POLENERGIA Management Presentation

POLENERGIA
Management Presentation
(potential expansion of activity as informed as of February 13, 2014, RB 3/2014)
March 2014
1
Senior managament
Highly motivated management team with great track record
Zbigniew Prokopowicz, CEO of PEP, Managing
Director of Polenergia
•
•
•
President of the Company’s Management Board since
July 2008, executive chairman since 2004 and CEO
since 2008
Previously CEO of Mondi Packaging UK and Ireland,
Chairman of the Supervisory Board of Opoczno S.A.
Economics at Paris Dauphine IX University and MBA at
Institut Dʼetudes Politiques in Paris
Anna Kwarcińska, Vice President PEP, Vice President
Polenergia (CFO)
•
•
•
PEP Vice-President since 2003
Previously Manager at Arthur Andersen Poland
English Philology at Adam Mickiewicz University in
Poznań, Management and Administration of the
Warsaw University and MBA at University of Illinois
and INSEAD Executive Certificate in Global
Management
Arkadiusz Zieleźny , Vice President of Polenergia, CEO
of Polenergia Trading
•
•
•
Vice President of Polenergia since 2011
Previously worked as Managing Director at Alpiq
Energy Spółka Europejska (formerly Atel Polska) and
at PSEG Polska and Enron
Warsaw School of Economics, TiasNimbas Business
School, MBA at Purdue University
Jacek Głowacki, CEO of Polenergia, Managing
Director of Polenergia
•
•
•
CEO of Polenergia since 2012
Previously Vice-President of the Management Board
of Ashmore Energy Int, CEO of the Nowa Sarzyna CHP
plant, Managing Director Kulczyk Holding
Science and Technology in Kraków, MBA from Booth
Business School, University of Chicago
Michał Kozłowski, Vice President PEP, Vice President
Polenergia (Wind Portfolio)
•
•
•
PEP Vice-President since 2005
Previously Vice-President of Polska Grupa Gospodarki
Odpadami, Manager at Deloitte & Touche
Economics and Sociology at the University of Łódź,
MBA at Oxford Brookes University, Chartered
Certified Accountant (ACCA)
Bart Dujczyński, Investment Director (KI), Vice President
of Polenergia
•
•
•
Vice President of Polenergia since 2012
Previously worked at Oaktree Capital Management and
Utilities and Infrastructure team at Rothschild and PwC.
At KI since 2009 as Investment Director London/Warsaw
King’s College, University of London, Chartered
Accountant (ACA), MBA from Booth Business School,
University of Chicago
2
01
Overview and investment thesis
3
Listed, vertically integrated utility offering predictable returns and strong growth profile
Generation
Distribution
RES
• Operating and
pipeline on-shore
wind assets and
offshore projects
• Specialised distributor
and seller for:
industrials, commercial
buildings and
residential communities
Gas
• CHP plant
– infra-like profile
• German-Poland
gas
interconnector
project
Coal
Sales /
Trading
Geographical location
• Coal-fired power
plant project
Polenergia1 is already functioning as mid-sized integrated utility across the electricity value chain with strategic focus on
renewable generation and energy/gas infrastructure, both with healthy, regulated and predictable cash flows and returns
Generation assets have limited exposure to market prices volatility as their revenues are based on regulatory framework or
secured by PPA/CPA agreements
Strong growth profile (near term based on onshore wind) leading to a creation of 1.4-2.2GW portfolio across technologies
by 2022
Experienced team driving disciplined project selection and execution leading to above average returns
Note
1
PEP S.A. is envisaged to be renamed to Polenergia S.A. after the consolidation of energy assets under PEP S.A. umbrella
4
Key investment highlights
Attractive
market
environment
Diversified
asset base
with strong
identified
growth
potential
Seasoned
organisation
with sector
and
technology
expertise
Appealing
transaction
structure and
support from
the key
shareholder
•
Continued positive performance of the Polish economy, with expectations of further pickup in economic activity and real
GDP growth of 2.9% in 2014 and cumulatively 24% by 2018
•
Requirement for significant growth in renewable capacity and new efficient conventional generation in the context of the
current Polish fuel mix and capacity replacement needs to meet the Polish renewable target of 19% by 2020 (20% by
2021)
•
Strong ongoing support from EU with proposed 27% renewable target for 2030 and a 40% reduction of CO2 emissions
(from 1990 levels)
•
Strong public support for new investments into energy generation and distribution with new regulations to provide solid
returns to sound renewable assets. Stable renewable support legislation giving optimal balance between the green
certificates mechanism and auction feed-in tariff
•
•
Presence throughout the value chain with different technologies allowing for flexible market approach
•
Significant high-quality onshore pipeline of projects, including 67MW under construction, 37MW ready to build and
another 277MW advanced pipeline with COD by 2016 – all with wind yields above average
•
Access to offshore opportunity in Poland – most advanced projects, which will be first farms to be built from within the
1.65GW offshore capacity projection by the Polish Government by 2030
•
•
Access to gas transmission development between Poland and Germany
•
•
Best in class development process ensuring high quality of operating assets and pipeline certainty
•
•
•
•
•
Proven ability to transact as well as raise equity and debt financings in various markets
Predominantly ’infra-like’ operating assets with contracted revenues and limited market risk which will generate
premium return due to supreme operational characteristics
Strong management team with extensive sector expertise at all levels and a strong track record in the Polish market have
to date developed ca. 500MW of onshore wind farms of which 184MW have been retained (including 80MW in
operations, 67MW under constructions and 37MW ready to build) and 302MW have been sold
Track record of successfully managing the business during its transformation from single plant venture into multitechnology vertically integrated utility
Listed vehicle providing for flexible funding and exit options
Ability to attract debt financing as well as specialist co-investors at asset level (i.e. for off-shore wind)
Transparent valuations and corporate governance
Long-term major shareholder fully supporting the business growth and strategy. Successful track record of co-operation
in Poland with global players such as SAB Miller (Brewing), KBC (Insurance), Strabag (Motorways) or Volkswagen (Auto).
5
Ex Ante: Group Structure Pre Merger
Company overview
Group structure
The company will be established by
consolidation of two groups:
−
−
PEP (Polish Energy Partners) –
Warsaw-listed renewables
developer and operator, which
has been acquired by
Polenergia Holding in 2012;
and
Polenergia assets with a focus
on gas-fired generation,
electricity distribution and
sales/trading as well as
transmission, renewable and
conventional development
projects
Both companies have progressed
with operational merger in 2013
and plan to legally combine in H2
2014 as part of this Transaction via
the contribution of Polenergia
assets into PEP
The combined group will remain
listed on the Warsaw Stock
Exchange
Other Investors
(mainly pension funds)
100%
39.49%
60.51%
PEP SA is listed on WSE1
Operationally merged
PEP Assets
Polenergia Assets
Elektrociepłownia
Nowa Sarzyna
Polenergia
Dystrybucja
Polenergia
Trading
PEP Onshore
Windfarms
PEP
Cogeneration
Offshore
Project
Gas
Transmission
Elektrownia
Północ
PEP Biomass
(Wińsko)
PEP Pellet
Production
Polenergia
Kogeneracja
Generation & Fuels
Distribution & Transmission
Sales & Trading
Note
1
PEP S.A. is envisaged to be renamed to Polenergia S.A. after the consolidation of energy assets under PEP S.A. umbrella
6
Ex Post: Transaction will create a vertically-integrated utility with impressive
growth story
Other Investors
(mainly pension funds)
Cornerstone Investor
50%+
Post merger
20-30%
20-30%
It is intended that PEP with the contribution of assets by
Polenergia Holding will issue new capital which will be cash
covered by a separate equity issue to existing & new investors so
that PH remains the majority shareholder
After contributing PH assets to PEP, the Company changes its
name to Polenergia which intends to remain listed on the
Warsaw Stock Exchange
Merged Assets
Elektrociepłownia
Nowa Sarzyna
Offshore
Project
PEP Onshore
Windfarms
Gas
Transmission
Polenergia Assets
Generation & Fuels
Polenergia
Dystrybucja
PEP Biomass
(Wińsko)
+
Polenergia
Trading
Elektrownia
Północ
=
PEP Cogeneration
PEP Pellet
Production
Polenergia
Kogeneracja
New Entity Name:
POLENERGIA S.A.
Distribution & Transmission
Sales & Trading
7
Tangible capacity development plan focused on Renewable Energy Sources…
Planned capacity development (MW)
3 000
2,506
2 500
2,206
300
800
2 000
800
800
31
1 500
31
300
1 000
585
500
0
204
381
124
80
2013
31
1,406
1,706
116
116
300
600
959
959
498
124
Coal-fired power
plant (optional)
Biomass-fired
power plant
Gas-fired CHP
Offshore
farms1
Onshore
farms
wind
wind
461
Onshore wind
farms
2016
Onshore wind Offshore wind Biomass-fired Elektrownia
farms
farms
power plant
Północ
(optional)
2022
Offshore wind
farms
2026
Note
1
Off-shore wind: chart presents capacity attributable to Polenergia (full project capacity is 1,200 MW)
Company plans to intensify development in the RES segment and reach wind power generation capacity of 461 MWe by
2016, and c. 1.3GW (incl. 300MW offshore wind) by 2022
Current pipeline of 381MW comprise 104MW in construction stage and 277 MW in advanced development
Furthermore the Company has identified and developed project in other segments that might be launched over the
coming 2-3 years subject to profitability assessment, e.g. gas transmission, coal-fired generation (800MW) or biomass
generation
8
…and an ideal platform for further expansion and opportunistic acquisitions
Unique, independent vertically integrated utility prepared to grow - one of its kind in Poland and the region
An integrated unit across the electricity value chain with strategic focus on renewable energy generation and
energy/gas infrastructure, with healthy, regulated and predictable returns and cash flows
The company will demonstrate significant long term growth based on renewables in a well hedged
diversified fuel mix portfolio
Managed under a very strict operational and cost conscious regime leading to efficiencies versus the state
owned publicly listed utilities
After the transaction, the company will be uniquely positioned on the WSE between large state-owned
energy groups and the few single-asset energy companies
Given the possible market capitalization of the combined entity as well as adequate free float and volume,
the company could be included in the mWIG40 index on the WSE
9
02
Favorable global trends and an attractive
macroeconomic and regulatory backdrop
10
Robust macro trends triggering transformation in the energy market
A highly attractive investment environment
10-year history of sustained GDP growth well above EU and US
average:
−
Attractive macro outlook, forecast 3.3% CAGR (‘14-’15F) and
cumulatively 24% by 2018
−
Resilient economy, the only country in the EU which went
unscathed through the 2009-12 downturn and has not been
in recession
−
Strong flow of EU funds, planned at ca. €100bn in 2014-2020
Politically stable, open economy with population of 38m people
−
Public debt at ca. 50% of GDP1 vs. EU average of 82%
−
EU member, but independent and stable currency
−
Low corporate tax rate of 19%
…with strong power market growth and support for
new capacity
High demand for new generation and distribution capacity driven
by:
−
Low capacity reserve in the Polish power system
−
Decommissioning of obsolete power units
−
Significant increase in electricity demand due to low
comparative electric energy consumption per capita
Low penetration of RES
−
Wind energy density in Poland among the lowest in Europe
also in light of 20/20/20 directive
Strong governmental backing for construction of new RES capacity:
−
Obligatory share of renewable electricity in retail electricity
sales to reach 20% in 2021 (up from 10.4% in 2012)
−
EU energy mix guidelines and CO2 emission limits
−
New favourable RES law finalised giving long term stability
Note
1
Polish public debt calculated according to EU methodology
Real GDP per capita growth
(%)
Real GDP growth per capita
rebased (2000=100)
180
8,0%
6,0%
160
4,0%
140
2,0%
120
(2,0%)
2000
2005
2010
2015
100
(4,0%)
80
(6,0%)
2000 2003 2006 2009 2012 2015
PL
Source EIU
Electricity consumption
Eurozone
US
Obsolete generation capacity
170
165
160
155
44,5%
47,5%
+27.1TWh
(+20%)
150
78%
77%
145
30,7%
32,0%
130
9,8%
11,0%
125
12,0%
12,6%
Boilers
Turbine sets
140
135
120
2013E
Source EIA
2016E
2019E
2022E
up to 10 years
20 - 30 years
10 - 20 years
more than 30 years
Source UOKiK and ERO, as of Dec 2010
Perfect positioning in a leading EU economy with significant growth potential driven by further
infrastructure projects, investments and EU funding
11
Strong state support reflected in the new renewable act
Projects in Operation and in Construction: Green Certificates
New Projects: Auction/Feed-in Tariff
Projects in operation and development/construction: Green certificates system is
optional for all projects commissioned before the new RES regulation become
effective after notification by EU (expected 1H 2016)
Long Term Support Maintained: support for 15 years from date of operation through
Feed-in Tariff in Reverse Auction system giving fixed price contracts for 15 years
Long Term Support Maintained: 15 years from date of operation, continuation of
Green Certificates System
High level of Substitution Fee: frozen at c. PLN300/MWh (after indexation in 2014)
Simple Reverse Auction Mechanics:
−
Target amount of energy produced in five 3-year settlement periods will be
auctioned
–
Ministry of Economy will determine every year the Reference Price for each
technology taking into account average CAPEX and OPEX for standardized
project
–
only offers with proposed price equal or lower than the Reference Price for
given technology will be taken into account
–
all technologies will be able to participate in the auction mechanism
–
pool of offers with lowest prices that meets the volume under given auction
will be granted contracts based on the winning offer price for 15 years with
price indexed annually (CPI)
Provisions for re-balancing of Green Certificate supply & demand which will lead to
material price recovery:
Supply: significant limitation of qualification for certificates which will
eliminate c.50% of supply through elimination of support for hydro plants
above 5 MW capacity, and reduction of support for biomass co-firing with
biomass to 0.5 per MWh if share of biomass in fuel mix (calorific value) is
below 20%
Demand: renewable obligation target for sales to final customers set at 20% in
2016 and determined annually based on the projected amount of electricity to
be generated from RES therefore allowing to balance demand and supply of
green certificates. The option to pay the Substitution Fee will be removed in
the event of certificate prices falling in average below 75% of the fee value in
the period of 3 month preceding the obligation fulfilment date. Unfavourable
tax treatment of costs resulting from Substitution Fee will be introduced. –
this will guarantee that Green Certificates minimum price will not fall below
75% of the Substitution Fee.
Bilateral Contracts permitted: will be able to sell the electricity to anyone, either
bilaterally or in the market (including group trading companies) with the differences
between the price achieved through auction and the market prices (determined based
on TGE quotations) will be settled by a Governmental Agency (contract for difference
mechanism)
Bilateral Contracts permitted: New regulations allow to sell certificates under long
term contracts
― Dedicated auctions for technologies producing less than 4000 MWh per annum
(effectively excluding all technologies except offshore and dedicated biomass)
Option to move to the Auction/Feed-in Tariff system: all projects under the green
certificates system will have the opportunity to move to the feed in tariff through an
auction system
― Extended construction period to 72 months (allowing for construction of offshore
farms)
Expected changes in the support system provide
safe cash flows for existing wind farm projects
with attractive IRRs
Envisaged offshore auctions:
Feed in tariff through auction system for new
projects provides fixed price with secured return
and limited market exposure
12
New RES regulations - positive impact on Polenergia Group
Current Projects outperformance: green certificates for 15 years of operation provide an attractive and secure
cash flows for existing wind farms (80MW) and projects in development/construction (381MW) to be
commissioned prior to 2016
Flexibility to choose between Systems: opportunity to move to the auction system through the Reverse Auction
if the fixed price contract is more economically beneficial
No price risk for Reverse Auction System: feed in tariff through auction system for new projects will be based on
fixed price through the whole support period with limited market risk exposure (no electricity price risk)
Focus on key renewable drivers in Polenergia Group: as the levelised cost of power generated in on-shore wind
farms is the lowest, and it is expected to further decrease, this technology (together with biomass) is expected to
be dominant in the new support system. Support for offshore wind farms is expected to be regulated by separate
legislation for projects with commissioning date after 2020 – this is in line with our Business Plan which contains
projects with grid connection terms agreed (we are one of only two players in Poland who have secured grid
connection terms already)
Superior productivity of Polenergia projects will enhance returns: Reference Prices are expected to be set on an
average IRR 12%. Polenergia portfolio projects have additional advantage of productivity exceeding average
conditions (average load factor > 30%)
Ability to generate trading synergies: additional margin can be achieved through synergies with trading company
(Polenergia Obrót) as there is no limitation on who to sell the electricity or certificates to under both systems
13
Green Certificates supply and demand mechanics
TWh
Supply Shortfall
35,00
25,00
15,00
5,00
-5,00
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
-15,00
-25,00
-35,00
Green certificates demand
Green certificates supply
Green certificates overhang
Source: Own calculations based on Confederation Lewiatan model
Growth in supply through Wind is scaled back through specific Supply adjustment mechanism, of which the main
two are:
― Large scale Hydro (>5MW) receives no GC from 2015;
― Co-firing limited to 0.5x GC from 2015;
This results in a reversal of the Over Supply by 2014 and a gradual reduction of the GC overhand by 2016-2017
GC overhang will disappear by 2016/17 and supply shortfall in the long term mean that GC will settle at or
close to the level of the substitute fee – this is why it is key to commence building and operating Wind
Farms as soon as possible to take advantage of the GC alternative as part of the new RES law
14
The levelised cost of electricity for on-shore wind is already one of the lowest and is
projected to decline even further in the future
Levelised cost of energy
Expected levelised cost of energy - wind
Marine - wave
Marine - tidal
STEG - LFR
STEG - tower & heliostat
STEG - parabolic trough + storage
Fuel cells
Wind - offshore
STEG - parabolic trough
STEG - tower & heliostat…
PV - thin film
PV - c-Si tracking
Biomass - gasification
PV - c-Si
Geothermal - binary plant
Wind - onshore
Municipal solid waste
Biomass - incineration
Geothermal - flash plant
Landfill gas
Biomass - anaerobic digestion
Large hydro
Small hydro
Nuclear
CHP
Natural gas CCGT
Coal fired
0
50
100
150
200
Global LCOE range
Regional scenarios
1059
861
531
250
300
Q1 2013 central
350
400
Q2 2013 central
450
500
USD/MWH
Source Company
Source Levelised cost of electricity update:
Onshore wind represents one of the lowest levelised costs of electricity among all fuel sources and is
expected to decline due to innovation and economies of scale. Levelised cost of energy generation in gasand coal fired facilities will increase due to fuel prices and carbon risk
15
Coal will decline in the Polish fuel mix and will be replaced by RES…
Rapid development of RES
−
−
−
−
−
Share of RES in power generation in
Poland remains relatively low, offering
very attractive prospect for development
of this market segment in the future
The demand for RES energy is also
strengthened by pan-European targets to
reduce long-term energy cost and
greenhouse gases emissions by 2020
which have significant impact on the
Polish fuel mix but nevertheless coal will
remain dominant fuel and price setter for
the long term…
…which in light of CO2 emission limits will
cause the black energy prices to increase,
and at the same time improving
profitability of renewable and efficient
new coal, biomass and gas projects which
will benefit the company
Wind will remain the key RES technology
driven by attractive wind conditions,
falling capex costs and strong state
support
RES levelised cost of electricity is falling
therefore reinforcing its competitiveness
Polish fuel mix (2013A – 2035E)
2013
2035
Total: 162TWh
Total: 207TWh
34.3%
56TWh
1.2%
3TWh
2.3%
4TWh
4.5%
7TWh
5.2%
8TWh
10.3%
17TWh
3.3%
7TWh
8.5%
18TWh
13.1%
27TWh
11.6%
24TWh
48.6%
79TWh
Lignite
Other
Wind offshore
18.8%
39TWh
26.2%
54TWh
3.6%
6TWh
1.5%
2TWh
Hard Coal
Gas
Wind onshore
25.9%
54TWh
Nuclear
Biomass&biogass
Hydro
%
17.4%
36TWh
Total RES share
Source Polish power market scenarios, Energy Market Agency (ARE), December 2013
Aim to reduce long-term energy cost and greenhouse gases emissions by 2020 will impact the Polish fuel mix
but nevertheless coal will remain dominant fuel for the long term
16
…however coal will remain price setting fuel in the merit order
Polish merit order curve (December 2013)
Polish merit order curve (December 2035)
Coal-generation will
remain the price setting
technology
Renewables
Renewables
Source Company
−
−
Current merit order leaves significant price premium for
renewable generation, which operates at marginal cost
close to zero, allowing for premium profits in a market
with the price set by coal
Low share of renewables and high share of lignite-based
generation secures significant reserve capacity, for the
price premium to hold in the future.
Source Company
−
−
−
Although c. 10GW of renewable capacity is expected to be
added by 2035, this still will not be enough to offset the
expected raise in demand
As such, coal will remain the minimum price setter, even in
2035
In effect, price premium reserved for renewable generation
is expected to be secured for the next decades.
Polenergia sees an opportunity in the high profit margins available for renewable generation. Once the financing is
amortized wind generation will present a zero-cost generation profile and above average profits in the long-run
Significant new renewable capacity will be added over the next 20 years. Yet, given the projected increase in electricity
demand, renewables will always sit well within the base load part of the merit order and secure profits due to the short run
marginal costs being well below those of price setting technologies, mainly coal
17
Polish capacity development (2014-2035)
2.5GW of
wind offshore
capacity by
2035
GW
60
50
40
30
20
10
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Nuclear
Hard coal
Lignite
Gas
Other Res
Biomass& biogas
Wind onshore
Wind offshore
Hydro
Source Company, December 2013
Redpoint capacity development forecasts confirm important role of wind offshore in Polish fuel mix
reaching installed capacity at 2.5 GW by 2035
18
Global trends are shifting towards RES
17%
Wind
RES
48%
28%
Source: Company
Total share of Renewable Energy Sources (RES) in global power generation capacity is expected to grow
from 28% in 2012 to 48% in 2030.
Share of wind energy is expected to grow to 17%.
19
Strong government support for offshore
wind in major EU member states
European offshore wind market is expected to grow at
18.6% CAGR to 29.9 GW by 2020, and further to 71.5 GW
in 2030.
−
−
The weighted average levelised cost of electricity is
currently EUR 158/MWh, and is expected to decrease by
22% to EUR 128/MWh in 2020.
−
The world’s largest offshore wind farm – the London Array
(630 MW) was commissioned in 2013, which marks the
industry’s transition from smaller scale (100-200 MW) to
large scale (300-600 MW) which will populate the market
in the future.
Several of 5-7 MW turbines started the testing phase in
2013, and the largest offshore wind HVDC converter (800
MW) was installed in the North Sea.
−
Global offshore wind - capacity additions per annum (MW)
Favourable regulatory framework for
offshore wind in Poland
−
−
−
−
Marine Areas Act, which sets ground for site
permits already in place
Renewable Energy Sources (RES) Act, which sets
ground for renewable energy support system for
offshore approved by Komitet Staly (Government
Committee), which confirms official position of
Polish Government to have 1,65 GW offshore
capacity by 2030
The EU has initiated work on RES targets for 2030,
which are expected to be concluded by March
2015.
It is expected that these targets will give strong
support for offshore wind projects because:
−
−
10 000
8 008
8 000
7 039
−
5 992
6 000
4 847
3 581
4 000
1 985
2 000
3 904
2 539
1 663
0
2012
2013
2014
UK
Source: Company
2015
Germany
2016
China
2017
2018
2019
The final targets are may be
binding/obligatory for EU member states
Key EU players, Germany and France are
strongly in favour of increasing both RES
growth and C02 emission reduction targets
from 2020 to 2030
By that time onshore wind and
photovoltaic facilities will reach high
density, so the only technology allowing to
meet the increased targets will be offshore
wind, in particular taking into account its
decreasing capex costs over time
2020
Other
20
New projected global capacities will be dominated by RES with large share of wind
Development of installed capacity by source
400
Marine
−
Globally 69% of the new power
generation capacity added
between 2012 and 2030 will be
from renewable technologies
−
installed capacity of wind
energy in 2030 will reach more
than 1,600 GW.
−
The dynamic growth of this
segment will lead to 17% share
of global capacity.
Solar thermal
350
Small-scale PV
300
Solar PV
Offshore wind
250
Wind
69%
200
EfW
Biomass
150
Geothermal
Hydro
100
Nuclear
Oil
50
0
2006
Gas
Coal
2010
2015
2020
2025
2030
Source Company
Installed capacity of wind farms
1 800
1 600
1 400
Off-shore wind farms
1 200
1 000
800
On-shore wind farms
600
400
200
0
2006
2009
2012
2015
2018
2021
2024
2027
2030
Source Company
21
Continued capex increase for RES assets
−
Since 2004, there
has been an
upsurge in global
capex on new
generation assets
producing electricity
from RES and
continues to stay at
a very high annual
level of over USD
250 billion in 2013.
Capex for RES assets (USbn)
350
318
286
300
262
254
250
200
195
196
2008
2009
167
150
116
100
80
55
50
0
2004
2005
2006
2007
2010
2011
2012
2013
Source Company
The level of capital expenditure on RES confirms its key position in the global power industry
22
03
Appendix
23
A Onshore wind assets
Operating assets portfolio
24
Onshore wind farms – high quality operational portfolio
Description
−
Production (GWh)
The Company’s key operational wind assets comprise of
three on-shore wind farms with total capacity of
80MW: Puck, Modlikowice and Łukaszów
200
172
150
−
All three wind farms have long-term PPAs with
electricity off-takers
−
There are project finance arrangements in all three
wind farms with international lenders
163
52
49
100
50
48
80
74
39
40
44
48
39
40
44
40
40
2008
2009
2010
2011
2012
2013
0
Puck
Wind farm
Installed
Load factor (Pcapacity (MW)
50)
Łukaszów
COD
Turbines
Modlikowice
Puck
22
22%
2006
11 x 2 MW Gamesa G80
hub height: 80m
Łukaszów
34
29% 2
2011
17 x 2 MW Vestas V90 2.0
hub height: 105m
Modlikowice
24
28% 2
2011
12 x 2 MW Vestas V90 2.0
hub height: 105m
Total / Average 1
80
27%
Notes
1
Average weighted by installed capacity.
2
Projected long-term load factors.
Clients
25
Proven track record of successful development of onshore wind farms
Location and capacity of retained wind farms (MWe)
Track record
−
Puck
22MW
Rajgród
25MW
Gawłowice
41MW
−
Since early 2000s company has gained significant
expertise in wind projects by developing 486 MW of
onshore wind capacity (some of them sold at preconstruction stage)
Three wind farm projects have been retained and are
currently in operation
Skurpie
37MW
486
382
304
Łukaszów
34MW
199
Modlikowice
24MW
22
Operating wind farms
177
Wind farms under construstion/RTB
37
105
2005-2010
Sold
Retained
2011
34
25
24
20
41
2012
2013
Construction stage
Cumulative
26
A Onshore wind assets
Development portfolio
27
Onshore wind farm assets
Description
−
Map of onshore wind assets and development pipeline
Leading Polish wind farm
development platform with 932MW
pipeline
FW A
Puck (22 MW)
Myślino (20MW)
−
Great track record of renewable
projects developed by a highly
experienced team of professionals
Suwałki (41MW)
FW B (53 MW)
Jarogniew/Mołtowo (20MW)
Rajgród (25MW)
FW C
Wartkowo (30MW)
Klukowo/Samborsko (105MW)
Skurpie (37MW)
Grabowo (40 MW)
FW D
−
−
Unique platform to become a
significant renewable energy player in
the near future
Renewable energy is and will continue
to be highly supported in Poland:
obligatory purchase of electricity and
granting of green certificates for a 15year grandfathered scheme. Longer
term move to auction system for long
term pipeline will also guarantee long
term stability
Tychowo (35MW)
Bądecz (42 MW)
Gawłowice (41MW)
Zielona/Debsk
(90MW)
FW E
Piekło (12 MW)
FW F
FW G
FW H
Mycielin (48 MW)
Dębice/Kostomłoty (45 MW)
Łukaszów (34 MW)
Pągów (51MW)
Modlikowice (24 MW)
FW I
FW M
FW J
FW M
FW K
FW L
−
Gawłowice and Rajgród already have
binding long term PPAs in place.
Projects sold after development stage
Operating wind farms
Wind farms under construstion/RTB
Projects in advanced development
Projects in early development
28
Overview of wind farm portfolio
Operating wind projects
#
Location
1
Puck
2
3
Modlikowice
Łukaszów
Pipeline build up
Pwr (MW)
Load factor
(P-50)
Start-up
Clients
22
22%
2006
Energa, Polenergia
2011
Tauron PE
2011
Tauron PE
24
34
28%
29%
1
1
80 MW
By 2021F all 25 wind projects, of which 22
currently in-development, will be operating
amounting to the total capacity of 959 MW
−
Total capacity : 959MW
53
53
71
203
Construction stage
#
Location
4
Gawłowice
365
Pwr (MW)
Load factor
(P-50)
Building permit
Completion
41
40%
Under construction
1Q 2015
5
Rajgród
25
33%
Under construction
1Q 2015
6
Skurpie
37
36%
RTB
financing in progress
3Q 2015
498
775
879
879
888
756
959
756
594
461
104 MW
184
Advanced development (for construction in 2015-16)
80
#
Location
Pwr (MW)
Load factor
(P-50)
Building permit
Completion
8
Mycielin
48
39%
Q3 2014
2016
9
Zielona/Dębsk
90
38%
Q4’14/Q1’15
2016
10
Piekło
12
36%
Q3'14
2016
11
Bądecz
42
33%
Q4 2014
2016
12
Grabowo
40
39%
Q2 2015
2016
13
Kostomłoty/Dębice
45
36%
Q4'14/Q1’15
2016
Notes
1
Projected long-term load factors
203
80
2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F
In operations
In development
Intended for sale
498MW
53MW
In earlier stages
of development
One wind farm
intended for sale
277 MW
29
Key elements of wind farm development process and wind energy business model
Key steps in wind farm development process
Land
Securing land for
investment
(long term lease
or ownership)
24
Zoning
18
Changing or
confirming
suitable land
zoning
Wind
Studies
12
Performing wind
quality tests
X Estimated time required
(months)
Environme
nt
Obtaining
environmental
decision required
for building
permit
6
Grid
connection
Agreeing grid
connection terms
with a local
network operator
12
Building
permit
Filing for and
obtaining
a building
permit
Completion
4–6
years
some stages
are done
simultaneously
Current status of Company portfolio
Total capacity : 1,012 MW1
45MW
552MW
932MW
Completion
349MW
658MW
828MW
967MW
460MW
80MW
467MW
545MW
663MW
354MW
184MW
Building permit
Grid connection
Environment
Wind studies
Zoning
Land
Done
Notes
1
Includes 53MW Wind Farm Szymankowo that is intended for sale in 2015
30
B Offshore wind farms
31
Leading offshore wind farms developer in Poland with first mover advantage
Description
Location and capacity
Company plans to develop two
projects with combined planned
capacity of c. 1.2GW
The plan is to build offshore projects
in cooperation with an experienced
industrial player (50/50 JV)
Potential investors interest was
confirmed during preliminary
discussions
Third site permit for 1.6GW
constitute upside option without
incurring any further development
costs
Electricity offtake will be secured for
15 years by purchase obligation and
contract for difference mechanism
under the auction system
−
−
−
−
−
Project Name
Bałtyk
Bałtyk
Środkowy III Środkowy II
Actually planned capacity
(MW)
600
600
Number of turbines
c. 100
c.100
Distance to the shore
22 km
37 km
Net area
116.6 km 2
122 km 2
Depth
25-39m
23-41m
Average wind speed
9 – 10 m/s
9 – 10 m/s
Planned construction
CAPEX (€bn)
c. 2.46
c. 2.35
Planned key dates
Bałtyk
Bałtyk
Środkowy III Środkowy II
Environmental decision
1Q 2016
3Q 2016
Construction start
2020
2023
Comissioning date
2022
2026
Project Green
600 MW net to PH
Development projects:
Offshore wind farms
Installed capacity and electricity generation (PH share)
700
3 000
600
2 500
500
2 000
400
1 500
300
1 000
200
500
100
0
0
2014
2018
2022
Installed gross capacity (MW)
2026
2030
Power generation (GWh, rha)
32
Project key milestones and current status
Key milestones
Bałtyk III
Bałtyk II
Site permit
Obtained, paid
Obtained, paid
Environmental scoping
Obtained
Obtained
Terms and conditions to connect to
transmission system
Obtained
Obtained
Milestone
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Completion of environmental studies
Environmental Impact Assessment and
Report
Environmental Decision
Met mast
Basic engeeneering for construction
permit
Construction permit
Contracting construction
Supplies manufacturing
Construction
Contructing O&M
Operations (pow er generation)
Bałtyk Środkow y III and export cable
Bałtyk Środkow y II
Company has the first mover advantage in Poland and is expected to benefit from global trend to develop
offshore wind capacity
33
Competetive advantages
First mover advantage – Polenergia has been the leader in the
offshore wind development in Poland:
−
The first and most attractive site permits obtained
(wind speed, distance, depth, least collisions with
environmental protection targets, etc.)
−
The first and most attractive (i.e. the quickest to start)
terms and conditions to connect to the national
electricity transmission system obtained
−
The most advanced environmental process (min. 18
months advantage to the second player in the
market) which allows for the first environmental
decisions and least accumulated effect risk
−
The most advanced in securing export cable route
As a result, Polenergia’s project are most likely to:
−
Win the first auctions
−
Bear the least environmental risks and limitations due
to accumulated impact effect
−
Be the first built and commissioned
−
Enjoy the whole period of 15 year support system
−
Enjoy the highest investment returns in the sector
34
C Gas-fired CHP
35
Gas-fired CHP – operational portfolio
Description
−
Location and capacity
Elektrociepłownia Nowa Sarzyna
Natural gas-fired combined heat and
power station with a total generating
capacity of 116 MWe and 70 MWt
Installed capacity
116MWe, 70MWt
Net capacity
113MWe
Electricity: ca. 760MWh
Heat: ca. 530TJ
−
Modern plant which began
commercial operations in 2000
Average Net
Generation
−
Operating at high efficiencies, the
facility works under a base-load
operating regime
Plant
Gas fired CCGT cogen w ith fuel oil
backup
Fuel
Natural gas / fuel oil backup
Efficiency
HHV (48.6%), LHV (54.0%)
−
Power generated is exported via three
110 kV overhead transmission lines.
−
The plant exceeds Polish
environmental standards
−
−
Stable income and cash flow streams
from government sponsored stranded
cost payments through 2020 – giving
an infrastructural like risk and return
profile
Under the currently expected price
environment post 2020, ENS is
assumed to operate as a gas-peaker,
producing short volumes and taking
advantage of high baseload – peak
spreads
ENS
116MWe / 70MWt
Operating assets:
Type
2*1 CCGT Thomassen (GE) frame 6
COD
2000
Gas fired power plant
Availability
93,80%
Remuneration formula
−
ENS generates revenues through sales of energy and heat, additionally it receives
stranded cost compensation and gas compensation as well as cogeneration certificates
−
Guaranteed stranded costs compensation effectively sets company EBIT at zero, (it is
calculated in a way to balance energy and heat sales minus COGS and opex)
−
As non cash position amortization allows to service debt and interests costs
−
Gas compensation and cogeneration certificates are fully passed to earnings before tax
36
D Electricity distribution
37
Electricity distribution
Length of distribution, lines (# of projects)
Polenergia Dystrybucja
Żarnowiec
37.5 km
Szczecin
0.6 km
Description
Gdańsk
25.9 km (2)
−
Tczew
3.9 km
Łysomice
11.4 km
Warszawa
13.4 km (17)
Kościan
1.5 km
ŁSSE
1.0
km
Leszno
8.0 km
Warszawa
3 km (2)
−
Nowiny
3.6 km
Kraków
1.4 km
Operating assets:
Electricity distribution
Development projects:
−
Operating
Development
Total
Electricity
distribution capacity
76 MW
11 MW
87 MW
Electricity
distribution volume
235 GWh
37 GWh
c. 270 GWh
Number of projects
27
3
30
8.2k
0.4k
c.8.6k
−
−
Power lines length
(km)
111.3
No of substations
87
No of transformers
149
RAB
Fully regulated under the
WACC/RAB regulated
regime with approved capex
plans
Development projects
Electricity distribution
End-customers
Polenergia Dystrybucja is
niche distributor of
electricity to industrial and
individual clients and to
commercial off-takers:
residential communities,
production plants, office
buildings and shopping malls
PLN 49m
26.8
PLN 28m
138.1
PLN 77m
3 development projects
based on contracts with real
estate developers and
industrial partner
All projects fully regulated
under the WACC/RAB
regime with approved capex
plans
Ideal platform for larger
scale expansion in electricity
distribution
Value creation and benefits for clients
Value creation
−
Extension of regulated activities by obtaining an
electricity distribution license for “last mile” electricity
infrastructure in non-residential real estate such as
shopping malls and offices buildings
−
Effective use of the synergies between the regulated
activity (distribution of electricity) and commercial
(sale of electricity) due to unbundling
−
Offering partners opportunity for the optimization of
the electricity infrastructure cost during construction
site as well as maintenance
−
Effective use of the synergies in the Polenergia Group
Unique package of benefits for its clients
−
Immediate recoupment or reduction of the electricity
infrastructure cost
−
Competitive tariff rates for distribution and grid
connection fee
−
All costs associated with the infrastructure
maintenance covered by Polenergia Dystrybucja
−
Settlement of electricity by the company
−
Risk of payment delays for electricity transferred on
the company
−
Third Party Access (TPA) available for recipients
38
Business model of distribution
Business model description
EBITDA calculation
― The Company has agreed its RAB with ERO along with a
path to full recognition in 2015, currently 72% is recognized
― Development Plan approved by ERO directly impacts RAB as
capital expenditures included therein establish the base for
RAB.
― RAB is passed through to tariff via regulated return
calculated using WACC set by ERO
― RAB provides the cash flows necessary to service the capex
debt financing costs through the following:
+
Operating costs
+
DSO distribution costs
+
Real estate tax
+
Grid losses
+
Return on RAB
+
RAB depreciation
REGULATED REVENUE
-
Operating costs
― return on RAB currently 9%
-
DSO distribution costs
-
Real estate tax
-
Grid losses
― The financing structure reflects this profile in order to best
support the business
― CFADS further improved through connection fees
Costs
― depreciation of RAB
REGULATED COSTS
+
Connection Fees
=
EBITDA
=
CFADS
39
E Trading
40
Trading
Overview of Polenergia Obrót (trading)
Polenergia Obrót historical value-at-risk (PLNm)
−
Central trading and risk management platform located in
Warsaw
−
In January 2013 company took over ex-Vattenfall trading
team operating in CEE power markets
18
16
12
Polenergia Obrót (2013)
Electricity traded
3,153 GWh
44 mm3
Natural gas traded
14
10
8
6
Trading activities
4
Physical power trading across Poland primarily with careful
consideration of cross border contracts & physical trading in
Germany
Asset backed trading: market access, portfolio management and
physical optimization of Polenergia’s assets (power and
certificates)
Polish Renewable and Cogeneration Certificates
Low risk profile
2
0
03mar14 04mar14 05mar14 06mar14 07mar14 08mar14 09mar14 10mar14
GER
Limit
−
Polenergia Obrót has a very conservative risk
management policy
−
Daily exposure capped at a prudent level of VAR =
PLN16m
−
Historical VAR stays well below the set limit at c. PLN 8m
Trading based on the physical product delivery
Restricted risk policies controlled daily
PL
41
F Other Development Projects
Bernau – Szczecin pipeline (Germany(Germany-Poland)
42
Excess demand for natural gas in the Polish market
Poland: Natural gas sales market share by players
%, by volume
Market structure
98%
−
Regarding all stages of the supply chain, the Polish gas market is characterized by a
very low level of competition and is dominated by one major player – PGNiG
PGNiG (national
incumbent)
−
All Polish long-term import contracts are held by PGNiG
Others
−
PGNiG oversees imports, E&P, distribution and storage. It also represents 98% of the
gas sales in Poland in both – wholesale and retail market
2%
Source IHS CERA
United…
Belgium &…
Italy
Slovakia
Austria
Lithuania
Hungary
Germany
Netherlands
Low diversification of supply sources
Czech Republic
Spain
Denmark
Finland
Total gas consumption in Poland will reach 20 bcm p.a. in 2023
France
−
1,4
1,1 1,1 1,2 1,2 1,3
0,9 1,0
0,8
0,7
0,6 0,6 0,7 0,7
0,4 0,4 0,5
EU27 Average: 0,9
0,1
Romania
Currently gas consumption in the Gas-to-power sector is comparable low, since the
Polish power generation is dominated by coal fired plants. However, the existing coal
infrastructure is very old and requires quick replacement. Several new investments
based on CCGT are planned in upcoming years
Bulgaria
−
2,3
Portugal
Poland‘s natural gas demand is around 15 bcm p.a., mainly driven by industrial and
residential customers and on per capita basis is one of the lowest in the EU reaching
0.4 mcm per capita in 2011 (c. 50% of EU27 average)
Poland
−
Poland vs. EU: Gas consumption per capita, 2011
mcm per inhabitant
Sweden
Natural gas demand in Poland
Source BP Statistical Review of World Energy 2012, Eurostat
−
The Polish domestic gas production is about 4 bcm p.a. (high-calorific equivalent)
(about 27% of the gas supply) and is expected to be stable in the following years
−
Russia has been the main gas supplier with a share of about 89% of the total imports
(65% of the total supply). The remaining 11% mostly come from intra EU imports, of
which the lion‘s share was imported from Germany
−
A liquefied natural gas (LNG) terminal at Świnoujście is currently under construction
by Polskie LNG S.A., a 100% GAZ-SYSTEM affiliate, and will provide an initial capacity
of 5.0 bcm p.a. starting in 2015. Only one contract is signed for 1.5 bcm at prices
much above pipeline gas, so this import path is not likely to play significant role
Poland: Breakdown of natural gas supply, 2011F
bcm
Indigenous production *
6,0
Imports from Germany
& Czech Rep.
9,1
Imports from Russia
0,9
Source IHS CERA
(*) Includes low methane gas from domestic production; Total supply reaches c. 15
bcm in high-calorific equivalent.
43
Gas import infrastructure in the context of Poland’s strategic objective
Available and
planned
natural
gas transmission
capacitiescapacities
on Polish border
from West
to
Available
and
planned
natural
gas transmission
on Polish
border
East direction
from
West to East direction
LNG Terminal in Świnoujście
• 5.0 bcm p.a. of transmission capacity
available on firm basis since 2015
• Further extension up to 7.5 bcm
optional
• Currently only 30% booked
Due to past political reasons, the Polish import
infrastructure is mostly one-side designed for gas
supplies from Russia
−
Although Poland has a number of interconnection
points with neighboring countries, the existing
system is highly utilized and all capacities at entry
points are almost completely booked by PGNiG
−
At present the firm capacities from West
European markets amount only to slightly more
than 10% of today’s Polish consumption
5.0
Włocławek
Yamal pipeline - Virtual reverse flow
• 2.3 bcm p.a. of transmission capacity
available on interruptible basis.
• 100% of capacity booked until 2015.
• Firm reverse flow of 5 bcm p.a.
capacity will be available since Q2
2014
−
Lwówek
2.5
3.3
5.0
Lasów
• 1.5 bcm p.a. of transmission capacity
available on firm basis.
• 100% of capacity booked
1.5
Cieszyn
• 0.5 bcm p.a. of transmission capacity
available on interruptible basis.
• 100% of capacity booked
Legend
Currently available firm transmission capacities
Currently available interruptible transmission capacity
New, planned transmission capacities
−
This will be increased to about 47% of
todays consumption after 5 bcm reverse
flow on Yamal pipeline is commissioned
−
And to 80% of todays consumption
including additional 5 bcm of LNG
Total reverse flow on Yamal pipeline is limited with
technical possibilities at the connection with Polish
network (up to 5.8 bcm/a in total)
−
Given the planned increase of natural gas demand
in Poland to 20 bcm p.a., Poland is still likely to be
short of 20% of its future consumption (4 bcm)
from western markets
−
Apart from sourcing the Polish market, additional
connection with Germany may be used to reexport gas to Ukraine and Baltic states, which
desparately search for the same option to get gas
imports independent from Russia
0.5
Source Gaz-System
Poland’s strategic objective is to reach 100% of natural gas supplies independent from Russia
44
Bernau – Szczecin pipeline (Germany-Poland)
Overview
−
Gas transmission project is ideally located to connect western gas
markets with the isolated markets of Poland and other Eastern
European countries (Ukraine, Baltic states)
−
It is to provide the access to import infrastructure in Germany and
become one of the key market openers of the East Europe gas
market
−
Customers in Poland (and potentially in neighbouring countries to
the east and south of Poland) will gain access to the liquid Gaspool
spot market which allows them to purchase gas at lower prices and
from various suppliers, thus significantly improving their energy
security and ensuring supplies of this strategic commodity in a
diversified way
−
Strategic partners are to be invited for joint development of the
project in Poland and Germany in 2014. The company assumes to
hold 51% of German part of the business
−
Already secured attractive RAB based remuneration
Bernau – Szczecin pipeline
Tota l techni ca l capa ci ty
Compres s or s ta ti ons
Length
Sta rt of cons tructi on
Sta rt of opera ti ons
3.0 – 5.0 bcm p.a .
1 x 5.4 MW
c. 150km (30km i n POL, 120km i n GER)
2015
2018
Project Status
FEED Des i gn
Cons tructi on Permi ts
Rights of Wa y
TPA/Unbundl i ng
Commerci a l cl os i ng
Gri d connecti on
EPC
Fi na nci ng
Secured
Secured
c. 50% Secured
In progres s
In progres s
In progres s
To be compl eted
To be compl eted
General characteristic
EXIT POLAND / ENTRY GERMANY
10 % of the pipeline
capacity dedicated
for short-term
products (up to 1
year) offered in
auctions acc. to CAM
network code rules
90 % of the pipeline
capacity dedicated
to long-term
products (up to 15
years) offered in
auctions acc. to CAM
network code rules
EXIT GERMANY / ENTRY POLAND
5.0 bcm p.a.
firm capacity
or conditionally firm
3.5 bcm p.a.
firm and interruptible
capacity
10 % of the pipeline
capacity dedicated to
short-term products (
up to 1 year) offered
in auctions
90 % of the pipeline
capacity dedicated
to long term
products (up to 20
years) offered in
auctions
(1.5 bcm p.a
reserved exclusively
for POLENERGIA)
45
F Other Development Projects
Elektrownia Północ – coal fired power plant
46
Elektrownia Północ – coal fired power plant
Location and capacity
Coal fired PP – development project
Elektrownia Północ
Key investment considerations
Elektrownia Północ:
Perfect moment in the Polish power market cycle: low capacity
reserve in the Polish power system, decommissioning of
obsolete units and low comparative electric energy
consumption per capita contribute to a strong outlook and
fundamental support for power price growth in Poland
−
EP
800 MWe
−
Project intended to be based
upon long term Take-or-Pay
PPA for 20 years
−
Project will decrease the
electrical power shortages in
the region which are
expected to occur in the
second part of the decade
(2017-2018)
Development projects:
Hard coal PP
−
Elektrownia Północ
Planned capacity
Efficiency
Fuel (hard coal)
800 MWe
over 45%
20-22 GJ/tonne
Construction of a coal-fired
power plant with a capacity
of 800 MWe using
supercritical pulverized coal
combustion technology
We are considering inviting
strategic investor to this
project
Project status:
New incentives from Polish government to construct new
capacity expected
Multi offtaker mode allowing for benefiting from the power
price growth
Robust offtake structure ensuring Project’s bankability: passthrough PPAs with creditworthy offtakers, including recovery of
fixed and variable costs, debt service, and a price upside-sharing
mechanism, all of which improve Project’s overall cash-flow
profile thus contributing to debt financing costs optimization
Strong competitive position of the Plant: one of the most
efficient plants in Europe, placing it at a favorable point in the
Polish merit order - the Project will operate always in base load
throughout its life as a high efficiency plant with an
advantageous FSA
Strong economic environment
•
Real estate: 223 ha secured
Optimal project structuring
•
EPC tender process: completed
(signed with Alstom)
Optimal fuel choice
•
Grid connection: Signed
•
Fuel Supply Agreement: Signed
Competitive and stable fuel supply agreement secured
Favorable location: the Project is conveniently located in the
northern part of Poland (close to key transmission grid lines, sea
shore, and with access to the key rail line) and will be supported
by expected power shortages in this region
Strong local support for the Project
47
Located where unbalanced distribution and transmission assets are
Installed capacity in the North and South
Northern Region2
Capacity installed1: 4.7 GW
(13.3%)
GDP: PLN 202bn (17.2 %)
Southern Region3:
Capacity installed1 : 14.37 GW
(40.1 %)
GDP: PLN 363bn (30.8 %)
−
−
−
−
40.1% of installed capacity of Polish power plants exists in
the South of the country, due to the concentration of
industrial production in the region and the availability of coal
deposits
Majority of newly constructed wind assets are located in the
North of the country making balancing and stabilizing of the
grid extremely difficult without reliable and predictable
generation capacity
Supplementing the power shortage in the North using excess
capacity from the South is difficult due to the underinvested
national transmission grid
Low interconnection capacities to foreign electricity grids
substantially limit imports of energy to Poland
Notes
1 2007 Data
2 Calculations based on the following provinces: West Pomeranian, Pomeranian, Warmian-Masurian and
Kuyavian-Pomeranian
3 Calculations based on the following provinces: Lower Silesian, Opole, Silesian and Lesser Poland
Transmission grid of PSE OPERATOR, 2011
The Polish transmission
network is underinvested.
Southern Poland with high
concentration of power is
connected with the north
suffering from power
shortages by merely two 400
kV lines
Interconnection capacities
450kV
To Sweden
600 MW
600 MW
Only 7% of total production of
Polish power sector of 163.2
400kV
TWh flowed out of Poland in
Krajnik - Vierraden
2011, whilst only 4% flowed
into Poland
GERMANY
RUSSIA
LITHUANIA
220kV
Białystok - Roś
BELARUS
992 MW
110kV
400kV 1280 MW
Wólka Dobrzyńska - Brześć
Mikułowa - Hagenverder
220kV
CZECH REPUBLIC
1889 MW
443 MW
UKRAINE
750kV
400kV
Non-operational
Source GUS, PSE Operator
Exports capacity
Imports capacity
220kV
SLOVAKIA
628 MW
358 MW
Krosno Iskrzyna - Lemesany
400kV
48
As one of the most efficient plants in Europe, EP will be favourably placed in the
Polish merit order and will operate predominantly at base load
Polish merit order curve (December 2013)
−
More than 75% of the installed boilers and turbines
in Poland are older than 20 years and close to 50%
of all boilers and turbines in use are older than 30
years
−
High efficiency rate of EP, with substantially lower
costs of fuel, emissions and other variable costs, will
guarantee high utilization of the available capacity
of EP
−
It is expected that the Plant will operate always in
base load throughout its early life, due to its
position in the Polish merit order as a high efficiency
plant with an advantageous FSA
−
In case of the increasingly more probable nonnuclear scenario, the Plant’s position in the merit
order will shift to even more advantageous place
Polish merit order curve (December 2035)
To be updated
Source Company
49
F Other Development Projects
Biomass power plant
50
Highly efficient biomass power plant
Location and capacity
Wińsko
31 MWe
Biomass power plant – development project
Standalone biomass combustion:
−
PEP has significant experience
in biomass energy project
construction and operation
(operated EC Saturn, a CHP with
one of the largest biomass-fired
blocks in Poland - 80 MWe /
201 MWt for 8 years)
Key characteristics
Turbine
Boiler
Installed capacity
COD
Customer
Development projects:
Wińsko:
−
Currently, PEP develops a 31
MWe power plant in Wińsko,
which is fully permitted
Load factor
Efficiency
Operational period
Condensing / Alstom
Vibrating grate/
DP Cleantech
31 MWe
2019
Supply to the grid
92%
Electrical 33%
30 years
Biomass power plant
51
Wińsko - project selection process
The Company carefully analysed a number of potential locations for the planned biomass power plant. Three
potential locations in Lower Silesia were selected of which Wińsko is being currently developed
Availability of biomass
fuel
Project selection
criteria
−
280k tons of biomass fuel (of which 30-40% from agriculture (straw,
energy crops) and 60-70% from forest (forest residues, saw dust,
energy crops)
−
Selected location guarantees availability of:
Availability of grid
connection
−
Cereal, rape and corn straw production of 3.2m tons within
70-100km distance (c. 0.7m tons available for sourcing)
−
Forest biomass - 0.6m tons of forest cutting residue
available for sourcing within 200km distance
−
Sawmill biomass – 0.9m tons (0.1m tons available for
sourcing)
−
Agricultural land available for energy crops
−
Limited competition from pellet, mushroom, and energy
producers
60% of total required
biomass is already
contracted
Other
−
Availability of land with suitable zoning
−
Access to water and waste water treatment facilities
−
General willingness of local administration
−
Road infrastructure
52
Wińsko key characteristics
Biomass power plant
Turbine
Key characteristics
Boiler
Type: Condensation
Type: Vibrating grate
Capacity: 31 MWe
Capacity (net): 78 MWt
Supplier: Alstom
Supplier: DP Clean Tech
Wińsko
Expected start-up: 2019
Customer
Expected project
timing
Supply to the grid
Status
2013 2014 2015
2016
2017 2018 2019
Construction permit
Grid connection (terms)
Grid connection
(agreement)
Financing confirmed (term
sheet)
Supervisory Board’s
approval
Ground acquired
Financing complete
Supplier contracts signed
Construction
COD
53
G Other Operating Assets
Zakrzów CHP, Mercury PP, pellet plants
54
Other operating assets
Zakrzów CHP
−
CHP plant with heat capacity of 29
MWt located in Wrocław
−
Energy is generated from natural
gas supplied by PGNiG
−
−
−
Established in 2000 for the
purpose of supplying electricity
and heat to Whirlpool under long
term contract (valid until Oct 2020)
Constructed by PEP on a turn-key
basis, together with the necessary
infrastructure (gas pipeline and
connections)
Whirlpool remains the sole user of
energy generated
Mercury PP
−
Power plant located in Wałbrzych
−
Launched in July 2006
−
Power unit consists of a gas-fired
boiler and steam turbine with a
capacity of over 8 MWe
−
Power unit generates electricity
from coke-oven gas, which is a byproduct of coke production at WZK
Victoria
−
Operated under a contract
concluded between PEP and WZK
Victoria for the supply of cokeoven gas and offtake of electricity.
The contract is valid until
December 31st 2021
Pellet plants
−
−
In response to growing demand, in
2008 PEP launched projects to
supply the energy sector with
pellets manufactured from
agricultural biomass, in particular
from straw
The company operates three pellet
plants:
−
Fabryka Północ, located in
Sępólno Krajeńskie
−
Fabryka Południe, located
in Ząbkowice Śląskie
−
Fabryka Wschód, located
near Zamość
COD
appr
Capex
Annual
prod.
(tonnes)
Fabryka
Północ
Fabryka
Południe
Fabryka
Wschód
2012
2010 and
2011
2012
PLN 1.7m PLN 18.5m PLN 25.5m
36k
53k
51k
55
Disclaimer
This presentation (the “Presentation”), is being provided solely for information only and non-reliance basis.
The purpose of the Presentation is to provide selected information relating to Polish Energy Partners S.A. ("PEP") and Polenergia Holding ("Polenergia") (the “Transaction”).
This Presentation does not constitute or form part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any shares in Polish Energy
Partners S.A. and/or Polenergia. The contents of this Presentation should not be construed as investment, legal or tax advice.
The Presentation has been prepared on the basis of information provided by PEP and Polenergia and also from publicly available information. The information provided should
not be relied on for any purpose and should not in any way serve as a substitute for other enquiries and procedures that would (or should) otherwise be undertaken.
No representation or warranty, expressed or implied, is or will be made and no responsibility or liability is or will be accepted by PEP and/or Polenergia or by any of their officers,
servants or agents or affiliates as to or in relation to the accuracy or completeness of the Presentation or the information forming the basis of this Presentation or for any
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been independently verified. Recipients are recommended to seek their own financial and other advice. In publication of this Presentation, PEP and/or Polenergia, their
representatives, directors, officers, employees, advisers and agents undertake no obligation to provide the recipient with access to any additional information or to update this
document or to correct any inaccuracies therein which may become apparent.
The Presentation includes certain forward-looking statements relating to certain business, management’s plans and objectives for relevant assets. These statements involve high
level of risk and uncertainty because they relate to events and depend on circumstances that will or will not occur in the future. No representation is made that any of these
statements will come to pass. Actual outcomes are highly likely to vary from any such forward-looking statements and such variations may be material. There are a number of
factors that could cause actual results and developments to differ materially from any of those expressed or implied by any such statements, such as, but not limited to, the
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The distribution or possession of this document in certain jurisdictions may be restricted by law or regulation. Accordingly recipients of the Presentation are required to inform
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