The European Commission, DG Competition, approved, on the 7th February, Poland’s plan to introduce a capacity market. This tool is a mean to guarantee sufficient generation capacity for the coming decade. Polish capacity market (CM) is the most cost-effective solution. It is estimated that until 2030, CM reduces the costs for Polish consumers by € 7 billion in total and wholesale electricity prices will be on average ca. EUR 5 /MWh lower by 2040. It will also lower the cost of capital for the new investments, specifically for peak-load capacity. The EC confirmed that the introduction of the CM, for a period of ten years, is a response for the clearly identified security of supply concerns. It is estimted that until 2030, 10-30% of the existing conventional capacity will be withdrawn from the market due to the age and non-compliance with Best Available Techniques (BAT) standards. The Polish market-wide capacity mechanism is technologically neutral. It is open to all types of capacity providers, including renewables, demand-response as well as foreign entities. Furthermore, the measures will keep costs for consumers in check thanks to the regular, competitive auctions to allocate capacity contracts. While CM is a key measure to guarantee the security of electricity supply, it will also help to modernise Polish electricity generation [...]
The European Investment Bank (EIB) has confirmed that it will provide almost EUR 1bn for strategic investments in energy and science in Poland. In line with its aim of promoting competitive and secure energy, the EIB has provided EUR 250m of financing to Energa for the upgrading and extension of its electricity distribution network in northern and central Poland. This financing, in the form of innovative hybrid bonds, is guaranteed under the European Fund for Strategic Investments (EFSI), a central element of the Juncker Commission’s Investment Plan for Europe. A further two EIB loans are providing Poland with EUR 730m for research, development and innovation activities in research institutes, universities and enterprises. The latter operations are the first to be supported by InnovFin Science, a facility with the financial backing of the European Union under Horizon 2020, its research and innovation programme. Energa will use the funds obtained from the issue of hybrid bonds to implement its priority investment programme in 2017-2019. The company estimates its total capital expenditure in this period to be in the order of EUR 814m. The innovative nature of the hybrid bond product stems from its equity-type features and partial equity recognition by rating agencies. The main objective of Energa’s programme is to increase the security of electricity supply while limiting network losses and improving the quality of service. The project will also include investments in the connection of renewable energy sources (mainly in low and medium voltage) to increase the hosting capacity of the network. Apart from these tasks, investments in smart meters and network automatisation as well as in new connections in the [...]
Polish and Danish gas transmission system operators (TSOs) have launched the Open Season 2017 Procedure on the 6th of June, inviting all potential shippers to bid for capacity in the probable new gas pipeline from Norway to Denmark and Poland, the Baltic Pipe. The purpose is to collect long-term investment signals before final investment decision is taken by TSOs, GAZ-SYSTEM and Energinet. Open Season 2017 procedure is a two-step process: Phase 1: publishing Open Season 2017 Rules and other documents about the process, and allowing shippers to book for capacity until the 25th of July 2017. Phase 2 is expected to be launched on the 5th of September 2017 and will invite shippers to submit their final bids for capacity allocation by 24th of October 2017. The shippers that have submitted a bid in Phase 1 must also submit the same bid (or higher) in Phase 2 for the bid to be valid. If shippers book a sufficient amount of capacity during Phase 1, Energinet and GAZ-SYSTEM will introduce fast track implementation of the Baltic Pipe project. The Baltic Pipe is a strategic infrastructure project, with the goal of creating a new gas supply corridor in the European market. For the first time, it will be possible to transport gas from fields in Norway to the Danish and Polish markets, as well as to customers in the neighbouring countries. At the same time, the Baltic Pipe project will enable the supply of gas from Poland to the Danish and Swedish markets. Diversification of supplies through direct access to deposits of natural gas will significantly improve the energy security level. [...]
Consolidated LIFO-based EBITDA, normalised to remove one-off items, reached almost PLN 2.6bn in 2016, 20% up on 2015. Consolidated LIFO-based EBIT soared 175% year on year, to PLN 1.9bn. Consolidated net profit for the year exceeded PLN 1bn, the best ever result delivered by the Group. To compare, in 2015 LOTOS reported a net loss of PLN 0.3bn. In 2016, LOTOS processed a record high volume of almost 10.4 million tonnes of crude oil, with the refinery’s capacity utilisation rate of 99%. The average daily output from the fields in Norway, Poland, and Lithuania was more than 26.6 thousand boe. LOTOS posted its record high results despite the challenging macroeconomic conditions. The average price of Brent oil in 2016 fell by 17% year on year, to USD 43.58/bbl. An even steeper decline was recorded in the average annual price of gas, which fell by as much as 29% (at the National Balancing Point), to USD 25.84/boe. Cash flows up, debt down In 2016, LOTOS generated operating cash flows in excess of PLN 2.7bn (compared with just under PLN 1.5bn in 2015), which is the best proof of the Company’s improving financial health. Net debt as at the end of 2016 was PLN 4.8bn, down PLN 0.9bn year on year. Net debt to normalised LIFO-based EBITDA was 1.8x (vs 2.6x in 2015). Higher reserves in Norway In 2016, 2P recoverable reserves attributable to LOTOS increased to 72.7 million boe (+9% year on year), following a major increase (by 8.5 million boe year on year) of the hydrocarbon potential in Norway due to reclassification of the Utgard field’s reserves. LOTOS Petrobaltic’s total [...]
Cristina Dascălu (CD): What are be the priorities you will advocate in Brussels, as Vice- Chairman of the Board of Directors of CEEP, representing the energy-intensive industry? Robert Pietryszyn: One of the most important drivers for the further development of the EU, and its position with respect to the biggest world economies, i.e. the USA, China, Japan, Russia and India, is competitiveness. In my opinion, increasing it, and witnessing the catch-up between the EU-15 and Central European countries, is one of the main problems of the EU. We can observe that from 2004, up till now, the GDP gap between the two parts of the EU has not got closer, and is even widening, showing the ratio as 3 to 1 (Euro 33.000 for the EU-15, to Euro 11.000 for Central Europe). Another great problem concerns the different approach to climate issues. In general, Central Europe outpaces the EU15 in terms of climate policy and CO2 decreases. Unfortunately, this is not a commonly known fact. By the way, the EU as a whole, already reached a 20% CO2 decrease in 2013. Again, this fact has not been publicised enough. Why is this? The policy concerning the Emission Trading System (ETS), shows that lower prices for EAU stimulated more investments and technological progress leading to the CO2 decreases in Central Europe, and the whole philosophy concerning backloading and the Market Stability Reserve (MSR), is not necessary at all for EU countries. Central Europe should invest in new technologies and the development of their industries within the frame of the general EU policy. This also means that each country should have [...]
We represent the widely understood Central Europe energy sector (electricity generation, distribution and transmission, renewables, gas, oil, heat generation and distribution, chemical industries, etc.), universities and scientific institutions.