparison: The normal price for one megawatt of balancing reserve in Poland is about 250 PLN, roughly 55 Euros, only one-fifth of this peak value.
This article tries to shed some light on the developments in the Polish power system, which led to the events of the (almost) black Monday in the middle of June 2020. Spoiler alert: Neither the Coronavirus nor the renewable energy producers are to blame.
Big Power Plants Can Cause Big Problems
Two years after the climate conference in Katowice, Poland is still relying very heavily on coal as its primary source of electric energy. Seventy-nine percent of the Polish power production capacity is based on lignite and hard coal. The main argument for this policy is holding workplaces in the domestic mining industry. However, even though the government is currently spending around 400 million euros a year to keep the Silesian coalmines running, they have become uneconomical. As a result, the coal to fire Polish power plants comes mainly from Russia, regardless of the massive subsidies and the poor quality of the imported coal.
The power station at Bełchatów, the biggest lignite-fired power producer in the world, is an example of this policy and the problems it causes at the same time. Since its foundation in 1981, Bełchatów grew to be the largest lignite power plant in Europe, it is the second largest coal power plant in the world. The emissions add up to the amount of 30 to 40 million tons of CO2 a year – more than Ireland or Slovakia are emitting as whole countries. The 5,4 gigawatts from Bełchatów account for roughly one-fifth of the whole Polish power demand on a hot summer day (24,14 GW) . In other words: When this giant sneezes, Poland gets the flu. However, not only the issues in Bełchatów caused the problems on June 21 and June 22 – several other power stations had severe malfunctions, too.
A List of Events that Led to the Polish Power Shortage between June 21 and 22 2020
To understand the events that led to the gap of roundabout seven gigawatts power in the Polish power system on June 22 2020, we have compiled a list of events. Though this is a non-complete list - the sum of power outages add up to only around 4.2 GW -, the depicted events show quite drastically the vulnerability of a heavily centralized fossil power system.
Bełchatów Coal Power Station, Łódź Region
Strong rainfalls came down on late Sunday, June 21 in the region of Bełchatów. One of the three giant carburization stockpiles, which supply coal to several power plant units, was flooded. Though pumping started immediately, block 5, 6, 7, and 8 ran out of lignite and in consequence, the turbines ran out of steam. Approximately 1,500 MW of the nominal power output went down.
Kozienice Power Station, Central Poland
Kozniece Power Station experienced severe technical difficulties on June 22; one of the old blocks with 500 MW nominal power output and the new B11 block with 1075 MW went down. The Polish Energy News Website Wysokienapiecie suspected a delivery of wet coal at first, a spokesperson of the power plant denied this and claimed that the reasons were merely “technical” and made no further specifications. The total power loss of 1,500 MW placed an additional heavy burden on the Polish power grid.
Opole Coal Power Station, Upper Silesia
The modern coal power station in Opole, situated about 100 km from Katowice in Upper Silesia, encountered problems with the flue gas desulfurization in block 5. Due to the high sulfur content of the low quality coal, the power production stopped immediately to prevent exceeding the sulfur emission standards. The Polish power system lost another 900 MW.
Dolna Odra Coal Power Station, West Pomerania
The control room of Dolna Odra, a coal power station in West Pomerania near the Polish-German border, detects a leak in block 8. After the immediate shutdown, the whole power output of Dolna Odra power station loses 230 MW.
How the Blackout was avoided
Poland did not experience nationwide or local blackouts on June 22 – but power outages came quite close. The cluster of events put heavy stress on the Polish power system; it could not have remained stable without help from across the borders. In a rush, the Polish transmission system operator (TSO) PSE had to import around 3,000 Megawatt from Sweden, Germany, the Czech Republic, Slovakia, and Lithuania. Additionally, PSE put the “cold reserve” into action, consisting of old and uneconomical power plants, but kept in standby for situations like this. Last but not least: About 640 MW of photovoltaic power, delivered between 10 a.m. and 4 p.m. on June 22, helped to save the day.
Desperate Times Cause Desperate Prices
Balancing reserve is a special kind of electric energy, which grid operators use to stabilize the power grid in imbalance situations. It is a very valuable resource in every power system and therefore traded on a special exchange market. The normal price for one megawatt of this energy in Poland floats around PLN 250 (about 56 Euros) – but not on June 22 of 2020. A record peak of PLN 1289,94 (292.67 Euros) per megawatt of balancing energy was recorded at 9 a.m..
This price explosion has a rather simple explanation: When grid-balancing problems occur, grid operators first try to solve these problems with domestic resources. These normally consist of a balancing reserve market and, in severe cases, of the capability to give shutdown orders to large power consumers when blackouts are imminent. As last measures, the national grid operator can buy power in neighboring countries and/or activate cold reserves.
On June 22, all of these options were drawn. As first link in the chain, the grid operators drained the balancing reserve market in record time. Due to the economical rules of supply and demand, the price for balancing energy jumped up and quintupled the regular price level – but not for long. As PSE recognized that they had to activate cold reserves and buy power from the neighbors to avoid blackouts, the price of balancing energy dropped back to the normal level.
Lessons Learned From “The Black Monday”, June 22 of 2020
It has been a paradigm in the energy business that an energy system containing mainly fossil energy sources guarantees a more reliable and steady electricity supply. We as a company did not believe in this from the start and the incidents of June 22 in Poland confirm this belief in a drastic way. Very large power plants bury very large risks, apparently more risks than a modern, internationally connected energy system can sustain. A power system with a great number of small, decentralized power plants, not only from renewable sources, spreads the failure risk much wider. Even if some of these decentral installations fail, the others can step in and guarantee the power supply in a fast and flexible manner.
To connect and control these installations, Virtual Power Plants (VPPs) with a diverse portfolio of energy sources are a proven and reliable solution. The right mix of energy sources of wind, photovoltaics, biogas, CHP plants, and emergency power supply units creates a reliable and interdependent network, which is very unlikely to fail. Connected via secure mobile data networks, Virtual Power Plants can deliver power and balancing reserves within seconds, directed by a remote control system and quickly reacting to network signals. Being very responsive and flexible in their operation, VPPs are a main part of the answer to the big question of how the modern and digital energy world should look like - the failure-prone and aged technology of former socialistic combines like Bełchatów with its non-waterproof coalbunkers is exactly the opposite of these needs.
Selling Balancing Reserves as a Business Opportunity
Problems and threats aside, the incidents of June 22 have shown an interesting and forward-looking business opportunity. As energy systems are obliged to increase the renewable share in their power production, the demand of balancing reserves will grow. This power, created by adjusting the output of power producers and input of power consumers, will increase its value as the renewable revolution in the energy system moves forward. In other words: If the coal power plants go down for whatever reason, your renewable power plant, connected to a VPP, can do its part to secure the nation’s power supply. This isn’t just patriotic, but also a profitable deed. As June 22 shows, the prices on the balancing reserves market can rise very quickly in desperate network situations. Your CHP unit, your emergency power generator, your power storage unit – they all can take part in this business by connecting them to the Virtual Power Plant of Next Kraftwerke.