15 Jun 2023 .

Cable pooling: A potential solution for renewable energy optimization in Poland

Cable Pooling


Right now, harnessing the potential of renewable energy is critical to ensuring sustainable development and mitigating the effects of climate change. One such promising concept in the field of renewable energy sources (RES) is "cable pooling". Cable pooling refers to the connection of multiple renewable energy installations to a single grid connection point, thus optimizing energy production and potentially reducing costs. This article provides a brief analysis of the concept of cable pooling, focusing on its potential implications for the renewable energy sector in Poland. 


Overview of cable pooling 

Cable pooling is a strategy by which multiple renewable energy installations, such as wind farms or solar panels, share a single connection point to the power grid. This arrangement can allow for more efficient use of the grid connection capacity, potentially reducing costs and increasing the amount of renewable energy that can be produced and delivered to the grid. It can also decrease the variability of energy supplied to the grid. The technique has been used successfully in countries like the Netherlands, where shared grid connections have facilitated the rapid expansion of renewable energy projects. However, this approach is not yet widespread in Poland, due to several legal and formal barriers. 


Legal and formal barriers to cable pooling in Poland 

At the moment, Polish law does not provide for coordinated cooperation between installations looking at more efficient utilization of distribution capacities at one connection point. Network operators argue that they have no legal title to discipline those producers who, despite having a lower connection power than the nominal power, will consistently exceed it. 

To circumvent these obstacles, investors create a subordinate network and become its operator (OSDn). The subordinate network has a contract to output power to the superior (distribution or transmission) network. The contractual power of such an OSDn is the same as, for example, the previously installed power of a wind farm. 

However, this procedure is time-consuming and complex, making it costly and therefore only accessible to large, organized entities. These actions primarily result from business creativity, not from a power industry development strategy supported 

by dedicated legal provisions. This does not, therefore, enable the full potential of connection powers to be utilized. 


Potential legal changes and solutions

In response to these issues, the Polish Ministerstwo Klimatu i Środowiska initiated consultations at the end of 2022 on what is known as the "network package". One of its pillars is legislation aimed at developing cable pooling in Poland. The proposed solutions include: 

· Allowing a greater connection power than the connection conditions would imply, 

· Establishing the possibility of limiting production by the producer so as not to exceed the contractual power, 

· Granting network operators, the rights to order a reduction of power introduced into the network to the level of connection power without bearing responsibility for the consequences, 

· Disconnecting from the network in case of exceeding the connection power by more than 5%, 

· Imposing a penalty of 5 PLN/kW on the producer for exceeding the contractual power. 

These proposed changes would remove most of the barriers to the implementation of cable pooling in Poland. However, it should be noted that the project is still under consultation and may be subject to change. 


The potential of cable pooling in Poland 

Drawing on Dutch experiences, best practice involves concluding standard contracts between investors, defining the terms of cooperation and cost-sharing of joint connection and installation. A model agreement - Cable Pooling Agreement (CPA) – presented by Dutch industry organizations could enable the full potential of cable pooling also in Polish legal reality. 

Appropriate contractual regulations should also appear at the level of the connection agreement concluded with the appropriate operator. Such a tripartite agreement could be beneficial for investors and the system operator due to the limitation of the number of binding obligations and transparency. In such a case, contractual freedom should be preserved in defining which installation is to limit its production so that the total amount of electricity generated from both (or more) installations does not exceed the power of the installed connection. 

Upon implementation of these rules into the Polish legal order, it will be possible to harness the potential of combining RES sources in Poland. Subsequently, it is necessary to determine how much new capacity could be connected to the network if cable pooling was allowed. 


Analysis of the potential for combining RES sources in Poland 

As a rule, cable pooling is synonymous with abolishing the requirement for the connection power to be equal to the power of the generating source. This means that the size of the RES (and energy storage) power would no longer be limited by network operators. The investor will be able, for example, to get connection conditions for a source of 5 MW (or larger) power with a connection power of 1 MW. The main limitation on the part of the operator would be a requirement that the instantaneous production from the connected source does not exceed the power of the connection agreement. 

Limiting production will translate into a smaller volume of energy generated and sold by the producer. Operating a source in such a regime will mean that the traditional analysis of the economic justification for investing in new sources will change. Until now, such analysis was based on the assumption that the source will produce the maximum amount of energy allowed by weather conditions. When combining sources, it will be necessary to estimate the losses caused by limiting production. 

The main cost of generating energy in wind and photovoltaic power plants is the capital invested in the generating source (CAPEX). There is no need to purchase fuel in this case, and operating costs are reasonably low. The invested capital pays off over time, thanks to the energy generated. The more energy sold, the shorter the payback period. Limiting production due to connection power will result in an extension of the payback period. Oversizing the source, which will often have to be switched off, can therefore result in a loss for the investor. 

Thanks to enabling the combination of sources, the potential for RES development at both individual installation level, and at the national level, will mainly result from the profitability of investments in new sources. The analysis presented in this report aims to indicate how much new RES power can be created thanks to cable pooling. It should be noted that new investments must be profitable. The analysis does not examine spatial constraints. 

For the purposes of this analysis, a mathematical model was used that allowed for the optimal choice in economic terms of expanding the existing source within the previously indicated connection power. In the applied computational algorithm, the following assumptions were made: 

· The connection power constitutes the upper limit of power that a combination of renewable energy sources can generate. 

· The optimization criterion is annual profit. 

· Capital costs are calculated for additional power as the product of total investment outlays and the capital return rate CRF (Capital Recovery Factor). 

· The model did not take into account investment costs or operating costs of existing sources. 

· The volume of electrical energy produced (in MWh) within the installation is converted into monetary values. 

An additional parameter necessary to indicate at the preliminary stage is the price of electricity sold to the network. For the purposes of this analysis, the following values were adopted: 

· 298.92 PLN/MWh (low price scenario), 

· 398.56 PLN/MWh (moderate price scenario), 

· 498.20 PLN/MWh (high price scenario). 

The moderate value, i.e. 398.56 PLN/MWh, is the arithmetic average of prices forecasted by Aurora Energy Research for 2022–2035. The lower and upper values represent a 25% deviation from the average price, allowing for a more comprehensive assessment of the impact of electricity prices on the potential of cable pooling in Poland. 

By analyzing the cost-benefit of cable pooling under these scenarios, we can provide a more accurate picture of its potential. 


Cable pooling's game-changing impact on RES growth 

The economic analysis indicates that cable pooling, given the scenarios above, can contribute significantly to the growth of RES capacity in Poland. 

For the low price scenario, where the price of electricity sold to the network is 298.92 PLN/MWh, cable pooling could facilitate the addition of up to 6 GW of RES capacity. In the moderate price scenario, the growth in RES capacity could reach up to 8 GW. The high price scenario would make it economically viable to add up to 10 GW of capacity. 

These results underscore the potential of cable pooling to accelerate the adoption of renewable energy technologies in Poland. By reducing grid connection constraints and providing the flexibility for multiple sources to share connection infrastructure, cable pooling can pave the way for more cost-effective renewable energy production. 

However, it is important to note that the analysis only considered the profitability of new investments. The actual implementation of cable pooling would require further examination of spatial constraints, technical feasibilities, and policy supports. 

Policy reforms would be required to foster a favourable environment for cable pooling. These could include legal provisions that facilitate shared connection agreements and regulatory incentives that encourage RES developers to take advantage of cable pooling opportunities. 


Conclusions: cable pooling a key factor in Poland's renewable energy transition 

Embarking on a deeper exploration of cable pooling's transformative potential in the Polish energy landscape, one can reflect on the profound implications of its successful implementation. 

Cable pooling, despite its technical complexity, represents a compelling solution that can guide Poland into a new era of energy generation and usage. As described throughout this article, cable pooling allows multiple energy installations to share a single connection, enhancing the efficiency of renewable energy production and fostering resilience against power generation fluctuations. 

By uniting different types of renewable energy sources, cable pooling assures a steadier and more reliable stream of power production. This is especially significant for Poland, a nation attempting to escalate its renewable energy production while decreasing reliance on non-renewable resources. 

The path towards the implementation of cable pooling in Poland has not been without its challenges. Legal, technical, and economic obstacles, from regulatory uncertainties to substantial implementation costs, have posed significant hurdles. However, with recent legislative changes proposed by the Ministry of Climate and Environment, the way forward appears increasingly viable. 

This article's analysis demonstrates that the scope for renewable energy expansion, facilitated by cable pooling, is vast. It shows that even under conservative assumptions, the economic feasibility of new renewable energy installations could significantly increase, leading to a potential surge in renewable energy production. 

Moreover, the success of the Dutch Cable Pooling Agreement (CPA), which defines the terms and conditions of cooperation and cost-sharing, offers a practical demonstration that the potential for growth can be realized. 

This journey ends with an emphasis on the transformative potential of cable pooling in Poland. It goes beyond providing an effective solution to renewable energy production—it presents Poland with a pathway to demonstrate global leadership in sustainable and reliable power generation. 

Implementing cable pooling in Poland requires not merely technical and economic strategies but a long-term vision centred on sustainable growth, innovation, and the well-being of future generations. Hopefully this article could spur further dialogue and action to fully realize cable pooling's potential, ultimately contributing to a more sustainable Poland. The task now lies in the hands of all stakeholders to shape this future.