- Electricity distribution and sales volumes increased compared to the previous year
- Construction of new units at Opole and Turów is on schedule. Work at Opole is over 70% complete and nearly 18% at Turów
- PGE expects further efficiency improvements and higher flexibility amid search for new business areas
The Company’s consolidated EBITDA reached nearly PLN 7.4 billion in 2016. The 10% decline from 2015 resulted from a higher cost of CO2, lower capitalisation of lignite extraction, lower realised electricity prices and lower production volumes. With close to PLN 4.2 billion, the conventional generation segment accounted for the largest part of the Group’s EBITDA in 2016. The distribution segment closed the reporting period with EBITDA in excess of PLN 2.2 billion. The supply segment generated PLN 500 million and the renewables segment brought in PLN 365 million. Adjusted net profit for shareholders was PLN 3.4 billion.
“2016 was a period of intense work for us, which yielded satisfactory results in both operating and financial terms. After the completion of a comprehensive modernisation at Bełchatów power plant, we substantially increased lignite-based electricity production as of the third quarter. We produced a total of 54 TWh in the entire year and despite a busy overhaul schedule for conventional units, only 3% less than in the preceding year. Group EBITDA significantly exceeded PLN 7 billion, which I consider a fair result in the context of falling electricity prices and the rising costs of CO2 emission allowances.” said Henryk Baranowski, CEO of PGE Polska Grupa Energetyczna.
Lignite-based electricity production declined by 4% y/y to 37.35 TWh, resulting from the availability of unit 1 at Bełchatów power plant being limited to 1500 hours per year. Hard coal-based production reached 11.30 TWh, declining by 4% y/y due to repairs at unit 6 of Dolna Odra power plant and lower use of units by the transmission system operator. Wind-based energy production grew by 32% y/y, reaching 1.08 TWh. The volume of gas-based production grew by 14% in 2016 to 2.33 TWh due to favourable prices of this fuel, resulting in higher electricity output at the cogeneration plant Lublin-Wrotków CHP after the heating season. Electricity distribution volume reached 34.3 TWh, up by 3% from 2015. Energy sales to end customers reached 43 TWh and heat sales volume reached 18.1 million GJ.
In the third quarter of 2016, PGE updated its business strategy until 2020. According to the strategy, PGE’s mission is to ensure security and development through supply reliability, technical excellence, modern services and partnership relations. The Group wants to combine strong operational efficiency in every area of its business with high flexibility, understood as readiness to quickly adapt to current market and regulatory conditions. PGE is counting on new technologies, efficient management and the development of new business areas. It is searching for new growth vectors such as electromobility, system integration of dispersed sources and energy efficiency. According to its updated strategy, PGE Group wants to be closer to clients, to better understand them and to provide them with new and increasingly more comprehensive services, nonetheless prioritising energy supply security. In its updated strategy, PGE also highlights the obligation to conduct business in compliance with the values and rules laid down in PGE Group’s Ethics Code as well as a conscious and sustainable development.
“The energy industry all over the world is being reshaped, forcing electric utilities to seek out new growth paths. In this challenging environment, we have redefined the foundations upon which we want to build our future.” said Henryk Baranowski.
Investment expenditures in 2016 reached PLN 8.2 billion, down by 14% from the preceding year. Of this amount, PLN 3.5 billion was spent on the construction of new units at Opole.
“Investments in new capacities are progressing in line with the plan. At Opole power plant, where two new units with total capacity of 1,800 MW are being constructed, work is over 70% complete. At Turów power plant, where a 490 MW energy unit is being built, work is 18% complete. We completed a project of 138MW gas-and-steam unit at Gorzów CHP, and we are yet to execute several modernisation projects that will improve the emission profiles of our units and extend our production assets’ lifecycles. We are also pleased with investments in the distribution segment, launch in 2016 of the so called Czosnów hub and pilot AMI metering in Łódź and Białystok.” said Henryk Baranowski.
In 2017, PGE Group intends to develop its cogeneration segment and, as announced in the Group’s strategy, it plans to carve out its combined heat-and-power plants into a separate company. Aside from the two largest investment projects, Opole and Turów, the Group is also continuing work at Rzeszów CHP, where an installation for thermal processing with energy recovery is being built. The PLN 293 million project will make it possible to process up to 100 000 tonnes of municipal waste per year, with this being also used to produce electricity and heat. The Group is also expecting to see final arrangements regarding the capacity market.
Equity investments, mergers and acquisitions will also add to reinforcing PGE’s position of sector leader. PGE is amongst entities that have submitted proposals to purchase EDF’s Polish assets, and the Group has purchased shares of Polimeks-Mostostal, a company with the largest share of work at key projects in the conventional generation segment.