PGE BIG BOOK

Transcription

PGE BIG BOOK

PGE BIG BOOK
January, 2016
•
Table of contents
PGE in a nutshell
2
Corporate Governance
8
PGE Group Strategy
12
Main business lines description
25
Business environment
38
Regulations
47
Recent financial and operating results
60
Financing and rating
68
Impairments
85
Accounting matters
89
Other issues
97
Technical appendix
105
1
•
PGE in a nutshell
<< Back to table of contents
2
Highlights – PGE combines operating and financial strengths
Highest
EBITDA
Highest
EBITDA
margin
among Polish
companies listed
on WSE
across Polish
power utilities
as of 9M 2015
Energy
production
in 2014
55 TWh
Energy
distribution
in 2014
32.5 TWh
no. 1 in Poland
no. 2 in Poland
CAPEX
programme
ensuring
business
leadership
RES
generation
in 2014
2.3 TWh
Strong
Credit Rating
Net debt/EBITDA
Fitch: BBB+
Moody’s: Baa1
2014:
- 0.11x
Q3 2015: 0.01x
Electricity
consumers
in 2014
5.1 m
Dividend yield
5.8%
12M avg. as of YE
both with
stable outlook
3
PGE Group in the value chain – 2014 data
•
Mining
•
•
•
•
•
•
Power
generation
•
•
Transmission
Distribution
Wholesale &
Supply
2 open pit lignite mines (Bełchatów
and Turów)
Lignite output 50 million tons p.a.
Production net ca. 55 TWh
Installed capacity ca. 12.6 GW
Sales of heat ca. 18 million GJ
2 Lignite-fired power plants
(Bełchatów and Turów)
2 Hard coal-fired power plants
(Opole and Dolna Odra)
Combined heat and power plants –
8 sites (Szczecin, Pomorzany, Gorzów,
Bydgoszcz, Zgierz, Kielce, Rzeszów
and Lublin-Wrotków)
Hydroelectric power plants (Hydro
ca. 97 MW, Pumped-storage ca. 1.5
GW), Wind farms 311 MW
•
Activity of PSE S.A.
•
•
•
Distribution of energy 32.54 TWh
Distribution grid: 281,290 km
Number of substations: 91,374
•
•
•
Final consumers 39.60 TWh
Wholesale market 62.44 TWh
Balancing market 1.10 TWh
4
PGE timeline since establishment
PGE Group established
Group segments’
consolidation
Acquisition of
DONG and Iberdrola
wind farms
Strategy 2014-2020
announced
2007
2009
2008
IPO on the Warsaw
Stock Exchange
2011
2010
2013
2012
Bełchatów Unit 14
(858 MW)
commissioned
2015
2014
Opole II project
(2x900 MW)
kicked off
5
Competitive advantages
Assets
• Leader in installed
capacity and electricity
production
• Focused on baseload
generation, absolute cost
leader in Poland - approx.
70% of power capacity
generated from own fuel
(2 lignite mines)
• Highly diversified and
youngest generation fleet
in Poland
• Regulated assets operator
(Dolna Odra Power Plant
and pumped-storage
plants)
• Growing renewables
portfolio: 529 MW in wind
as of the end of 2015
• 2016 Regulatory Asset
Base in distribution:
PLN 15.1 bn
Strategy
Strong financials
• Stable revenues
• EBITDA margin at 29%
• Strategy for 2014-2020
aimed at keeping the
leading position on Polish
market
(2014 FY) - highest among
Polish power utilities;
• Approx. 1/3 of EBITDA
from regulated activities
(distribution) under a
stable and transparent
framework;
• Strong investment grade
credit ratings with stable
outlook by Fitch and
Moody’s
• Plenty of headroom in the
balance sheet – net
debt/EBITDA at 0.01x at
the end of Q3 2015
• CAPEX financing secured
•
PLN 50 billion in total for
capex, including PLN 33
billion intended for
development,
modernisation and
replacement of generation
assets
• Maintaining the position
of electricity generation
leader
• Building a position of a
preferred supplier
• Continued improvement of
network reliablitiy
• SMEs focus in supply
business
6
Ownership and listing
Shareholders structure (as of 2015 YE)
PGE on the Warsaw Stock Exchange (2015)
Number of shares and votes (pcs)
State Treasury
Other Shareholders
Total
1,091,681,706
% of shares
and votes
Turnover (PLN)
10,214,639,718
58.39% Average number of shares traded (pcs)
2,396,745
778,079,123
41.61% Maximum price in year (PLN)
21.43
1,869,760,829
100.00% Minimum price in year (PLN)
12.06
41.61%
58.39%
Other
Shareholders
State
Treasury
Key Treasury special control powers
Company statues provide for special powers for the State Treasury.
As long as it is a shareholder of PGE, State Treasury:
•
has the right to appoint one member of the Supervisory Board either by a
written statement submitted to PGE at the General Meeting or outside
the General Meeting, via the Management Board;
•
holds special right with regard to selection of the Supervisory Board
members - when appointing members of the Supervisory Board by the
General Meeting, half of the members shall be elected from among
persons indicated by the State Treasury;
•
Supervisory Board selects the Chairman of the Supervisory Board from
among its members wherein the Chairman of the Supervisory Board shall
be elected from among persons indicated by the State Treasury.
PGE shares
•
PGE's shares are ordinary, bearer shares.
•
•
PGE’s shares are listed on the regulated market of the Warsaw
Stock Exchange.
may demand in writing that the Management Board convene a General
Meeting;
•
may demand that certain matters are placed on the General Meeting
agenda;
•
PGE's shares are not privileged.
7
•
Corporate Governance
– Management team and corporate structure
8
Management team - profiles
Marek Woszczyk
President of the Management Board
Supervises the Advisors to the Management Board and the Board Office as well as the following departments:
Corporate Communication, Marketing, HR, Audit, Legal and Security.
Since 1998 worked in the Energy Regulatory Office (ERO), from 2011 as a President.
Grzegorz Krystek
Vice-President for Operations and Trading
Supervises the departments of Planning and Analysis, Supply of Raw Production Materials, Operations, Wholesale Trade and Sales.
From the beginning of his professional career has been involved with the power generation industry, working for such corporations
as Westinghouse, Apache Corp., New York State Electric&Gas Corp., Arthur Andersen, Vertis Environmental Finance and Elektrim Energy Group.
Marek Pastuszko
Vice-President of the Management Board for Corporate Affairs
Supervises the departments of Administration, Corporate Governance, Procurement and IT Strategy for PGE Group.
Former Director of Law Section at the Organization Department of PGE and Task Manager of PGE IPO Project. Afterwards President of the Management
Board at PGE Energia. Subsequently legal counsel at Bird & Bird. Since May 2010 Deputy Director of Legal Department at GAZ-SYSTEM S.A.
Magdalena Bartoś
Managing Director, CFO
Supervises Financial Controlling, Treasury, Accounting, Investor Relations and SAP Program.
Managed corporate finance area of production and trade companies, including stock-listed companies
(such as Enea Operator, Nike Poland, Zelmer S.A. and Mazeikiu Nafta) and was a consultant with Ernst & Young.
Recent changes in the Management Board
On January 29, 2016 the Supervisory Board decided to recall Mr. Jacek Drozd, Vice-President for Corporate Affairs, and Mr. Dariusz Marzec - VicePresident for Development. Moreover, on January 29, 2016 the Supervisory Board has temporarily delegated its member - Mr. Marek Pastuszko - to
perform the duties of the Member of the Management Board.
9
Supervisory Board – profiles
Anna Kowalik
Chairman of the Supervisory Board
Jacek Barylski
Vice-Chairman of the Supervisory Board
Committees of Audit, Appointment and Remuneration
Committees of Appointment and Remuneration, Corporate Governance
Legal consuel. Currently holds the position in the Ministry of Finance. Supervised
several companies with State Treasury shareholding. Currently member of the
Supervisory Board of PKP S.A.
Legal consuel. For many years has worked for Ministry of Treasury. Experience
in supervision of operations of companies with State Treasury shareholdings.
Lecturer in the field of the commercial and civil law.
Marek Pastuszko
Member of the Supervisory Board delegated to perform duties of the
Member of the Management Board - Vice-President for Corporate Affairs
Małgorzata Molas
Secretary of the Supervisory Board
Former Director of Law Section at the Organization Department of PGE and Task
Manager of PGE IPO Project. Afterwards President of the Management Board at PGE
Energia. Subsequently legal counsel at Bird & Bird. Since May 2010 Deputy Director of
Legal Department at GAZ-SYSTEM S.A.
Committees of Strategy and Development, Appointment
and Remuneration
Economist. Experience in supervisory boards of companies with State Treasury
shareholding., e.g. Towarowa Giełda Energii S.A., Zakłady Azotowe in
Tarnów-Mościce S.A. Currently works for Ministry of State Treasury.
Marek Ściążko
Member of the Supervisory Board (independent)
Jacek Fotek
Committee of Strategy and Development
Engineer. Currently the Secretary of Science at the Institute for Chemical Processing
of Coal in Zabrze and the professor at AGH University of Science and Technology at
the Department of Energy and Fuels. He was a Member of Supervisory Board of
Tauron Polska Energia S.A. (2008-2015)
Jarosław Gołębiewski
Committees of Audit, Strategy and Development
Economist. Graduate of the Faculty of Economic Sciences at the University of Warsaw.
He was a Member of Supervisory Boards of AMINO S.A., Zakłady Akumulatorowe ZAP
S.A. and Przędzalnia Czesankowa Elanex.
Committee of Audit
Economist. Currently President of the Management Board of BondSpot S.A.. His
professional career included managing positions at Bank Handlowy w Warszawie S.A.,
Polski Bank Rozwoju, Citibank Poland, PZU Asset Management S.A., Invista DM S.A.
Małgorzata Mika - Bryska
Member of the Supervisory Board
Committees of Strategy and Development, Corporate Governance
Economist. For many years has been serving in the government administration,
currently in the Ministry of Economy. In 2003-2012 she held position of the Head
of Economic and Trade Section of the Permanent Representation of the Republic
of Poland to the EU and simultaneously led issues related to the energy sector.
Recent changes in the Supervisory Board
On January 28, 2016 the Minister of State Treasury appointed Mr. Marek Pastuszko as a member of Supervisory Board of the Company. On January
29, 2016 the Supervisory Board has temporarily delegated Mr. Marek Pastuszko - to perform the duties of the Member of the Management Board
On September 14, 2015 the Extraordinary General Meeting of the Company recalled Mrs. Barbara Dybek (Chairman of the Supervisory Board) and
Mr. Krzysztof Trochiumiuk and appointed Mr. Marek Ściążko and Mr. Jacek Fotek
10
Simplified ownership structure of PGE Group
PGE Dom
Maklerski S.A.
100%
PGE Polska Grupa Energetyczna S.A.
the Parent,
Corporate Center and Wholesale Company
Brokerage
house
Exatel S.A.
PGE Sweden AB
(publ)
100%
100%
100%
PGE Systemy S.A.
Shared Services Center
100%
Telecom
operator
PGE OKK Sp. z o.o.
Shared Services Center
99.96%*
100%
100%
100%
70%
PGE Górnictwo
i Energetyka
Konwencjonalna S.A.
PGE Energia
Odnawialna S.A.
PGE
Dystrybucja
S.A.
PGE Obrót
S.A.
PGE EJ 1
sp. z o.o.
CONVENTIONAL
POWER GENERATION
RENEWABLE POWER
GENERATION
ELECTRICITY
DISTRIBUTION
SUPPLY
NUCLEAR
PROJECT
Generation segments
* Squeeze out of minority shares in PGE GiEK S.A. is progressing .
11
•
PGE Group strategy
12
The strategic goal of PGE is value creation for shareholders
Strengthening of the leading position in electricity generation with the most
effective and diversified asset portfolio assuring long term competitive
advantage
Leading electricity
producer in Poland
Actively pursuing
identification and
implementation of
new growth initiatives
focused on value
creation
1
Group actively
developing
4
new
business areas
Innovation
2
Preferred
and reliable
energy
supplier
Reliability of supply as
well as optimal sales and
customer service
processes
3
The most
effective energy
group in Poland
Improvement of effectiveness of Group’s operations
in key areas based on best industry standards
13
PGE CAPEX Program for 2014-2020*
CAPEX timeline
2014-2020 CAPEX breakdown
[Nominal, net of VAT]
Development
and modernization of
distributiona
networks
~PLN 12.3 bn
Others
New conventional
capacity
~PLN 15.2 bn
9%
PLN
bn
6.35
30%
25%
Modernization
and restoration
of existing
generation assets
~PLN 16.3 bn
~PLN 50 bn
3%
New RES capacity
~PLN 1.7 bn**
33%
• Between 2014 and 2019 spending on preparation for the
commencement of the nuclear program will amount to ~PLN 0.7 bn
2014 2015 2016 2017 2018 2019 2020
* Source: PGE Group Strategy for 2014-2020;
** Projects realized under green certificates regime till the end of 2015 – 246 MW in wind farms with CAPEX of ca. PLN 1.4 bn
Further developments dependent on the final result of auction bid in coming years.
14
Strategic goal - Leading electricity producer in Poland (1/2)
STRATEGIC ASSUMPTIONS
MAIN DEVELOPMENTS
• Construction of new high-efficiency units in Opole and in
Turów with total gross capacity of ~ 2,290 MW
• Opole II project (2x900MW) - project on schedule and on budget,
progress of the project – 30% (as of Dec. 2015), exp. comm.: unit 5 in
Q3 2018, unit 6 in H2 2019
• Growth of cogeneration combined with long term support
system. 187 MWe new cogeneration capacity
• Total planned CAPEX for 2014 to 2020 in range of ~ PLN 50
bn, of which ~ PLN 15.2 bn for new conventional generation
capacities
• Turów project (490 MW) - NTP issued in Dec. 2014, contractor
redesigns technical project in order to meet new requirements of
BAT conclusions to be effective after 2021; exp. comm. in H1 2020
• Gorzów CHP project (138 MWe)- advanced stage of works, comm. in
H1 2016
• Rzeszów CHP (29 MWe) - new cogeneration unit comm. in Dec.
2014
• Zgierz CHP (20 MWe) - extraction-condensing turboset with a
peak-load and reserve boiler comm. in Dec. 2014
Opole II
Turów project model
15
Strategic goal - Leading electricity producer in Poland (2/2)
• Additional 218 MW installed capacity of PGE in wind farms
in 2015. Further growth of the RES portfolio dependent on
the final shape of future support system
• Implementation of the nuclear power project in a business
model – PGE chosen by the government to lead the strategic
project of the first Polish nuclear power plant
• Maintaining position of the leading operator of the
regulatory assets
• Securing fuel base for conventional energy as strategic
option
MAIN DEVELOPMENTS
• Wind projects executed in 2015:
Karwice 40 MW
Lotnisko 90 MW – the biggest in PGE’s wind portfolio
Resko II 76 MW
Kisielice II 12 MW
• Comprehensive modernization of units in Bełchatów – to be
commissioned in 2016
• Installations reducing SOx emission for units no. 3-12 in
Bełchatów (comm. in 2015) and units no. 4-6 in Turów
(commissioning in 2016)
• Installations reducing NOx emission for Opole power plant,
CHP Bydgoszcz and CHP Pomorzany
Lotnisko wind farm
Bełchatów power plant
16
Strategic goal - Preferred and reliable energy supplier
• Reorganisation of the sales process based on effective
trading strategy
• Reduction of SAIDI by 50% until 2020 for customers of
distribution segment
• Focus on understanding customer needs and improvement
of customer service quality
• Optimization of cost to serve through:
- redirecting traffic from direct channels to remote and selfservice channels
- implementation of Customer Relations Management tools
(CRM)
- Improving the effectiveness of back-office and service
functions through process optimization
- optimization of processes in metering data acquisition,
service connections and technical maintenance
• Focus on small and medium enterprises - retention of
historical customers and acquisition of new ones through
improvement of customer service quality and product
offering expansion
MAIN DEVELOPMENTS
• Trading strategy update – new approach towards value
chain management, wholesale trading, supply and risk
management
• Project of network losses reduction:
- replacement of transformers with low-loss units
- innovations in the area of metering systems (AMI Advanced Metering Infrastructure)
- gradual replacement of client-side inductive meters
with static meters and implementation of remote
metering data readings at HV networks, HV/MV and
MV/LV transformer stations and client-side
- decrease in network losses ratio over a four-year period,
from 6.87% in 2011 to 6.32% in 2014
• CRM Billing - support systems for settlements and
customer service in Supply and Distribution segments deployment of IT tools that support billing, settlement,
debt recovery, sales, post-sales, CRM and customer
services processes
17
Strategic goal - Most effective energy group in Poland
• Efficiency programs:
- Employment restructuring
- Central procurement
- Better assets utilization (Distribution & Conventional
Generation)
• Active dialogue with stakeholders in the area of regulatory
environment
• Optimization of management processes and support
functions in the Group
• Implementation of the operating model
• Implementation of Group-wide effective financial and risk
management process
• Effective investment portfolio management process and
close monitoring of their progress
MAIN DEVELOPMENTS
• Voluntary Leave Program (VLP) – costs across the Group in
2014 – PLN 404 million, realized mainly in Conventional
Generation, the whole VLP programme will be finished in
June 2017
• Mobile Application PLUTON to better manage maintenance
teams in distribution area implemented at the end of 2014,
only after 6 months enabled to increase the efficiency of
maintenance teams by 16% and which resulted in more
than PLN 5 million of savings
• SAP Program - implementation process of following
modules: Accounting and Logistics, HR Strategy and Asset
Management was continued in the three quarters of 2015
• Tax Capital Group formed with the intent to facilitate more
effective Group cash management, agreement concerning
formation of the tax group signed on September 18, 2014,
tax group launched on January 1, 2015 and will be in effect
for the next 25 years
• Cash management - cash pooling agreements concluded on
December 22, 2014; 16 companies from the PGE Group
and banks: Powszechna Kasa Oszczędności Bank Polski
S.A. and Bank Polska Kasa Opieki S.A.
• Creation of Shared Services Center – as of January 1, 2015
PGE OKK sp. z o.o. has commenced providing the finance
and accounting services to the selected entities of the PGE
Group
18
Strategic goal – New business areas and Innovation
• Development of new products and business areas. Initially
identified growth areas:
MAIN DEVELOPMENTS
• Joint Undertaking – Bilateral Cooperation with the National
Centre for Research and Development (NCBiR):
-
- dual fuel
- comprehensive energy solutions for customers, strategic
partnerships with players from outside of the energy
sector, energy advisory services
- infrastructure for e-mobility, distributed energy
generation and energy storage management,
electrification of home heating waste to energy and new
technologies using domestic energy resources
•
Development of operations in wholesale trade, a/o by
entering new wholesale trade markets, development of
trading and structured instruments
•
Analysis of market environment and identification and use
of innovative solutions for achievement of strategic goals
•
Use of the potential and competences of the PGE Group for
generation of revenues in new business areas, cooperation
with R&D institutions and domestic partners
July 1, 2015 agreement on cooperation in order to
implement a model of open innovations in the power sector.
PGE and NCBiR jointly will allocate PLN m 200 to finance
R&D projects carried out by consortia composed of research
units and businesses
• Power-to-Gas: common project of PGE and Gas Transmission
Operator GAZ-SYSTEM S.A.:
- May 12, 2015 initiation of the common project regarding
the application of energy storage technology involving the
transformation of electricity into another energy-bearing
medium, namely into gaseous fuel
•
PZU TFI and PGE - joint investment opportunities in
innovative businesses and promising projects in early
development stage:
- June 1, 2015 - partners signed a letter of intent
• Sector Programme - Cooperation of Polish Electric Energy
Comity (PKEE) with the National Centre for Research and
Development (NCBiR)
- October 21, 2015 NCBR completed process of approving
Programme Feasibility Study submitted by PKEE addressing
main challenges that face power sector in Poland. Allocation
for the Program in PLN 1 bn, half of which is to be financed
by projects’ consortia or companies carrying out research
19
Strategic investments and its financing (1/2)
Projects in pipeline
Opole II project
Rationale of
the project
Financing
model
Project schedule
&
current stage
Expansion project.
Brownfield, will utilize lower
unitary cost of production
placing two units to the left
side of Polish merit order
Turów project
Replacement. Brownfield.
Will replace decomissioned
units and utilize deposits of
lignite
Gorzów project
Expansion project. Built in
order to maintain generation
potential of Gorzów CHP
Investment financed in corporate model assuming on-balance sheet financing
and external resources, including bonds, Eurobonds and loan facilities.
Advancement of the project –
ca. 30% (as of Dec. 2015)
Early stage of the project
Advancement of the project –
ca. 60 -70%
1. Beginning of the project –
Q1 2014
2. Unit #5 commissioning –
Q3 2018
H2 2019
Q4 2014
H1 2020
Q1 2014
2. CHP commissioning – H1
2016
20
Strategic investments and its financing (2/2)
Projects analyzed
Nuclear project
Lignite deposits
Rationale of
the project
Expansion project. Built to secure and
diversify sources of energy supply. Zero
emission technology implies lower cost from
EU climate policy
Security of fuel supply. Projects for
obtaining a concession for lignite extraction
from Złoczew and Gubin deposits to secure
resource base for conventional generation
Financing
model
Ongoing work on financing model for the
investment. Involvement of Export Credit
Agency considered. Need of support scheme to
be established
Expenditures for acquiring concessions are
financed in corporate model
Environmental and site research executed by
PGE Group
Preparation of a report on the impact of
projects on the environment
Physical commencement of the project and
application for the "fundamental decision
possible in 2019
In both cases the licenses for extraction are
expected to be obtained in 2017
Project schedule
&
current stage
21
Financial aspirations*
•
Level of EBITDA (PLN bn)
•
Maintaining the current dividend policy
•
Effects of planned activities relating to improvement of
effectiveness – sustainable impact on EBIT
7.8
8.1
8-9**
2013
2014
2015-2020
40-50% of consolidated annual net profit***
PLN 1.5
bn
PLN
0.5 bn
Efektinroku
2013 Effect
Efekt
po 2015
Effect
2013
after
2016
•
Maintaining long-term ratings
•
Planned CAPEX 2014-2020
•
Annual R&D spending between 2015 and 2020
Moody’s
Baa1
Stable outlook
Fitch
BBB+
Stable outlook
~PLN 50 bn
min. 1.5% of net profit
* Source: PGE Group Strategy for 2014-2020; based on market and macroeconomic assumptions adopted by PGE
** PGE has commenced verification of macroeconomic and operational assumptions
*** Dividend policy revised to the level of 40-50% of the consolidated net profit adjusted by the value of impairment loss.
22
Environmental impact of investment pipeline (1/2)
In order to meet the European environmental requirements PGE initiated a wide pipeline of modernization
projects of currently operating conventional generation assets, as well as construction of new highly efficient
generating units that shall meet the highest environmental standards.
Already decreased emissions
(1990-2013)
• SOx emissions lowered by 80%;
Comparison of emissions rates of „modern” and „old” units
2014 data
• NOx emissions lowered by 40%;
• Dust emissions lowered by 97%.
• SOx emissions lowered by 59%;
• NOx emissions lowered by 40%;
• Dust emissions lowered by 53%.
SOx
NOx
kg/MWh (gross
production)
mg/Nm3
mg/Nm3
LIGNITE
Bełchatów unit 858MW
Expected further emissions
decrease (2013-2020)
CO2
Bełchatów "old" units
Turów unit 11*
Turów "old" units
995
93
195
1 091
536
243
ca. 820
≤ 75
≤ 85
980
363
253
ca. 700
≤ 100
≤ 80
876
199
318
HARD COAL
Opole units 5&6*
Opole "old" units
* Projected level of emissions – units under construction
23
Environmental impact on investment pipeline (2/2)
2014-2020 Modernization and restoration of existing generation assets ~PLN 16.3 bn
Project’s objective
Expected
completion
Comprehensive modernization
of units 7-12 in Bełchatów
extend the life-time of the units up to 320 ths. hours which enables utilization
of existing lignite resources;
boosting the efficiency of the units by approx. 2 pp.
increase of achievable power capacity of each unit from 370 MWe to 390 MWe
2016
Comprehensive modernization
of units 1-3 in Turów
extend the life-time of the major equipment of units by ca. 150 ths. hours
increasing the efficiency of units by almost 3 pp.
increase of achievable power capacity of each unit from 235 MWe to 250 Mwe
2020
Modernization of desulphurization
installations for units 3-12 in
Bełchatów;
decrease the SO2 emission level to the level required in IED (<=200 mg/Nm3).
2015
Projects pipeline
Construction of desulphurization
and denitrification installations
in Turów and Lublin;
decrease the SO2 emission level to the level required in IED (<=200 mg/Nm3).
2015/2016
(Turów)
2018 (Lublin)
Construction of denitrification and
desulphurization installation for
boilers no. 3 and 4 in Bydgoszcz
CHP
reduction of NOx and SOx emissions from boilers no. 3 and 4 to a level allowing
for further use after 2017
2018
Modernizations in Pomorzany CHP
reduction of NOx and SOx emissions to a level allowing to meet the
requirements of the IED Directive and BAT conclusions;
ensure that the plant remains in operation until ca. 2040.
2019
24
•
Main business lines description
25
Value Chain of PGE Group in 2014
Share of
EBITDA
recurring*
Conventional
generation
Renewables
51%
5%
Supply**
Distribution
5%
37%
2,378
305
351
3,266
PLN m 6,466
EBITDA
recurring*
•
Competitive
advantages
•
•
Leader of
baseload
generation
Cost-effective
fuel base
Youngest
generation
assets
•
Second
largest wind
power
generation
in Poland
(0.64 TWh)
•
•
•
•
Market
share
38%
11%
Large SME and
mass customer
base
No 2 on the
market in sales
volume
Competences in
modelling and
forecasting of the
energy market
Asset-based
trading allowing
further
development
30%
2014
* Excluding significant one-off items
** Supply and Wholesale presented as a one business line - Supply
End
customer
market
•
•
No 2 in Poland
in number of
customers
Stable
regulatory
environment
PGE
Group
26%
26
Value Chain of PGE Group in 9M 2015
Conventional
generation
Share of
EBITDA
recurring*
Renewables
53%
Supply**
5%
Distribution
8%
33%
PLN m 5,525
1,829
2,917
421
277
EBITDA
recurring*
•
Competitive
advantages
•
•
•
Baseload
generation
leadership
Cost-efficient
resource base
Relatively
young
generation
assets
•
40.5 TWh
generation
•
Second
largest wind
capacity
with 351
MW of
installed
capacity as
of Q3
•
1.77 TWh
generation ***
•
•
•
•
Leader in
wholesale trade
Asset backed
trading with
growth potential
Market modeling
competencies
45.6 TWh sold
on the wholesale
market
Biggest supplier
in terms of sales
volume –
29.0 TWh
* Excluding significant one-off items
** As of Q1’15 Supply and Wholesale will be presented as a one business line - Supply
*** Renewables generation includes biomass co-combustion
•
•
•
2nd biggest
customer base –
5.2 million
Stable
regulatory
environment
24.8 TWh
supplied in 9M
2015
PGE
Group
27
Conventional Generation - overview
Our flagship business
• 2 lignite mines, 4 conventional power plants (2 lignite fired and 2 hard coal fired) and 8 CHP plants
• The total achievable power generation capacity of 10.7 GWe
• PGE accounts for 78% of Poland’s total lignite extraction
• Apart from internally extracted lignite, PGE uses hard coal, gas and biomass in electricity and heat generation processes
Lignite resources
Deposit
Resources – as at the end of 2014
[Mg million]
Output in 2014
[Mg million]
Bełchatów – Field Bełchatów
geological
industrial
137.4
91.9
26.6
Bełchatów – Field Szczerców
geological
industrial
873.5
662.3
15.8
Turów
geological
industrial
372.4
325.2
7.6
Long term strategic options
• The above mentioned resources are sufficient to fuel PGE’s power plants for another 15 to 20 years
• PGE had already secured rights to potential future lignite resources in fairly close neighbourhood of existing plants
• Future conventional investments conditional upon CO2 policy, strategic partnerships and implemented support
mechanisms
28
Lignite deposits
Gubin*
Turów LP
Bełchatów LP
Złoczew*
Bełchatów
2044
Turów OCM
2020
2040
field
Szczerców
field
Lignite fired power plant (LP)
Active field / open cast mine (OCM)
2040 Projected year of termination of extraction
*Available resources (strategic options)
PGE operates two lignite complexes:
In Bełchatów and in Turów.
Each complex encompasses
open cast mine and power plant.
Bełchatów mine contains
two fields: Bełchatów and Szczerców.
**Illustrative. Based on currently
exploited resources
29
Conventional Generation – fuel supplies
Main fuels:
•
•
•
Lignite (sourced internally)
Hard coal
Gas
Provision of fuel supplies:
•
Hard coal supplies secured through long-term contracts; main suppliers include:
- Kompania Węglowa - contract 2014-2018, price formula includes ARA prices, domestic hard coal price and electricity price
- Jastrzębska Spółka Węglowa – contract 2013-2017, prices negotiated annually
- Katowicki Holding Węglowy – contract 2012-2016, prices negotiated annually
•
Future hard coal contracts:
- An agreement with Kompania Węglowa concluded in August 2013 for supplies of hard coal in years 2018-2038 in order to
provide fuel for new units in Opole power plant. Price formula includes average electricity price, average market price of hard
coal and average cost of CO2 emission rights
•
Gas supplies secured through long-term contracts and supplementary short-term agreements.
- 20-year agreement with PGNiG concluded in October 2013 for gas supplies to Gorzów CHP (starting from the commissioning
date). Gas price lower than tariff provided mainly through access to local sources of natural gas.
30
Renewables - overview
►Targeted portfolio expansion delivered in 2015
RES installed capacity in Poland
Overview
MW
7000
•
Over past 4 years PGE onshore wind installed capacity increased from
30MW in 2011 to 529 MW in 2015.
•
New support scheme will replace green certificates regime (for new
projects). The auction mechanism will reward only the most efficient
and cost-effective technologies.
•
In 2015 PGE has completed four wind farms (Karwice, Lotnisko, Resko
II, and Kisielice) and expanded capacity by 218 MW yoy.
•
•
Secured support scheme for existing wind farms.
+111%
6000
5000
4000
3000
2000
1000
0
2011
2012
wind
Source: ERO
2013
hydro
2014
9M'15
other (bio and PV)
PGE – installed wind capacity
MW
600
529.0
500
311.0
400
300
+10%
138.2
200
100
+70%
283.2
30.0
+105%
+361%
2012
PGE’s installed capacity Q3’15 eop
Type
No. Of Units
Operating
Wind
11*
351.0*
541.5
Hydro (run-of-river)
29
96.7
304.7
RES TOTAL
40
447.7
846.2
2013
2014
2015
Installed
capacity (MW)
9M’15 energy
generation (GWh)
Pumped-storage
power plants
2
1,216.0
Pumped-storage
plants with natural flow
2
291.5
3.8
Pumped-storage TOTAL
4
1507.5
374.5
1,955.2
1,220.7
TOTAL
0
2011
At the moment there is still uncertainty related to the RES support as
of 2016 – particularly auction final price and volume to be purchased.
370.7
* Figure does not include Lotnisko (90MW), Resko II (76MW) and Kisielice II (12 MW) completed in Q4’15
31
Supply
► PGE has a large customer base and growing sales of electricity
Supply branches
Supply and wholesale position
•
The total size of the power supply market in Poland
amounts to approx. 160TWh.
•
•
The Group supplies to ca. 5.1 million customers.
•
Households are ¼ of the market and customers’ prices and
regulated by tariff „G” approved by the ERO.
Free electricity market for industrial and commercial
customers.
Update of PGE’s trading strategy
•
•
Target to maximize margin on the whole value chain.
•
Offer expansion both from the product and services
perspective.
•
New marketing offers including dual fuel and auxiliary
services.
•
Focus on customer: account management and support.
Better risk management related to increased volatility of
both electricity prices and green certificates.
32
Distribution segment overview
► Distribution activities provide regulated stable and predictable cash flows
Electricity distribution network overview
Key operational data
Operational data
Unit
Number of stations
pieces
91,374
90,685
MVA
28,714
28,178
Capacity
km
281,290
279,704
HV lines
km
10,096
10,079
MV lines
km
109,054
108,571
LV lines
km
162,140
161,054
Grid loss ratio*
%
6.3%
6.5%
min
474
528
SAIDI 2014 in minutes
TAURON
•
•
•
Operates in the area of 122.8 th sq. km and supplies electricity to
over 5.2 million customers
Includes supply of electricity to final off-takers through the grid
Revenues are dependent on unit distribution tariffs that are
accepted by the ERO President assuming full coverage of justified
costs and market level of return on distribution assets
2013
Length of power lines
SAIDI ratio**
Distribution Position
2014
SAIDI - reduction target
600
planned
unplanned
ENERGA
500
-10%
400
-50%
300
ENEA
200
100
PGE***
0
100
200
300
400
500
0
2013
2014
2020
SAIDI (in minutes)
* ratio calculation: (volume of energy inducted to the grid of the Distribution System Operator –volume of
energy taken from that grid)/ volume of energy inducted to the grid of the Distribution System Operator
** ratio calculation: (duration of long and very long breaks x number of off-takers exposed to the effects
thereof)/number of off-takers
*** PGE position handicapped due to natural conditions (less populated and geographically challenging areas)
33
Business model (1) – electricity
RENEWABLE GENERATION
CONVENTIONAL GENERATION
SUPPLY
power
exchange
and OTC
local
market
Wholesale
Retail
DISTRIBUTION
Regulated market
(households)
Trading Management Service Agreement (TMSA)
Free market
(business)
Non-TMSA
34
Business model (2) – property rights (certificates) and CO2
CONVENTIONAL GENERATION
RENEWABLE GENERATION
SUPPLY
power
exchange
and OTC
Wholesale
local
market
Retail
DISTRIBUTION
Property rights
CO2 emission allowances
35
Other substantial business run by PGE
EXATEL
•
One of the leading telecommunications operators in Poland, 100% owned by PGE.
•
Exatel operates one of the most innovative transmission fiber network in Europe,
with a total length of ca. 20,000 km.
•
Exatel covers with its services 55 % of the largest banking and financial institutions in Poland.
Positive references of ca. 1,000 key customers - large companies and institutions.
•
1,700 telecommunications hubs in 400 localities in Poland which provide coverage of all business areas.
•
Global reach of services - direct connection with major domestic and foreign operators .
•
Flagship services: lease of digital lines, voice transit services, data transmission services, Internet
services, as well as hosting and co-location.
PGE Systemy
•
PGE Systemy S.A. provides PGE Group with a full range of Information and Communication Technology (ICT)
services as ICT Shared Services Centre.
•
PGE Systemy S.A. is an expert in implementation of new technologies and innovations aiming at speeding up
information flow and improving the administration within the whole Group.
36
First Nuclear Power Plant – zero-emission supply of energy for Poland
Recent developments on national level
Recent developments on PGE level
Polish government commitment to the deployment of the
Polish Nuclear Power Programme confirmed by:
September 3, 2014 - PGE S.A., TAURON Polska Energia S.A., ENEA
S.A. and KGHM Polska Miedź S.A. (Business Partners) concluded a
Partners’ Agreement on acquiring from PGE 10% of shares in
PGE EJ 1 sp. z o.o. - special purpose company responsible for the
project. Shareholders agreed to proportionally finance the
operations under the initial phase of the project.
•
Adoption of the Polish Nuclear Power Programme
(PNPP) (January 2014)
•
Including nuclear power in national energy mix
scenarios proposed in the draft of the new Polish
Energy Policy until 2050 (PEP 2050) (public
consultation started in August 2014)
•
April 15, 2015 – PGE sold 30% of shares in PGE EJ 1 sp. z o.o. to
the Business Partners.
Establishing of the Trans-ministerial Advisory
Committee for the Deployment of the Polish Nuclear
Power Programme at the Ministry of Economy
(appointed in October 2014)
Rationale behind the project
Project pipeline
•
EU climate change policies;
•
Further site and environmental studies – 2016;
•
Decarbonisation;
•
Specific location to be chosen – expected 2017;
•
Diversification and increase in security of supply;
•
Results of the integrated proceeding – expected mid-2019;
•
Aging generation fleet;
•
Environmental decision – expected 2019;
•
PGE Group diversifies it’s generation portfolio in order to
lower CO2 emission.
37
•
Business environment
38
Poland – electric power system profile
Electricity balance (2015)
20,5
GW
19,5
Country consumption: 161.4 TWh
18,5
Country generation: 161.8 TWh
17,5
International balance: 0.3 TWh (net export)
Dynamics of consumption: +1.7%
Lignite
Gas
2%
2%
Max. Demand 2015: 24.8 GW (Jan, 7)
Max. Generation 2015: 25.6 GW (Dec, 6)
6%
1%
5%
2%
3%
Hard coal
Lignite
Gas
3%
39.3 GW
Industrial (all fuels)
50%
19.6 GW
136 TWh
Hydro
47%
63 TWh
Industrial (all fuels)
Hydro
Wind
Wind
24%
9.3 GW
Avg. generation PL
Generation structure (9M 2015)
Hard coal
11%
5%
16,5
15,5
Achievable capacities structure (9M 2015)
2% 4%
Avg. demand
Biogas & biomass
Photovoltaic
Pumped-storage
Biogas & biomass
33%
45 TWh
Biomass co-combustion
Photovoltaic
Pumped-storage
Sources: ARE, PSE
39
Polish Merit Order in picture – illustrative only
Essentials
CHPs – treated as „must runs”,
Gas-fired units
while producing heat
electricity is a spinoff;
Additionally supported with
yellow or red certificates
Average demand
Lignite
power
plants
Lignite and
hard-coal
power
plants*
RES installations with almost zero marginal cost,
able to sell at 70 PLN/MWh (minimum price to be
offered), supported with green certificates
Marginal cost of thermal power
plants driven mainly by the cost of
fuel and price of CO2 allowances
•
Great
importance
of
the
generation efficiency (newer
installations consume less fuel)
•
Current supply and demand build
up wholesale price of electricity
•
Supported units are pushing
thermal units out of merit order –
lowering the price below variable
cost of conventional generation
in condensation
Industrials – „must runs”
generating for industrial
purposes with ability to
deliver surplus of electricity
•
Hard-coal
power
plants
Remarks
Pumped-storage units: working
accoring to TSO needs, separately
remunerated
•
Merit order varies during the day
(i.a. significantly lower demand in
off-peak hours) and between
seasons (i.a. less CHPs in warmer
months, RES affected seasonally
by the weather)
•
Fuels division for illustrative
purposes – (*) depending on the
current market conditions some
more effective hard coal units
could generate cheaper than less
efficient lignite ones
40
Trends in commodity prices
Hard coal
USD/t1
CO2 allowance (EUA_DEC15)
EUR/t
+28%
6,2
5,1
5,5
6,3
6,7
7,1
7,4
8,0
83,8
PGE average wholesale price of electricity
PLN/MWh
175
-25%
78,9
74,9
75,0
174
72,3
61,0
Source: Bloomberg
174
+5%
58,7
56,5
166
162
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
174
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Source: Bloomberg
163
+7%
164
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Source: PGE
Average quarterly TGE Electricity Prices 2013-2015
PLN/MWh
Base (Spot)
Base_Y_14/15/16 (Forward, next year)
Peak (Spot)
183,0
196,5 193,9
205,8
185,3
171,7
166,4
148,0
Base_Y_14
229,5 236,4
146,4
155,3
163,8
-16%
Base_Y_15
193,6
Base_Y_16
173,3 172,9 172,7
163,5 167,2
163,6
166,3
-9%
163,6
157,7
-13%
152,5
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Source: TGE
1
CIF ARA current month
41
Growing demand but pressure on prices
Macroeconomic environment
Q3 2015
Q3 2014
9M 2015
9M 2014
Real GDP growth (y-o-y)
3.3%*
3.4%
3.4%*
3.5%
Domestic Electricity Consumption growth (y-o-y)
2.3%
1.7%
2.0%
0.3%
Domestic Electricity Consumption
39.28
38.40
119.19
116.89
* Forecasted
Poland’s electricity price
CO2 allowances (DEC 2015)
8,5
190
8,0
BASE_Y-16
185
7,5
180
PLN/MWh
7,0
EUR
6,5
6,0
175
170
165
5,5
∆+4 EUR
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
150
Jan-14
4,0
Oct-13
155
Jul-13
4,5
Apr-14
160
Jan-14
5,0
42
Key available interconnections in Poland
Volumes traded in 2015
Total operating
capacities
installed between
countries
3.24 TWh
Export
1.24 TWh
SWEDEN
600 MW
LITHUANIA
500 MW*
0.02 TWh
3.16 TWh
~0 TWh
0.01 TWh
GERMANY
1,843 MW**
Import
0.06 TWh
0.42 TWh
0.07 TWh
0.34 TWh
0.01 TWh
~0 TWh
UKRAINE
251 MW
0.40 TWh
CZECH REP.
1,618 MW**
SLOVAKIA
831 MW**
* Connection opened Dec. 2015
** Connections trading availability limited due to circular flows between Germany and Austria – see trading volumes
43
Development of international links
Planned development of LitPol link
Phase shifters
being installed
will allow
electricity trading
+ 500 MW
LITHUANIA
+ 500MW
+1,500 MW
+ 500 MW
+ 1,500 MW
+500 MW
GERMANY
Import capability increase 2017
Export capability increase 2017
Import capability increase beyond 2020
Export capability increase beyond 2020
44
Simplified PGE SWOT analysis
Strengths
• Most competitive conventional power portfolio
including own lignite resources
• Significant retail and distribution customer base
• Strong financial position: low debt, stable EBITDA and
Weaknesses
• Relatively high CO2 emission per unit of electricity
• The highest SAIDI ratio among Polish distribution
companies
• Workforce guarantees hampering restructuring of
employment
rating outlook,
• In depth know-how in managing conventional
• Relatively high electricity generation surplus over
own retail sales
generation and RES
Opportunities
• Number of strategic options to retain baseload
generation leadership
•
•
•
•
•
•
Wholesale market model design upgrade
Macroeconomic outlook improvement
Fixed cost reduction potential
New value pools related to electricity
Capacity markets introduction
New auction support system for renewables
Threats
• Higher CO2 prices resulting in lower lignite-based
generation competitiveness
• New SO2, NOx emission standards
• RES rollout faster than currently anticipated might
affect conventional fleet
•
•
•
•
Increasing electricity imports
Global macroeconomic outlook worsening
Lack of committed support mechanisms for nuclear
Low retail and distribution tariffs
45
Business lines – opportunities and threats
Conventional
generation
Youngest generation
assets in Poland.
Own lignite deposits.
Leadership in generation.
Tight climate policy (CO2,
BAT/BREF)
Potential changes to ORM
Support for CHPs only
until 2018
Electricity prices under
pressure from cheap hard
coal, higher imports and
RES generation
Renewables
Expanding green
portfolio assuring
number of green
certificates.
Auction system to be
introduced in 2016.
Formal and legal barriers
during investment
process.
Distribution
Fully regulated activity.
Significant customer
base.
Infrastructure requiring
significant
modernization.
New model for 20152020 to reflect
government bond yields
compression and quality
component in tariff
Supply
Dominant position on
the market.
Significant customer
base.
Volatility of both
electricity prices and
green certificates.
Increasing competition
on retail market.
Recent developments important for each business segment
Changes in Operational
Reserve Mechanism:
-
higher payment per hour;
-
higher overall budget;
-
full budget utilization.
New RES regulations as of
2016:
cut in support for biomass
units;
support for biggest hydro
eliminated;
dedicated support for
microinstallations.
Model of DSO strategy for
2016-2020 approved
New tariff model:
- quality parameters added;
- OPEX reduction;
- new WACC computation
model.
Updated PGE’s trading
strategy:
- better risk management;
- new marketing offers, incl.
dual fuel;
- auxiliary services provided
with energy.
46
•
Regulations
47
European Union Emissions Trading System (EU ETS)
Idea
•
•
•
•
The purpose is to promote reductions in CO2 emissions
Limit reduced each year. In the system’s Phase III (years 2013-2020) by 1.74% annually, what gives 21% reduction in total
Participants of the system: 28 EU countries + Iceland, Liechtenstein and Norway
EU legislation puts a cap on emissions of greenhouse gases (GHG) to ensure the reduction targets (mainly CO2 for power sector)
Trading mechanism
• Companies buy and sell emission allowances (EUA) in auctions.
• Allocation of the allowances to be auctioned: 88% EU ETS member states (on the basis of the verified emissions in 2005), 10%
least wealthy countries, 2% ‘Kyoto bonus’ for nine states (incl. Poland)
• Auctions on specific platforms – mainly German EEX and British ICE. Poland plans to launch its own platform. So far using EEX.
• Free emission allowances granted until 2013. From 2013 power generators have to cover full emission with allowances bought –
excluding Poland and other new member states (free allowances granted on the basis of modernising the power sector).
• These exceptions are known as derogations. The size of derogations for particular installations is determined and proposed by
National Implementation Measures.
• Companies obliged to redeem allowances, respectively to their emissions, by 30 April of the following year. Allowances are then
cancelled and taken off the market
• Fine for non-compliance: 100 EUR per tonne of CO2 in 2013 with Eurozone inflation indexed yearly
Alternative emission certificates
• Alternative emission units: CER/ERU (granted for reduction of emissions), exchangeable for EUA 1:1
• Maximum volume to be exchanged for EUA: up to 11% of the free emissions granted in years 2008-2012 or up to 4.5% of the
verified emissions in years 2013-2020
ETS periods
•
•
•
•
Phase I: 2005-2007
Phase II: 2008-2012
Phase III: 2013-2020
Phase IV: 2021-2030
48
EU ETS market reviewed
MSR and Backloading
• Market Stability Reserve (MSR) aims to overcome a surplus of the allowances accumulating since 2009, which has weakened the
carbon price.
• MSR to be established in 2018 and become operational from January 1, 2019
• An understanding between the Council and European Parliament representatives reached (May 2015) and followed by further
acceptance of the European Parliament (July 2015)
• Backloaded and unallocated allowances to be transferred into the reserve
• Increase of the annual reduction in the number of emission allowances from 1.74 per cent. to 2.2 per cent. after 2020
EU ETS in 2021-2030 (IV Phase)
• Conclusions on 2030 Climate and Energy Policy Framework (October 2014)
• EC proposal for a revision of the ETS directive (July 2015) – follows the conclusions with a few detailed issues still to be
discussed
• The draft ETS Directive published in 2015
• Main assumptions:
–
Binding EU target of at least 40% reduction in greenhouse gas emissions by 2030 compared to 1990 – no country
binding targets
–
Derogation period for countries below 60% EU GDP per capita average (at 2013 market prices – Poland within the threshold)
allowing to allocate up to 40% of auctioned allowances directly to the energy sector
• Poland may expect up to approx. 280 million allowances depending on conditions of gratification
–
A new reserve is to be created allocating 2% of the total EU ETS allowances for modernization of energy sectors in
countries with GDP below 60 % average. These allowances will be auctioned and funds will contribute to technical upgrades
in the sectors.
• Poland may expect to receive approx. a half of total funds, EUR 2.0 - 4.8 billion*
–
Additional allocation of 10% of total EU ETS allowances for countries with GDP per capita below 90% EU average
• Poland will receive approx. 270 million additional allowances as budget proceeds on top of the 700 million received
based on historical emissions
* Forum for Energy Analysis forecast
49
CO2 emissions - free allocation
Free allocation for 2013-2020
PGE is entitled to receive free emission rights in the third settlement period which runs from 2013 till 2020
•
Emission rights for the third settlement period were granted on the ground of Regulation of the Council of Ministers
of April 8, 2014 – details provided in the table below
•
Amount of allocations adjusted with reference to the current investment schedules
Allocation for PGE
Group generators
2014
2015
2016
2017
2018
2019
2020
2015-2020
30.0*
26.0
19.9
15.1
13.0
10.4
0.4
84.8
(in Mg million)
TOTAL electricity &
heat generation
* Covered 51% of CO2 emissions in 2014
50
Industrial Emissions Directive (IED)
Idea
•
•
•
•
•
Regulates standards of the industrial operations
Creating one law concerning industrial emissions – successor of IPPC Directive and LCP Directive
Aims at minimising pollution from various industrial sources throughout the EU
Need of constant monitoring of NOx, SO2 and dust particles emissions
Final limits to be set in BAT conclusions (see next slide)
Main mitigation mechanisms (2016-2020)
•
•
•
•
Transitional National Plan approved by the European Commission
Opt-out derogations (for installations to be decommissioned before 2023 and working not longer than 17,500h)
Derogations for district heating < 200 MWth
Peak load plants working no longer than 1,500h per year
Influence
• New plants have to meet strict emission limits values (ELVs) for nitrogen oxides, sulphur oxides and particulates from 2013.
• Existing large combustion plants have to fulfil standards from 2016
• PGE assured compliance with IED – environmental investments and use of mitigation mechanisms
51
Best Available Techniques
BREF LCP (BAT Reference Document for Large Combustion Plants)
•
•
•
•
Describe what are considered to the best available techniques in a specific industry
Delivered by technical working groups and periodically revised (BREF revision process)
Adopted under both IPPC Directive and IED
Concern NOx, NH3, CO, HCl, HF, SO2, Hg and dust emissions and other factors like efficiency
BATC (BAT conclusions)
•
•
•
•
Chapter of BREF LCP containing information on the emission levels associated with the best available techniques
Provides binding emission limits - company have to fulfil them to get permit to carry out operations
Separate limits for existing and new installations (receiving permit after BREF is published)
Installations have to fulfil requirements in 4 year term after the BAT conclusion is published to get integrated permit
Process
• Ongoing consultations
• Last meeting of the Technical Working Group – beginning of June 2015
• Expected publication od BREF LCP – beginning of 2017, to be in force in 2021
Influence
• BAT Conclusions significantly tighten permissible levels given by the IED
• Potential capital expenditures to comply with new standards
• BAT-compliance already assured for Turów 11 project (contract annex signed)
52
RES support from 2016*
Existing Installations
New Installations
commissioned until 2015 YE
commissioned from 2016
Hydro >50 MW
Biomass co-combustion
(undedicated)
No support from 2016
1 MWh = 0.5 certificate
Other RES
RES >10 kW
1 MWh = 1 certificate
0-3 kW
3-10 kW
400-700
PLN/MWh
750 PLN/MWh
technology
dependent
FEED-IN TARIFF
GREEN
CERTIFICATES
15-year support
(since commissioning or since the
beginning of the system: 2005)
AUCTIONS
Possibility to
change
support
scheme
For new
installations
Max. 800 MW
•
•
„Pay as bid” auction
Contract for Difference for 15 years
50.4 TWh in 2016
≤ 1 MW
>1 MW
Min. 25% = 12.6 TWh in 2016
AUCTION
For existing
installations
4.7 TWh in 2016
Load factor
<45%
Load factor
>45%
30.9 TWh in 2016
* Amended RES Act (Dec. 29, 2015) postpones launch of the feed-in tariff and auctions.
It is to be in force from Aug. 1, 2016
53
Capacity Mechanisms in Poland
•
Operational Capacity Reserve (ORM) – introduced 2014
–
•
Capacities not operating at the moment are remunerated for being available in peak hours
Interventional Cold Reserve (IRZ) – introduced 2016
–
Units in permanent reserve remunerated for ability to be relaunched
30
System reserve essentials
29
•
Mechanisms aimed at assuring capacity needed in
the system for delivering reliability
•
TSO determines security level – system reserve
should remain at 18% of the demand
•
International exchange not taken into account
when setting reserve level
•
Demand reduction (negawatts) – auctioned year on
year – as other instrument used by the TSO. In
2015 ca. 200 MW at disposal
•
Capacity market under discussion
28
GW
27
Peak
demand*
3.45**
26.20
26
0.83
25
24
Ca. 18% of
demand
24.70
23
Max. monthly demand*
IRZ
ORM
* According to TSO coordination plan for 2016 (maximum values in January)
** Model-based size of the ORM, operationally it could be higher or lower
54
Capacity Mechanisms in details
Operational Capacity Reserve (ORM)
•
•
•
•
•
•
Centrally dispatched units remunerated ex-post for peak hours if not selling electricity but being available
The maximum price (PLN 41.20) paid unless the security level is exceeded; if exceeded remuneration lower respectively
Budget and parameters determined year on year
Implicated total 2016 budget of ca. PLN 487m
Since 2016 not utilised part of the budget will be distributed through ORM-takers (monthly and yearly)
Detailed parameters comparison:
2016
PLN 128,758.72
2015
PLN 106,246.72
3,451.09 (MW)
4,155.37 (MW)
Reference price (CRRM)
41.20 PLN/MWh
37.28 PLN/MWh
ORM hours in year
3,780
3,810
Hourly budget (BGOR)
Required hourly quantity
(WRM)
Interventional Cold Reserve (IRZ)
•
•
•
Aimed at covering fixed and variable costs of the generation units
•
•
•
The agreement covers the years 2016 and 2017, with an option to extend for a further two years, till the end of 2019
•
Siersza units 3 & 6 and Stalowa Wola unit 8 (both TAURON) as a remaining part of the IRZ (in total 376 MW)
Reserve in 2016: 830 MW
PGE has signed the agreement with Grid Operator on intervention capacity reserve for units 1 and 2 in Dolna Odra power plant, with
a total capacity of 454 MW
Grid Operator shall pay PLN 24 average per hour, for each MW of power at the disposal
Units 1 & 2 in Dolna Odra power plant have been granted derogations in the amount of 17.5 thousand hours to be used in the
period 2016-2023. This limit shall be used depending on the needs of NPS
55
Cogeneration Support
System
• Based on certificates of origin - three types of certificates
Yellow (gas-fired units or total installed capacity of CHP below 1MWe)
Violet (units fired with methane from hard coal extraction or from biomass)
Red (CHPs over 1 MWe and using any other type of fuel)
• Support resumed in 2014 and functional until 2019 (for yellow and red ones, purple operational continuously)
• The certificates are given to the utilities that run highly efficient CHPs when co-generating heat and power
• Companies selling electricity to final consumer obliged to obtain certificates of origin and to present for redemption to the
regulator (detailed percentage obligations below) or make a substitution payment (prices below)
• Reduced obligation for big energy-intensive industrial consumers
Obligations
Obligation
Red
Yellow
Violet
2014
23.2%
3.9%
1.1%
2015
23.2%
4.9%
1.3%
2016
23.2%
6.0%
1.5%
2017
23.2%
7.0%
1.8%
2018
23.2%
8.0%
2.3%
• Obligation applies to the volume of electricity sold to final consumers (excluding big industrials presenting certificates for redemption
on their own)
Substitution payment
Red
Substitution
Yellow
payment (PLN)
Violet
2014
11.00
110.00
60.00
2015
11.00
121.63
63.26
2016
11.00
125.00
63.00
2017
2018
not decided yet
56
Industrial efficiency
System
•
•
•
•
Introduced 2011 (Energy Efficiency Act of April 15 2011) and intended to save energy by reducing energy consumption
Current scheme temporary, pending works on new law that is to implement Directive 2012/27/EU
Basing on White Certificates, granted to enterpreneurs for proven efficiency improvements
Companies selling electricity to final consumer obliged to present White Certificates for redemption to the regulator or make a
substitution payment until 31 March of the next calendar year.
Obligation and substitution payment
Obligation: O = (U × R)/(100% × SP)
• U: obligation indicator set for the year (currently 1.5%)
• R: revenues from electricity sold on final consumers
• SP: substitution payment (currently PLN 1,000)
Current market situtation
• Inefficiency of the system causes lack of White Certificates on the market and the obligation is realized in practice through the
substitution payment
57
Fundamentals of the distribution business
Regulated revenue composition*
RAB development*
(PLNm)
1,565
14,618
14,095
RAB 2014
1,655
1,042
(PLNm)
1,203
15,069
CAPEX Deduction RAB 2015 CAPEX Deduction RAB 2016
recognized
recognized
WACC:
Return on RAB:
5,655
5,604
2,442
2,597
2,638
972
1,008
1,041
1,003
1,050
1,065
1,027
999
860
2014
2015
2016
5,443
Return on RAB
Amortization
Transmission costs
Other costs
2014
2015
2016
7.283%
7.197%
5.675%**
2014
2015
2016
100%
95%
100%
* Based on a Tariff
** WACC in regular activity, additional premium for AMI investments
58
New Tariff Model in Distribution
Idea
•
•
End of the current model (for years 2012-2015)
Inclusion of quality indicators should ensure effective improvement in investments
2016-2020 Return on capital
New WACC computation model
ROC = RAB * WACC * Q * RC
Parameter
Q – quality coefficient
RC- regulatory coefficient
Risk free rate (%)*
External capital risk
premium (%)
Cost of external capital
(%)*
Asset beta
Quality regulation (Q) – range: 0.85-1.00
• SAIDI, SAIFI and connection time goals
• Separate for each DSO
Equity beta*
Equity risk premium
• To be included in 2018
Cost of equity (%)
Regulator’s adjustment ability (RC) – range: 0.9-1.1
Share of external capital
• Separately for each DSO
• To offset extreme weather conditions and innovations of DSOs
• 1.00 in 2016
Pre-tax WACC, nominal
(%)*
* values updated quarterly
Previous
model
Tariff for
2016
3.961
2.952
1.00
1.00
4.961
3.952
0.400
0.800
4.60
7.641
0.400
0.724
4.20
5.993
0.50
0.50
7.197
5.675
OPEX and Network losses coverage
• Assumed 10% OPEX reduction (in 5-year period), with 2.5% increase justified with the growing business scale
• Network losses coverage model changed – less costs justified as a result
59
•
Recent financial and operating results
60
Previous periods review: FY14
EBITDA over PLN 8.1 bn
Highest among Polish listed
companies
TOTAL GENERATION 54.84 TWh
-4% y-o-y decline; outages due
to modernizations of
conventional units
LTC compensations PLN 1.5 bn
Removed from recurring
EBITDA
Opole II
Project kick-off
in January 2014
EBITDA margin reaches 29%
One of the highest across the
sector
WIND GEN. 0.64 TWh
+49% y-o-y increase;
Wind Farm Wojciechowo
Free CO2 allowances PLN 751m
EBITDA
Turów
Notice to Proceed
issued in December
Net profit of 3.6 PLN bn
8% y-o-y decline
SALES TO END USERS 39.60 TWh
+7% y-o-y increase
Voluntary Leave PLN 404m
Added back to arrive
at recurring EBITDA
Modernisations
PLN 875m on modernization
of distribution assets
DPS = 0.78 PLN (DPR = 40%)
Sustainable dividend
policy in CAPEX-intensive period
DISTRIBUTION VOL. 32.54 TWh
Stable moderate growth
(+2% y-o-y)
Change of reclamation
accounting
FY13 figures restated for
comparability.
Smoothing volatility of financial
results
Wind farms
28 MW commissioned March,
further 218 MW
in the pipeline for 2015
61
Previous periods review: 9M’15
EBITDA over PLN 6.2 bn
9% y-o-y decline (base
period inflated with LTC
settlement)
TOTAL GENERATION 41.73 TWh
+3% y-o-y increase; lighter
overhaul schedule at
conventional gen.
Fixed asset impairment
PLN 8.9 bn
Added back to recurring EBIT
(neutral to EBITDA as
impairments are reported in
D&A line)
Opole II
24% of project
advancement
at 9M 2015
EBITDA margin remains at 29%
One of the highest across the
sector
NATURAL GAS GEN. 1.30 TWh
+225% y-o-y jump;
reinstated support for
cogeneration
LTC compensations PLN 443 m
EBITDA
Turów
Redesigning to meet
expected BAT Conclusions
Net loss of PLN -4.0 bn
Figure includes (after-tax)
impariment of PLN 7.3 bn
SALES TO END USERS 29.03 TWh
-1% y-o-y decrease
Net debt PLN 101 m
Decreased in Q3’15 by
PLN 361m due to
curtailed NWC
DISTRIBUTION VOL. 24.80 TWh
Stable moderate growth
(+3% y-o-y)
Reclamation provision PLN 193 m
Removed from
recurring EBITDA
Modernisations
Modernisation of units
9 and 10 in Bełchatów
in line with schedule
Wind farms
Three wind farms at the
final stage of works.
End of year target
portfolio: 529MW
62
Focusing on the key financial results; last period and last full year
PLNm
9M 2015
Sales revenues
21,158
9M 2014
20,857
y-o-y
%
1%
FY 2014 FY 2013
28,137
30,145
y-o-y
%
-7%
9M’15
20,715
Recurring Sales
19,503
6,214
6,813
EBITDA
EBITDA
6,214
6,813
-9%
8,118
7,837
4%
Recurring* EBITDA
5,525
4,885
13%
6,466
8,279
-22%
Recurring* EBITDA
-4,026
3,199
n.a.
3,638
3,948
-8%
Net profit (loss) to equity
1.72
1.75
-2%
1.95
2.11
-8%
Net profit (loss) to
equity
EPS ex.
impairment**(PLN)
21,158
20,857
Sales
-4,026
5,525
4,885
3,199
2,651
2,022
Recurring* net profit
to equity
9M 2015
9M 2014
FY 2014
Net cash from
operating activities
5,217
4,433
18%
6,333
7,941
-20%
Sales revenues
28,137
30,145
CAPEX
5,837
3,859
51%
6,349
4,357
46%
Recurring* sales
26,598
29,844
101
462***
(899)
(3,131)
Net debt (cash)
(end of period)
Rating
Outlook
Fitch
BBB+
Stable
Moody’s
Baa1
Stable
Credit ratings
*Recurring = excluding significant one-off items
** Basis for the dividend computation according to the amended Dividend Policy
*** As at June 30, 2015
EBITDA
8,118
7,837
Recurring* EBITDA
6,466
8,279
Net profit to equity
Recurring* net profit (to
equity)
3,638
3,948
2,615
4,303
FY14
FY13
63
Summary of generation performance; last period and last full year
9M 2015 production (% change y-o-y)
FY14 production (% change y-o-y)
0.93
1,26
(-2%)
0.54
(15%)
Coal
8.90
Coal
12.01
(-1%)
0.30 (-12%)
0.37
(+22%)
Others
(-5%)
0.64
TOTAL
41.73 TWh
(3%)
Lignite
29,39
(2%)
(-3%)
(+49%)
0.42 (-14%)
(-5%)
Others
0,52
(-2%)
1,30
1,16
(225%)
Lignite
Lignite
TOTAL
38,83
54.84 TWh
(-4%) (-5%)(-6%)
(+5%)
Hard coal
Gas
GENERATION DRIVERS:
Pump-storage
Hydro
Wind
Biomass
GENERATION DRIVERS:
Lignite: easier overhaul burden compared to base period when unit 11 in
Bełchatów was undergoing modernization,
Lignite: decommission of unit 10 in Turów and modernizations of unit 12
in Bełchatów and unit 3 in Turów.
Hard coal: unplanned outage of unit 4 in Opole, partially offset with
greater production at coal fired CHPs (Zgierz, Bydgoszcz, Pomorzany),
Hard coal: decommissioned unit 3 in Dolna Odra in Nov. 2013.
Gas fired CHPs: reinstated support for cogeneration, the new unit in
Rzeszów since November 2014.
Wind: favourable weather and increased capacity Karwice, launched in July
2015 added another 40 MW
Gas fired CHPs: reinstated support for cogeneration, the new unit in Rzeszów since
November 2014
Wind: new 28 MW in Wojciechowo since March 2014
Hydro: worsened hydro condition y-o-y
64
Development of 2014 EBITDA by major value drivers
PLN m
7,837
2013 EBITDA REPORTED
Adjustments
442
8,279
2013 EBITDA RECURRING
Wholesale price of electricity
746
Margin on retail market
785
Volume of electricity*
Cost of fuel (hard coal and biomass)
390
159
New wind assets**
78
Adverse hydro conditions
51
Cogeneration support
Other
136
58
2014 EBITDA RECURRING
Adjustments
2014 EBITDA REPORTED
* Excluding effects from new wind assets and adverse hydro conditions.
** Revenues from wind farms commissioned and acquired in 2013 and 2014.
6,466
1,652
8,118
65
Development of 9M 2015 EBITDA by major value drivers
9M 2014 EBITDA REPORTED
6,813
One-offs
1,928
4,885
9M 2014 EBITDA RECURRING*
Wholesale price of electricity
Volume of electricity
382
190
Hard coal with transport
64
CO2 cost
117
Electricity resold
Margin on retail market
96
125
RES support
2
Cogeneration support
74
Return on distribution
148
Other
176
9M 2015 EBITDA RECURRING*
One-offs
9M 2015 EBITDA REPORTED
*Recurring = excluding significant one-off items
PLN m
5,525
689
6,214
66
Capital expenditures in 9M 2015
PLN 163 m
Significant projects
CAPEX in
9M 2015
Construction of Opole II
PLN 1,744 m
PLN 1,138 m
19%
PLN 565 m
PLN 1,866 m
3%
10%
TOTAL
CAPEX
PLN 5.9 bn
(+50%)
32%
36%
Refurbishment and modernization in Bełchatów
PLN 578 m
Modernization of distribution assets
PLN 616 m
New developments in distribution area
PLN 523 m
Lotnisko wind farm
PLN 224 m
Resko II wind farm
PLN 192 m
Karwice wind farm
PLN 72 m
PLN 2,148 m
New projects
Modernization & maintenance
56%
44%
Investments in generating capacities incl. conventional generation, renewables and
distribution
Conventional Generation – modernization, maintenance
& other
Conventional Generation - new projects
Renewables
Distribution
Supply & other
•
Opole in decisive phase of investment – intensive assembly works in progress taking advantage of favorable weather
conditions
•
Comprehensive refurbishment in Bełchatów since 2010 - PLN 3.6 bn of CAPEX up to the end of Q3’15; currently 2 units in
outage, project completion in Q3’16
•
Remaining three wind projects on the path to be completed till the end of 2015 and to lock in green certificates support
67
•
Financing and rating
68
Financing model of PGE Group
Financing model
69
Towards optimal financing structure
Secured financing facilities in 2015
• Eurobonds totalling EUR 638 million issued in 2014
under EUR 2 bn EMTN program
• Bonds totalling PLN 1 bn under the domestic PLN 5 bn
bond program
• PLN 1 bn long-term loan from BGK
• Current account credits from PKO BP S.A. (PLN 1 bn in
April 2015) Pekao S.A. (PLN 1 bn in February 2015) and
SG (PLN 250 m in July 2013 to July 2016)
• Preferential credits from National and Regional Funds for
Environmental Protection and Water Management
• Syndicated loan amounting to PLN 5.5 bn
• European Investment Bank loan amounting to PLN 2 bn
• Extension of the BGK loan + PLN 500 m
Sources of future financing
Targeted financing structure
Bonds
Bank
loans
• Pending Eurobonds under 2 bn EMTN program
• In discussion with EBRD
• Further preferential credits from National and Regional
Funds for Environmental Protection and Water
Management
70
Towards optimal capital structure through leverage
From net cash to more optimal capital structure …
Net cash (PLN bn)
Net debt/EBITDA
-0.06
4.1
2.5
3.1
0.9
0.01
-0.61
-0.34
-0.39
-0.11
8.2
6.7
6.9
6.6
7.9
*illustrative only
2011
Dividends paid or proposed (PLN bn)
8.4
7.4
6.0
5.5
2010
max. 2.5
2012
Capex (PLN bn)
2013
6.3
2014
Mid-term*
Cash flows from operating activities (PLN bn)
71
Dividend policy and historical dividend payments
New
dividend policy
Distribution of profit for
2014
PGE’s dividend policy states that the
company will distribute 40-50% of
the consolidated net profit adjusted
by the value of impairment loss for a
given year.
The
Annual
General
Meeting
accepted the Management Board
proposal regarding the dividend
payout, i.e. PLN 0.78 per share.
Timeline
Dividend day was September 24,
2015.
Dividend was paid on October 15,
2015.
Policy is sustainable in the course of
the investment programme and will
be periodically verified.
Cash dividend
Approx. 0.89 PLN
attributed to
sale of Polkomtel
2.64
2.23
2.20
1.68
1.95
1.83
1.72
1.10
0.76
2009
0.86
0.65
2010
2011
Dividend per share (PLN)
2012
0.78
2013
2014
Earning per share (PLN)
72
Debt development by quarters
Gross debt and net debt (PLN m)
6 000
5 000
4 660
4 802
5 045
4 811
4 822
4 838
4 000
2 706
3 000
2 000
2 405
2 522
2 718
1 586
1 000
266
462
101
0
-1 000
-1 020
-2 000
-3 000 -2 530
-1 921
-2 313
-2 922
-899
-2 386
-3 131
-4 000
Mar-13
•
Jun-13
Sep-13
Dec-13
Mar-14
Gross debt
Jun-14
Net debt
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
External long-term debt is mainly drawn by PGE Polska Grupa Energetyczna S.A. (the parent company) and PGE Sweden AB
(Swedish SPV for Eurobonds issues). Some historical investments loans exist in PGE GiEK S.A. (Conventional Generation
company)
73
Composition of net debt 2011-2015
In PLN m
A. Cash
September 30, December 31, December 31, December 31, December 31,
2015
2014
2013
2012
2011
903
1,327
578.3
639.6
240.9
3,489
4,587
4,970.6
3,755.2
3,622.8
0
3
4.1
3.8
5.4
4,612
5,917
5,553.0
4,398.6
3,869.1
E. Investments held to maturity and loans and receivables
124
27
100.0
10.6
2,298.4
F. Short-term debt with banks and current part of long-term debt
252
356
525.9
809.3
693.8
1
1
1.9
2.2
3.9
252
357
527.8
811.5
697.7
(4,484)
(5,587)
(5,125.2)
(3,597.7)
(5,469.9)
948
1,008
992.0
1,083.0
1,335.6
3,636
3,679
1,000.0
0.0
0.0
1
1
1.9
2.3
5.8
4,585
4,688
1,993.9
1,085.2
1,341.4
101
(899)
(3,131.3)
(2,512.4)
(4,128.5)
B. Cash equivalents
C. Securities held for trading and available for sale
D. Liquidity (A) + (B) + (C)
G. Other short-term financial debt
H. Short-term financial debt (F) + (G)
I. Short-term financial debt, net (H) - (D) - (E)
J. Long-term bank loans and advances
K. Bonds issued
L. Other long-term loans and advances or other commitments
M. Long-term financial debt (J) + (K) + (L)
N. Net financial debt (I) + (M)
74
Debt Structure and Liquidity (as at September 30, 2015)
Fixed vs Floating Debt (Drawn Debt)
Floating
18%
Fixed
82%
Issues under the EMTN program
Bank loans
loans repayment
repayment schedule
schedule (PLN
(PLN m)*
m)*
Bank
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
Drawn Debt by currency
PLN
28%
EUR
68%
USD
3%
CHF
1%
* Illustrative only, assumption of full utilization of available
bank loans (syndicated loan, BGK and EIB loans)
Value
EUR 500,000,000
EUR 138,000,000
Tenure
5 years
15 years
Maturity date
June 9, 2019
August 1, 2029
Coupon
1.625% annual
3% annual
Rating
BBB+ (Fitch); Baa1 (Moody’s)
BBB+ (Fitch)
ISIN Code
XS1075312626
XS1091799061
75
Debt maturity profile
Debt maturity profile (PLN m) as at September 30, 2015
2 400
2 000
1 600
1 200
800
400
0
76
Financing structure
In order to manage liquidity and capital expenditures of the PGE Group a range of external financing instruments is used:
Bonds’ programs, Investment credits, Preferential credits, Current account credits
External credit lines utilisation as of September 30, 2015 (PLN m)
Current financing instruments as of September 30, 2015 (PLN m)
6 000
7 000
5 000
6 000
5 000
4 000
4 000
3 000
3 000
2 000
2 000
1 000
0
1 000
BOŚ
NFOiŚ
NIB
UBS
Drawn
WFOiŚ
Current
account
credit
Domestic
bonds'
program
Undrawn
EMTN
program
Syndicated
loan
BGK
0
Current
account credit
Bonds
Drawn
Preferential
loans
External loans
Undrawn
77
Foreign exchange exposure
Major sources of exposure:
•
Loans and borrowings
•
Sales and purchases of CO2 emission rights and gas (hedged with forwards on the ongoing basis)
General approach
Bearing in mind that PGE Capital Group generates the majority of its cash flows in Polish Zloty, the general approach to
foreign currency exposure is hedging with currency based derivatives
– particularly regarding significant transaction.
PGE Group entities enter into currency based derivatives transactions only to hedge identified risk exposure (speculative
transactions are not permitted).
78
Cash Pooling
Cash Pooling
Signed
in December 2014
Launched
in January 2015
Involves
Mother company, 16 subsidiaries from PGE Capital Group and two banks: PKO BP S.A. and Pekao S.A.
Benefits
•
Optimized cash flows and more efficient liquidity management
•
Lower external debt needs due to utilization of internal sources
•
Secured liquidity for entities of PGE Group.
•
Lower costs of banking services
•
Internal overdrafts for subsidiaries within agreed limits*
* Mother company is also entitled to an external overdrafts upon separate agreements with banks
79
PGE cash position provides…
… plenty
of headroom
in the balance
sheet
Financial strength
has been
confirmed by
rating agencies
Q3 2015
H1 2015
Gross Debt (PLN m)
4,838
4,822
Net debt (PLN m)
101
462
Net Debt/LTM EBITDA
0.01x
0.06x
Net Debt/Equity
0.003x
0.01x
Moody’s
Fitch
Long-term company rating (IDR)
Baa1
BBB+
Rating outlook
Stable
Stable
Date of rating assignment
September 2, 2009
September 2, 2009
Date of the latest rating
confirmation
June 2, 2015
May 21, 2015
Senior unsecured rating
Date of the latest rating change
BBB+
May 26, 2014
August 4, 2011
Date of the latest rating
confirmation
May 21, 2015
Long-term national rating
AA- (pol)
Date of rating assignment
August 10, 2012
Date of latest rating confirmation
May 21, 2015
80
PGE ratings vs other Polish utilities
Company
Fitch rating
Moody's rating
S&P rating
PGE
BBB+ stable
Baa1 stable
N/A
Enea
BBB stable
N/A
N/A
Energa
BBB stable
Baa1 stable
N/A
Tauron
BBB negative
N/A
N/A
PGNiG
N/A
Baa3 stable
BBB- stable
BBB- stable
Baa3 stable
N/A
A- stable
A2 stable
BBB+ negative
PKN Orlen
Poland
81
PGE ratings vs European utilities
Company
Fitch rating
Moody's rating
S&P rating
PGE
BBB+ stable
Baa1 stable
N/A
CEZ
A- stable
A3 stable
A- stable
RWE
BBB+ negative*
Baa2 negative
BBB negative
BBB+ stable
Baa1 stable
BBB negative
EDF
A stable
A1 negative
A+ negative
E.ON
BBB+ stable
Baa1 negative
BBB+ stable
Engie
N/A
A1 negative
A stable
Verbund
N/A
Baa1 negative
BBB+ stable
Iberdrola
* unsolicited
82
Key rating drivers – BBB+ stable by Fitch
„…The affirmation is driven by PGE's strong market position in the Polish electricity sector and a conservative financial
profile. The ratings are constrained by the fairly low share of the regulated network business in PGE's EBITDA, limited
diversification of generation sources, high average carbon dioxide (CO2) emissions per MWh and Fitch's expectations of
declining margins in the company's core business of conventional generation. We project that large capex plans will increase
funds from operations (FFO) adjusted net leverage to about to 2x in 2017 and close to 3x in 2020 from close to zero net
leverage at end-March 2015. We view net leverage of 3x as the maximum level for the ratings. …”
RATING SENSITIVITIES
Positive: Future developments that could, individually or collectively, lead to positive rating actions include:
- PGE currently has large financial headroom in its ratings, although this is likely to gradually decrease by 2017 due to rising debt. A
quicker than expected recovery of EBITDA from 2016 could translate into better projected credit metrics, assuming the capex plan is
unchanged or lowered. Projected FFO adjusted net leverage below 2x on a sustained basis, supported by management's more
conservative leverage target, could be positive for the ratings.
- The ratings could be positively affected by a more diversified fuel generation mix and lower CO2 emissions per MWh, which together
with planned efficiency improvements, would result in a stronger business profile.
Negative: Future developments that may, individually or collectively lead to negative action include:
- Deterioration of credit ratios, including FFO adjusted net leverage above 3x and FFO fixed charge cover below 5x on a sustained basis.
- Acquisitions of stakes in coal mines or other form of support for state-owned mining companies under financial pressure, such as
Kompania Węglowa - leading to net leverage above 3x or substantially worsening PGE's business profile could be negative for PGE's
ratings.
83
Key rating drivers – Baa1 stable by Moody’s
„…PGE's rating assessment reflects the company's strong position as a dominant generator of electricity in Poland, and
as an integrated energy group. The company benefits from a low cost lignite-fueled generation fleet. However,
these positives are offset by the exposure to power markets in the weak price environment and high exposure to
carbon, albeit reduced due to the free carbon dioxide emission allowances. The assigned rating further takes into
account an expected increase in leverage due to negative free cash flows arising from a significant capital expenditure
programme…”
„WHAT COULD CHANGE THE RATING UP/DOWN
Upward rating pressure is unlikely in the short to medium term given the challenges that PGE faces in terms of carrying out
its capital investment programme and the anticipated decline in its credit metrics. Over the medium to long term, we would
consider an upgrade in the event of improved clarity around the future shape of the energy market in Poland coupled with a
successful implementation of the investment projects and a strong financial profile of the group.
Negative pressure on PGE's rating would develop if (1) power prices and spreads declined further so that rating guidance
was not met; (2) the group's FFO interest coverage ratio were to fall below 5.0x, FFO/net debt were to decline below 30% on
a sustainable basis; (3) there was a material adverse change in the regulatory framework in Poland; or (4) the group were to
embark on the nuclear investment without adequate financial and contractual risk protections. In addition, a deterioration in
the credit quality of the Government of Poland and/or reduction in the support assumptions currently incorporated into our
assessment would likely put a negative pressure on PGE's ratings.”
84
•
Impairments
85
External indicators behind impairment tests.
Negative impact on conventional generation margins
Fossil fuel prices
• Global decline of fossil fuels prices persisting in medium term
• Hard coal as marginal fuel drives the electricity prices down
• Merit order flattening resulting in lower margins in conventional generation
Climate policy
• More stringent environmental policy on the European level penalizing conventional units especially less
efficient and carbon intensive plants
• Paradox of RES – the more RES the more spare capacity required resulting in lower wholesale prices
Uneven level playing field
• Accelerated growth of RES capacities to push conventional units out of merit order
• Limited operating time of the crowded-out conventional units decreases their profitability
• Development of cross-border connections and inflow from oversupplied markets puts domestic prices under
pressure
Regulations
• Support for RES-oriented investments
• More strict environmental norms (BAT/BREF) increase CAPEX in conventional generation giving no guaranteed
return
• Generation segment increasingly reliant on regulatory decisions - capacity mechanisms required
86
Impairments at Conventional Generation made in H1’15 (1)
•
•
•
Commitment to idea of high quality financial reporting
Balance sheet altered to reflect the most accurate estimates of the value of assets
Book value of the assets linked to the expected cash flows to be generated in future years
Summary of impairment tests results at the Conventional Generation segment (PLN million)
Book value
before tests
Impairment
Book value
after tests
5,561
17,188
5,116
3,136
445
14,052
Bydgoszcz CHP
417
417
0
Kielce CHP
157
157
0
16
16
0
4,408
0
4,408
Szczecin CHP
516
0
516
Lublin-Wrotków CHP
400
0
400
Rzeszów CHP
300
0
300
Gorzów CHP
296
0
296
70
0
70
Dolna Odra Power Plant
0
0
0
Zgierz CHP
0
0
0
As at June 30, 2015
Business units affected with the impairment tests:
Turów complex (mining and power generation)
Bełchatów complex (mining and power generation)
Other assets
Remaining units:
Opole power plant
Pomorzany CHP
Total
29,329
8,842
20,487
For detailed rationale behind impairment tests please also the next page.
87
Impairments at Conventional Generation made in H1’15 (2)
Snapshot of key assumptions*
(real prices):
•
•
•
•
•
Wholesale price of electricity to advance by 20% until 2020, milder growth in the following decade
CO2 emission allowance price to increase 2.5 times until 2020, milder growth in the following decade
Hard coal price flat in years 2015-2018, increase in 2019-2020 and stabilization in the following decade
WACC of 7.26% along the forecasted horizon (down from 7.63% used in the previous impairment tests)
Capacity market to provide the security of supply; for the years beyond 2023 we assumed the remuneration scheme
analogous to the UK market
• Allocation of free CO2 allowances (both in the period 2013-2020 and 2021-2030)
• Support for highly efficient CHPs
• Headcount optimization
Sensitivity analysis (PLN billion); what would be the impairment if we take different assumptions?
Item
Change
Change of the electricity price along the forecasted horizon
Change of WACC
Change of CO2 emission allowance price along
the forecasted horizon
Assumption regarding capacity market (Y/N)
Impact on the impairment
Increase
Decrease
1% / -1%
1.1
1.0
+ 0.5 p.p. / - 0.5 p.p.
1.4
0.9
1% / -1%
0.4
0.4
lack beyond 2023
5.2
*For more details please see Chapter A 2.3 of Half Year Consolidated Financial Statement.
88
•
Accounting matters
89
CO2 allowances – regulations and settlement
Regulations in the III Settlement Period
•
•
As of 2013 only carbon allowances for heat production are
received free of charge
Carbon allowances for electricity production are granted
free of charge conditionally on investments realized that
were included in the National Investment Plan
Accounting standard
•
•
•
All allowances received free of charge are recognized at
its nominal value – zero
Provision for allowances required for redemption is raised
respectively to its actual shortage in a given period
Cost incurred is visible in taxes and charges P&L line
2015 allowances settlement
•
In Q3’15 (and 9M15 PGE’s) installations emitted 15.05m
(and 44.02m) tonnes of CO2
•
Consequently PGE’s full cost related to CO2 emissions in
Q3’15 (and 9M15) amounted to approx. PLN 218m
(and PLN 557m).
•
•
Free EUA recognized at a zero value – note 7, Q3’15 consolidated FS
In April 2015, PGE received free of charge emission
allowances of 29m tonnes for electricity generated in
FY14 and 1m tonne for heat to be generated in FY15.
Also in April 2015, PGE completed the settlement of FY14
period (i.e. PGE redeemed EUA equal to FY14 emission).
EUA
CER/ERU
Total value
Quantity
(m)
Value
(PLN m)
Quantity
(m)
Value
(PLN m)
(PLN m)
As at Jan 1, 2014
59
1,404
-
-
1,404
Purchased
33
829
3
2
831
Free allocation
34
-
-
-
-
Redeemed
-61
-683
-
-
-683
Adjustment
3
2
-3
-2
-
As at Jan 1, 2015
68
1,552
-
-
1,552
Purchased
13
423
-
-
423
Free allocation
30
-
-
-
-
Redeemed
-59
-681
-
-
-681
As at Sep 30, 2015
52
1,294
-
-
1,294
Provision for purchase of CO2 allowances – note 11, Q3’15 consolidated (PLN m)
As at Jan 1, 2015
Redeemed
Released provisions
676
-680
-1
Provided in 9M15
557
As at Sep 30, 2015
552
Impact on P&L (PLNm) – illustrative only
Costs by kind
Taxes and charges
9M’15
20,956
2,176
90
EUA – accounting scheme
EUA inventory
Provision
3. Redemption
(April)
Cash
P&L
(costs by kind)
1. Purchasing of EUA is not a cost itself, it is an exchange of assets. Accounts involved: cash and
inventory.
2. The creation of provision is a cost recognition process.
3. Redemption is a settlement process. It is an utilization of assets (EUA inventory) in the process of
settlement with the Regulator.
91
The summary of key accounting topics emerged in 2014 and 2015
Period
Q4'14
Q1'15
H1'15
Q3'15
Topic
Land reclamation
accounting changes
Alteration of segments’
composition
Tangible assets
impairments
IFRIC 20
Segment
Conventional
Generation
Conventional Generation,
Retail + Wholesale, Renewables
Conventional
Generation
Conventional
Generation
Summary
The key distinguishing feature
of the new accounting method
compared to the previous one,
is the fact, that the present value
of future overburden* reclamation
costs is now capitalized and
subsequently depreciated over the
following years (straightforward
application of IAS 16)**
1. Retail and Wholesale to be presented as a single
business line – Supply (Previously, presented as
two separate segments)
2. Inclusion of Enesta into Supply segment
(previously reported as Other),
3. Inclusion of support-entities into Conventional
Gen. segmemt (previously reported as Other).
4. Inclusion of 3 hydroplants into Renewables
segment (previously reported as Supply)***
Treats impairments
as an accelerated
depreciation
(impairments does
not impact EBITDA
figure).
Concerns stripping
costs, i.e. cost
related to the
removal of the
overburden*
(details at the
next page)
Rationale
To diminish volatility
of financial results caused by
actuarial changes.
1. To remove the impact of the internal agreements
from the reported figures (our retail and
wholesale business are linked with transfer prices,
thus segments should be evaluated mutually).
2, 3, 4. To present results in a more logic order.
To facilitate
comparability with
other companies
(otherwise distorted
by significant
impariment)
To correct
depreciation
figures and to avoid
double counting
Magnitude
Switch into the new accounting
method resulted in FY14
consolidated EBITDA higher by PLN
458m, Ceteris Paribus. Reported
FY14 net profit was greater by PLN
341m compared
to the old method.****
1. In Q1'15 Supply segment had PLN 2 billion lower
Revenues and COGS than simple sum of wholesale
+ retail due to intersectional eliminations.
2. Insignificant: EBIT of Supply segment increased by
low-single digit (%) in Q1’15
3. Insignificant: lower than 1% impact on Con.Gen.
Q1'15 EBIT
4. Hydroplants have mid-teens % contribution to
Q1’15 EBIT of Renewables segment.
Under the old
accounting policy,
impairments would
result in negative
EBITDA of PLN -4.5
bn in H1'15 *****
Without the
respective
eliminations
depreciation would
be overstated by
c. 7% in 9M'15
* overburden – the material overlying a lignite deposit (most commonly the
rock, soil and ecosystem),
*** Segments rearrangement is outlined at page 95 of herein Big Book
**** For more information please see pages 50-53 of FY14 presentation,
** for more information please see:
***** Impairments are summarized at pages 88-89 of herein Big Book
www.gkpge.pl/media/pdf/PGE_Land_reclamation_accounting_20150129.pdf
92
Accounting topics which emerged in 2015: IFRIC 20
•
The acronym IFRIC stands for International Financial Reporting Interpretations Committee. IFRIC 20 provides the
guideline for the surface mines, regarding so called stripping costs. These cost are related to the removal of the
overburden (i.e. mine waste materials), before lignite deposits can be accessed.
•
This preparatory stage will yield economic benefit in future periods, therefore stripping costs are being
capitalized. This means that fraction of current period’s expenses are reflected in the balance sheet and will be
recognized in future periods income statements through the depreciation line.
•
In Q3’15 the capitalized stripping costs amounted to PLN 187 million vs. PLN 124 million in Q3’14. Stripping costs
advanced by 51% yoy, because of heavier preparation works at the relatively new field, Szczerców, (while older
deposit, Bełchatów is coming to its lifetime).
•
The switch towards the new field (Szczerców) increased the importance of IFRIC 20, which lead us to the
discovery of slight inconsistance within the previously used accounting method (we amended the method
accordingly, effective Q3’15).
•
D&A from cost by kind section needs to be adjusted for EBITDA calculations – as summarized in the table below:
[PLN million, consolidated]
9M'15
6M'15
Q3'15
1. Total depreciation of tangible assests (ex. impairments)
2,235
1,571
664
13
6
7
139
102
37
2,083
1,463
620
7%
7%
7%
2. Change in stock position
3. Cost of manufacturing products for the entity's own requirements
4. Depereciation of tangible assets involved in period’s fin. result (1-2-3)
Magnitude of depreciation adjustment (2+3)/4
•
To summarize: A fraction of costs by kind (incl. Depreciation) is being incurred to benefit future periods and
therefore is being capitalized. The machinery, say excavator, uses up, but its extinguishing value turnes into the
new asset (i.e. opencast field prepared for lignite extraction). That is why downward adjustment of c. 7% was
required at the D&A level.
93
Accounting topics which emerged in 2015: segments rearranged
Conventional Generation
Conventional Generation
Renewables
Renewables
Distribution
Distribution
Wholesale
Supply
Supply
3 hydro plants
Other
Other
PGE GiEK supporting entities
Enesta S.A.
94
Provision for future liquidation costs - changes in reclamation accounting
PGE maintains and adjust periodically
Provision for rehabilitation and liquidation of property, plant and equipment PLN 2,829m at 9M’15 eop
including:
9%
91%
Other:
Provision for rehabilitation of post-exploitation
mining properties
PLN 2,576m at 9M’15 eop
A. Provision for rehabilitation of ash storages
B. Provisions for rehabilitation of post-constructions
grounds of wind farms
C. Provision for liquidation of tangible assets
∑= PLN 253m at 9M’15 eop
KEY FACTS:
•
Reclamation costs will be incurred in the years 2023 – 2064 (Bełchatów open cast mine) and in years 2045-2065 (Turów open cast mine).
•
According to the Geological and Mining Law, companies involved in the open cast mining are required to maintain fund for liquidation of mining
facility. A fund must amount not less than 10% of the exploitation fee p.a. A Fund has to be paid up within one month after the end of financial
year. The above provision includes also the value of the fund.
•
Provision was highly sensitive to various assumptions; particularly to discount rates (based on government bond yields).
•
In order to moderate the influence of discount rates changes on the value of provisions and to smooth out the period-to-period volatility
of financial results caused by volatility of yields, PGE changed land reclamation accounting policy, effective Q4’14 and thereafter.
•
The rules and the impact estimated of new accounting policy were disclosed on January 29, 2015*
•
The accounting change in brief: the present value of the future overburden** reclamation costs get capitalized and would be subsequently
amortized over the lifespan of the mine, hence, the new tangible asset was recognized in books. Changes in reclamation provision caused, inter
alia, by changes in yields are now mirrored in the value of tangible assets, bypassing the net profit (∆ Liabilities = ∆ Assets).
•
Despite the accounting change, yields volatility still impacts the value of provision and Group’s P&L, yet the impact is roughly 4 times milder.
*Appendix to the current report; http://www.gkpge.pl/media/pdf/PGE_Land_reclamation_accounting_20150129.pdf
** Overburden – the material overlying a lignite deposit (i.e. rock, soil, ecosystem)
95
Tax Capital Group (TCG)
25-Y forward
• The agreement signed on September 18, 2014 is effective January 1, 2015 for the next 25 years
Composition
• Comprises 31 companies from PGE Group and includes the parent company and all the key
subsidiaries (except PGE EJ 1 and PGE Sweden).
Goal
Taxed as a
single entity
• Goal: optimisation of tax settlements
• The Polish Corporate Income Tax Act treats tax groups as separate income tax payers. Companies
within TCG are not treated any longer as separate entities for, but TCG is treated as one whole
entity instead. TCG tax base is the group’s aggregate income.
CIT only
• The above applies only to purposes of corporate income tax (CIT) and should not be equated with a
separate legal entity. Furthermore, TCG does not apply to other taxes (e.g. TCG members remain
separate payers of VAT).
Requirements
• The companies forming a TCG are obligated to meet a number of requirements – e.g. the parent
company’s share of at least 95%, etc. The violation of these requirements will result in dissolution
of the tax capital group and the loss of status of the taxpayer.
96
•
Other issues
97
New corporate governance model of PGE Capital Group
PGE Group Code
•
Approved by the Management Board on July 3, 2014;
•
Fundamental document defining a new corporate governance model;
•
Unifies and simplifies the structure of the Group.
Rationale behind the project
•
Efficient management of the companies from PGE CG;
•
Minimizing legal risks;
•
Legal framework for implementation of process management in PGE CG.
Tangible benefits
•
Obligation of each company to act in the common interest of the whole PGE CG;
•
Group-wide implementation of 2014-2020 Strategy;
•
Unified standard of internal documentation.
Expected effect
•
Operations of all companies integrated in PGE CG executed from the perspective of
a single effective business organism.
98
Employment and Labour (full time)
PGE Group
Conventional generation (like-for-like)
Conventional Generation (core)
21,693
-12%
6,443
19,638
44,217
41,277
Support
41,195
39,977
18,871
38,954
17,485
16,827
-22%
2011
2012
2013
2014
Q3 2015
2011
2012
2013
2014
Q3 2015
Since Q1’15, as a result of reporting rearrangements, Conventional
Generation segment includes supporting entities.
Supply (like-for-like)
Retail
Distribution
Wholesale, Enesta
606
1,635
1,491
1,505
1,497
-14%
12,073
11,306
1,419
10,938
10,648
10,331
-13%
2011
2012
2013
2014
Q3 2015
2011
2012
2013
2014
Q3 2015
Since Q1’15, as a result of reporting rearrangements, Supply segment
includes also Wholesale and Enesta (whereas before it included only Retail).
99
LTC compensations – current status of court disputes
Generators from the PGE Capital Group are in disputes with the ERO President regarding stranded cost compensations in years 2008-2010.
Stranded cost compensation in 2011-2014 are not subject to court disputes.
Status of court cases:
Year
Opole PP
Turów PP
Gorzów CHP
Rzeszów CHP
Lublin-Wrotków CHP
ZEDO PP
2008
Case at the Supreme
Court*
Case closed
Case closed
Case closed
Case at the Supreme
Court*
Case at the Supreme
Court*
2009
Case closed
Case closed
Case at the Supreme
Court
Case at the Supreme
Court*
CCCP verdict
Case at the Supreme
Court*
2010
CCCP verdict**
Court of Appeal
verdict***
n/a
Court of Appeal
verdict***
Court of Appeal
verdict**
Court of Appeal
verdict***
* Cases dependent on the Court of Justice of the European Union verdict
** PGE GiEK S.A. appeal partially allowed, PGE GiEK and ERO President both entitled to file appeal with the Court of Appeal
*** One verdict jointly for PGE GiEK S.A. as a legal successor of the merged companies from conventional generation segment
Case closed – favourable verdict
Court of Appeal – favourable verdict. ERO President entitled to cassation appeal
Not a subject to LTC compensations
Court of Appeal verdict favourable for PGE, cassation appeal filed by the ERO with the Supreme Court
Court of Competition and Consumer Protection – favourable verdict
PLN m
2011
Provision for outstanding court cases re LTC from 2008-2010
(1,038)
Reversal of provision based on legally binding verdicts
-
Unsettled LTC disputes – total value
2012
2013
2014
200
337
246
255
100
•
Other issues
– Success stories of PGE investment projects
101
Cogeneration unit for Rzeszów CHP - successful project from start to finish
General project information
Nature of the project
Cogeneration unit
Capacity
29 MWe and 26 MWt
Fuel
Natural gas
CAPEX
~PLN m 90 (net value)
Project duration
15 months
Commentary
•
Cogeneration unit in Rzeszów CHP is currently the largest and the
most advanced gas powered engine block in Poland;
•
Strict parameters of investment and high standards of applied
technologies allowed to obtain the external aid of PLN 30 million and
additional PLN 10 million of aid shifted from another cogeneration
project realized within the Group;
•
Rzeszów cogeneration unit includes four electric generators produced
by ABB and powered by Rolls-Royce piston engines;
•
•
Generation capacity covers energy needs of city’s right bank;
Location in Poland
Heating capacity will significantly reduce coal-fired boilers works in
winter and replace them completely in summer .
102
Wojciechowo onshore wind farm – effective project execution with local support
Onshore wind farm
Capacity
28 MW (14 x 2MW)
No of working hours
~2 700 h/year
CAPEX
~ PLN m 150
License to produce electricity
III 2015
Commentary
•
Contract engineer and first contracts for wind turbines in January 2013. First
construction work in April 2013 due to adverse weather conditions.
•
Wind turbines provided by Danish Vestas. Construction execution by SAG
Elbud Gdańsk – member of German SAG Group – experienced in wind farm
building.
•
Great project execution, experienced staff and sound local support for
investment delivered the project ahead of schedule and below budget.
•
Within the investment PGE renovated the district road running through
Wojciechowo and historic paved road.
•
Ongoing cooperation with local community – PGE founded a playground for
Wojciechowo, sport competitions organized between local residents and PGE
employees, Christmas gifts for children from Wojciechowo area.
Location in Poland
103
Intense distribution investments in line with our current strategy
Modernization and
new developments
Total grid length/ coverage (end 2014)
~281 ths km/122.8 ths m2
CAPEX in 2014
PLN m 1,508
New/modernized MV & LV grids
1,667 km/2,424 km
Commentary
•
•
Connection of new off-takers and grid expansion was the most
capex consuming area for PGE Distribution in 2014;
Investments of key importance for actions taken by the PGE to achieve
strategic aspirations, such as the most reliable energy supplier and
the leader in efficiency and innovation fields;
•
Lower ratio of network losses – from 6.9% in 2011 to 6.3% in 2014
due to sound investments in grid lines quality;
•
Decrease of interruption time for end-customers (SAIDI) by 11% in
2014 yoy;
•
Connection of 32 thousand new off-takers to the grid during FY2014,
at the end of Y2014 PGE Dystrybucja covered with its services over 5.2
million customers.
New transformers
and energy counters
110/ MV
and MV/MV
power
stations
Connection
of new
off-takers
19.3%
33.1%
8.8%
CAPEX for
distribution in
FY2014
11.4%
27.5%
MV and
LV grid
lines
Other developments
104
•
Technical appendix
105
Lignite Deposits
Location
Deposit
Average value
of heat content
kJ/kg
Resources as at end
2014
(mn tonnes)
geological
industrial
Output in
2014 (mn
tonnes)
Assumed
decommissioning
Bełchatów
Bełchatów Field
7,579
137
92
26.6
~2020
Bełchatów
Szczerców Field
7,802
874
662
15.8
~2040
Turów
Deposit I
9,729
Turów
Deposit II
9,523
372
325
7.6
~2044
Turów
Deposit III
9,070
Złoczew
Złoczew*
8,230
612
NA
License to be granted
Gubin
Gubin*
NA
1,561
NA
* Deposits not exploited so far
106
Conventional Generation Units (1)
Location
Bełchatów
Power Plant
TOTAL
Commissioning
/modernisation
Planned
decommissioning
370.0
1982
2015*
2
358.0
1983
2018**
3
380.0
1984/2008
2030
4
380.0
1984/2010
2031
5
380.0
1985/2011
2032
6
394.0
1985/2011
2032
7
390.0
1985/2012
2033
8
390.0
1986/2013
2033
9
370.0
1986
2034
10
370.0
1987
2034
11
390.0
1988/2014
2035
12
390.0
1988/2015
2035
14
858.0
2011
2040
-
5,420.0
Unit
no.
Achievable
Power
Capacity
(MWe)
1
Achievable
Thermal
Capacity
(MWt)
396
Main fuel
LIGNITE
* Operating time extended beyond 2015, from 2016 working as a peak load, max. 1500h/year
** Potential extension analysed
Only electricity generation units specified
107
Location
Turów
Power Plant
TOTAL
Opole
Power Plant
TOTAL
Commissioning/
modernisation
Planned
decommissioning
235.0
1998
2035
2
235.0
1998
2036
3
235.0
2000
2037
4
261.0
2004
2039
5
261.0
2003
2038
6
261.0
2005
2044
-
1,488.0
-
-
1
386
1993
2032
2
383
1994
2033
3
383
1996
2035
4
380
1997
2035
-
1,532.0
-
-
Unit
no.
Achievable
Power
Capacity
(MWe)
1
Achievable
Thermal
Capacity
(MWt)
219.0
102.5
Main fuel
LIGNITE
HARD COAL
108
Location
Commissioning
/modernisation
Planned
decommissioning
222.0
1974
2020
2
232.0
1974
2020
5
222.0
1975
2035
6
222.0
1976
2035
7
232.0
1976
2035
8
232.0
1977
2035
TOTAL
-
1,362.0
-
-
Pomorzany
CHP
1
67.1
1960
2040
2
67.1
1960
2040
TOTAL
-
134.2
-
-
Szczecin
CHP
1
68.5
2000/2011
2045
TOTAL
-
68.5
-
-
Dolna Odra
Power Plant
Unit
no.
Achievable
Power
Capacity
(MWe)
1
Achievable
Thermal
Capacity
(MWt)
64.4
323.5
162.1
Main fuel
HARD COAL
HARD COAL
BIOMASS
109
Location
Unit
no.
Achievable
Power
Capacity
(MWe)
LublinWrotków
CHP
1
Commissioning/
modernisation
Planned
decommissioning
155
2002
2033
2
76
2002
2033
-
231.0
-
-
1
5.0
1958
2016
2
6.0
1971
2016
3
32.0
1978
2030
4
54.5
1999
2030
TOTAL
-
97.5
-
-
Kielce
CHP
1
10.8
2008
2038
2
6.7
2014
2038
TOTAL
-
17.5
-
-
TOTAL
Gorzów
CHP
Achievable
Thermal
Capacity
(MWt)
627.0
300.8
348.0
Main fuel
GAS / HARD COAL
GAS / HARD COAL
COAL / BIOMASS
110
Location
Bydgoszcz
CHP
TOTAL
Zgierz CHP
TOTAL
Rzeszów CHP
TOTAL
Achievable
Power
Capacity
(MWe)
Achievable
Thermal
Capacity
(MWt)
Commissioning/
modernisation
Planned
decommissioning
EC I
(total)
-
87.0
1980
2022
EC II
(total)
183.0
627.0
1971-99/2002*
2022-37
EC III
(total)
4.0
45.0
1957-62
Extension works in
progress, currently
non operating
-
187.0
759.0
-
-
TG1
16.7
1967
2022
TG2
20.4
2014
2040
-
37.1
-
-
1
(BGP)
101.0
2003
2032
2
(BGS)
29.0
2014
2039
-
130.0
-
-
Unit
no.
178.0
498.3
Main fuel
HARD COAL /
FUEL OIL
LIGNITE /
HARD COAL
GAS / HARD
COAL
* 2002 – Turboset no. 2 (35 MWe) retrofitted
111
RES units - wind
Achievable
Capacity (MW)
Commissioning
Kamieńsk
30.0
2007
Pelplin
48.0
2012
Żuromin
60.0
2012
Lake Ostrowo
30.6
2007
Karnice
29.9
2009
Malbork
18.0
2007
Kisielice
40.5
2006
Galicja
12.0
2009
Resko I
14.0
2013
Wojciechowo
28.0
2014
Lotnisko
90.0
2015
Resko II
76.0
2015
Kisielice II
12.0
2015
Karwice
40.0
2015
529
-
Unit
TOTAL
112
RES units – hydro (1)
Unit
Achievable
Capacity (MW)
Commissioning
Dębe
20.00
1963
Tresna
21.00
1966
Porąbka
12.50
1953
Myczkowce
8.30
1961
Smardzewice
3.56
1974
Raduszec Stary
2.98
1935
Oława
3.20
2013
Grajówka
2.60
1922
Gorzupia II
1.42
1998
Dobrzeń
1.60
2008
Przysieka
1.32
2001
Krapkowice
1.26
2007
Krępna
1.26
2004
Januszkowice
1.40
2003
Rakowice
2.00
2005
Żagań II
1.19
1963
Bukówka
0.84
1993
Zasieki
0.82
1905
Zielisko
1.28
1905/1933
113
RES units – hydro (2)
Unit
Achievable
Capacity (MW)
Commissioning
Gubin
1.01
1905/1927
Żagań I
0.90
1927
Sobolice
0.65
1922
Szprotawa
0.65
1998
Małomice
0.45
1911
Kliczków
0.59
1994
Nielisz
0.32
1997
Żarki Wielkie
0.62
1966
Myczkowce (small hydro)
0.16
2007
Gorzupia I
0.60
1935
TOTAL HYDRO
94.48
-
200.20
1968
91.30
1936
291.50
-
Żarnowiec
716.00
1983
Porąbka-Żar
500.00
1979
1,216.00
-
Solina
Dychów
TOTAL PUMPED-STORAGE
NATURAL FLOW
TOTAL PUMPED-STORAGE
114
Abbreviations used
CHP
DSO
ERO
EU ETS
GHG
IEA
IED
LTC
MSR
NPS
NTP
ORM
RAB
RES
SAIDI
TPA
TSO
VLP
Combined Heat and Power Plant
Distribution System Operator
Energy Regulatory Office
European Union Emissions Trading Scheme
Green House Gases
International Energy Agency
Industrial Emissions Directive
Long Term Contracts
Market Stability Reserve
National Power System
Notice To Proceed
Operational Reserve Mechanism
Regulatory Asset Base
Renewable Energy Sources
System Average Interruption Duration Index
Third Party Access
Transmission System Operator
Voluntary Leave Program
115
Investor relations contacts
Head of IR
IR Officers
Jakub Frejlich
Tel: (+48 22) 340 10 32
Mob: +48 695 883 902
Krzysztof Dragan
Tel: (+48 22) 340 15 13
Mob: +48 601 334 290
Filip Osadczuk
Tel: (+48 22) 340 12 24
Mob: +48 695 501 370
Małgorzata Babska
Tel: (+48 22) 340 13 36
Mob: 661 778 955
Bernard Gaworczyk
Tel: (+48 22) 340 12 69
Mob: 661 778 760
116
Disclaimer
This presentation has been prepared by the management of PGE Polska Grupa Energetyczna S.A. (the “Company” or “PGE”) and other entities and is furnished on a
confidential basis only for the exclusive use of the intended recipient and only for discussion purposes. This document has been presented to you solely for your
information and must not be copied, reproduced, distributed or passed (in whole or in part) to the press or to any other person at any time. By attending this meeting
where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations.
This presentation does not constitute or form part of and should not be constructed as, an offer to sell, or the solicitation or invitation of any offer to buy or subscribe
for, securities of Company, any holding company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this
presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investments decision
whatsoever.
We operate in an industry for which it is difficult to obtain precise industry and market information. Market data and certain economics and industry data and forecasts
used, and statements made herein regarding our position in the industry were estimated or derived based upon assumptions we deem reasonable and from our own
research, surveys or studies conducted at our request for us by third parties or derived from publicly available sources, industry or general publications such as
newspapers.
This presentation and its contents are confidential and must not be distributed, published or reproduced (in whole or in part) by any medium or in any form, or disclosed
or made available by recipients to any other person, whether or not such person is a Relevant Persons. If you have received this presentation and you are not a Relevant
Person you must return it immediately to the Company. This presentation does not constitute a recommendation regarding the securities of the Company.
This presentation and any materials distributed in connection with this presentation are not directed to, or intended for distribution to or use by, any person or entity
that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law
or regulation or which would require any registration or licensing within such jurisdiction.
This presentation includes “forward-looking statements”. These statements contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar
meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company’s financial
position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company’s products
and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied
by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business
strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. The
Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any
change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The Company
cautions you that forward-looking statements are not guarantees of future performance and that its actual financial position, business strategy, plans and objectives of
management for future operations may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition,
even if the Company’s financial position, business strategy, plans and objectives of management for future operations are consistent with the forward-looking
statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Company does not
undertake any obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that
arise after the date of this presentation.
117

PGE BIG BOOK

Transcription

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