Integrated report 2021

Perspectives / Surroundings

Perspectives

Perspektywa krótkoterminowa (stan perspektywy na 25.05.2022)

Recurring EBITDA: outlook for 2022

2022 vs 2021
perspective

Main factors

Conventional Generation
  • Average annual wholesale price of electricity ~510-520 PLN/MWh
  • Average annual cost of CO2 ~300-310 PLN/t
  • Volatile state of the markets poses risk to margin on unhedged position
  • Expected higher average cost of hard coal, although price of volume covered by long-term contracts is relatively stable
  • Pressure on production volumes from new RES capacities and assumed higher wind generation
District Heating
  • A two-fold increase in cost of CO2
  • Average price of contracted natural gas higher by approx. 150-200
  • The increase in heating tariffs and support for gas cogeneration to a large extent does not cover the increase in CO2 prices and fuel costs
Renewables
  • Expected higher SPOT prices of electricity
  • Expected average higher prices of green certificates
  • New PV capacities
Supply
  • Pressure on margin from substantial rise in cost of electricity
  • Higher revenues from services of commercial management of generation capacities
Distribution
  • Regulatory Asset Base (RAB) higher by ~PLN 0.7bn up to PLN ~19.6bn
  • Slightly higher WACC 5.8% (before tax) as result of possible additional premium for reinvestment

 

CAPEX: outlook for 2022

2022 vs 2021
perspective
The main factors
Conventional Generation
  • Reduction of investment spending to maintenance outlays as BAT adjustment program concludes
Low-emission sources
  • Rising spending on construction of CCGT units in Dolna Odra along with the progress of the investment
District heating
  • Increase in expenditures related to the construction of new low-emission gas units, including: New Czechnica CHPP, Bydgoszcz CHPP, Zgierz CHPP, Kielce CHPP
Renewables
  • Increase in outlays for the construction of offshore wind farms
  • Consistent increase in outlays as part of the PV development program
  • Regardless of the growing expenditure on organic growth, possible acquisitions
Supply
  • Implementation of ongoing development and maintenance projects
Distribution
  • Increase in planned outlays for connecting new sources
  • Implementation of grid grounding program and smart metering installation

Poniższe tabele prezentują aspekty wpływające na rozwój działalności Grupy PGE w perspektywie średnioterminowej

MAIN DIRECTIONS OF CHANGE POTENTIAL IMPACT ON PGE CAPITAL GROUP
Macroeconomic environment – global
  • GDP in the eurozone in 2021 grew strongly by 5.2%. This was driven by an economic recovery following the global recession of 2020 (GDP down by 6.4%) caused by the COVID-19 pandemic. The EC’s forecasts for 2022 and 2023 expect the economic expansion to continue, at 4.3% and 2.4%, respectively.
  • Potential effects in connection with the war in Ukraine and its aftermath (described in p. 5.4 of this report)
  • The strong economic recovery along with supply restrictions and growing prices of fuel and energy led to an increase in inflation to levels not seen in nearly 30 years. At the end of 2021, annual CPI (consumer inflation) was up by 5% in the eurozone. Similar inflationary pressure was seen in other global economies such as the U.S. (7% annual inflation at the end of 2021) and U.K. (5.4%).
  • With inflation targets being exceeded, central banks began to tighten the monetary policy by reducing asset purchase programs (FED and ECB) and raising interest rates, especially in our region (Czech Republic and Hungary).
  • Following a strong rebound in the second quarter of 2021 resulting from a low base in 2020, industrial production in the eurozone decreased to -1.5% y/y in November 2021. The decline mainly resulted from supply chain disruptions during the COVID-19 pandemic, especially visible in the automotive industry.
  • In February 2022, PMI for industry was at 58.2 and for services at 55.5, showing a continued recovery in the nearest future.
  • The key risks to economic growth include how the pandemic situation will develop, tightening the monetary policy and supply restrictions.
  • EU economic growth in the coming years will be supported by a post-pandemic crisis recovery package worth EUR 750 billion.
  • Planned tightening of the EU climate policy, adoption of a CO2 reduction target of 55% in 2030, including expectations of further instruments to accelerate the decarbonisation of the economy will affect the levels and price relations of energy carriers.
  • Growth in GDP and industrial production in the eurozone should be supportive of economic activity in Poland, allowing us to expect an increase in demand for energy in the National Power System (“NPS”), although the pace of this growth will depend on both domestic factors and the situation in foreign markets, with particular emphasis on the level of international exchange.
  • A large portion of funding from the recovery plan is earmarked for the decarbonisation of economy, which in combination with a stricter climate policy (increase in prices of CO2 emission allowances, increase in share of RES, adoption of taxonomy and works on the Fit-for-55 package) will not improve the outlook for coal-based energy generation and in the long term should cause a further decline in demand and pressure on prices. Their level will be determined by the situation in global markets, which during periods of short-term imbalances may give rise to higher market volatility
  • Meanwhile, the wide availability of financial resources targeted at decarbonisation may facilitate the implementation of investments oriented towards the transformation of the PGE Group.
Macroeconomic environment – Poland
  • Real GDP growth in Poland in 2021 reached 5.7%, according to estimates from Statistics Poland, as a result of a rebound after the pandemic decline in 2020 (-2.5%).
  • Real GDP growth in Poland in 2021 reached 5.7%, according to estimates from Statistics Poland, as a result of a rebound after the pandemic decline in 2020 (-2.5%).
  • The primary factor driving the strong GDP growth was domestic demand (+7.6%), including consumption in the household sector (+3.4%). The impact of investment demand was lower (+1.3%).
  • Industrial PMI has remained above 50 points since July 2020, which shows growth in economic activity in this sector, however the January 2022 read-out (54.5 points) is slightly weaker than the data for December 2021.
  • Given the stronger price pressure, with both supply-side and demand-side causes (including increases in fuel and energy prices), inflation grew strongly in 2021, reaching an annual average of 5.1% and an annual rate of 8.6% in December 2021 for consumer inflation. Core inflation, which excludes food and energy prices, was 4.1%. According to National Bank of Poland surveys taken in January 2022, average annual CPI inflation may rise even more strongly in 2022, to 7.4%, and decline to 4.4% in 2023. Given the anti-inflationary shields introduced by the government, these forecasts are accompanied by an elevated level of uncertainty.
  • Strong inflationary pressure prompted the National Bank of Poland to raise interest rate. The reference rate has increased from 0.1% at the end of 2020 to 2.25% currently. At the same time, yields on debt instruments increased. According to a communication from the National Bank of Poland, further interest rate hikes are possible in order to bring inflation down to the target of 2.5% with a tolerable deviation of 1 percentage point.
  • Forecasts from the European Commission and the National Bank of Poland expect the accelerated GDP growth to continue in the coming years (4.9% in 2022 and 4.4%-4.9% in 2023). This dynamic will depend on the intensity of the pandemic, impact of interest rate hikes, economic growth in Europe and the capacity for increasing investments.
  • Economic growth in the short and medium term may translate into increased demand for electricity. However, a high pressure on rising electricity costs (CO2 costs, distribution charges, support schemes), increasing energy efficiency and a rapid reduction of costs of constructing own RES sources will have a negative long-term impact on the demand for energy from conventional generation sources.
  • In the longer term, lower levels of demand and changes to the energy mix may translate into a lower electricity price on the wholesale market and, in particular, a negative impact on the economics of coal-fired power generation. Short-term prices growth cannot be ruled out if the level of available reserves in generating units declines. 
  • An increase in interest rates and debt yields will raise the cost of debt financing in the investment program. No changes are expected in PGE Group’s credit ratings in local currency and foreign currencies (Moody’s Baa1 and Fitch BBB+), which should remain neutral for the availability of financing. In addition, on 18 January 2022, PGE’s Management Board passed a resolution on commencing the company’s recapitalisation in connection with planned investment projects in the area of renewable energy, decarbonisation and distribution, which may reduce the demand for debt capital.
  • The Extraordinary General Meeting, which took place on March 7, 2022 did not adopt the proposed resolution due to the break in the proceedings announced until April 6, 2022. Further decisions will be made during the continuation of the General Meeting.
  • An increase in the price indices of construction and assembly works, materials, as well as cost pressures in the specialised construction segment may result in higher expenditures for the execution of the planned investment programme and higher costs of external services. In addition, the structural shortage of qualified employees in the construction sector may cause delays in the implementation of investment and overhaul tasks.
Trends in electricity and fuel markets
  • Growth to record levels in domestic electricity consumption in Poland in 2021 (+5.4%) and in generation (+14%) above the figures from before the pandemic.
  • Significant decline in net import from 13.2 TWh in 2020 to 0.8 TWh in 2021 due to growth in energy prices and consumption in European markets.
  • Supply restrictions in European markets in renewable sources. The planned shut-down of nuclear plants in Germany with a capacity of 4 GW in 2021 and a further 4 GW by the end of 2022.
  • Sudden spike in energy prices in global markets in the second half of 2021 caused by a strong economic recovery (growth in the consumption of energy and fuels), lower wind speeds and geopolitical tensions.
  • Natural gas prices on TGE’s SPOT market increased from 96 PLN/MWh in the first quarter of 2021 to 450 PLN/MWh in the fourth quarter of 2021. Coal prices in ports ARA grew during that period from approx. 10 PLN/GJ to more than 25 PLN/GJ.
  • On the Polish market, the cost of basic fuel, i.e. hard coal, was stable for power plants and reached approx. 11.5 PLN/GJ.
  • Rise in CO2 prices – from approx. 37 EUR/t on average in the first quarter of 2021 to approx. 67 EUR/t on average in the fourth quarter of 2021, reaching approx. 90 EUR/t.
  • Growing energy prices in Poland due to the cost of CO2 and energy prices in European markets. The price of annual BASE contracts on TGE grew to 830 PLN/MWh on average in December 2021, from approx. 275 PLN/MWh on average in the first quarter of 2021
  • A systematic increase in demand for natural gas in Poland and the region is expected in view of new investments in natural gas-fired power generation units and high-efficiency cogeneration units as well as a gradual change in the fuel mix in Germany.
  • The Development of possibilities to supply natural gas to Poland (the expansion of the LNG terminal, the Baltic Pipe project, infrastructural projects of LNG exporters).
  • Launch by the Ministry of State Assets of the power-sector transition project in Poland and carve-out of coal-based generating assets from companies with a State Treasury shareholding
  • Changes in the energy market model:
    • implementing the capacity market mechanism and RES auctions.
    • introducing changes to the balancing market rules in two phases, at the beginning of 2021 and 2022.
    • introducing changes in establishing energy prices for end users.
    • new settlement model for prosumers.
    • implementing regulatory solutions dedicated to distributed power generation.
    • implementing the Flow Based Market Coupling mechanism for trade on the synchronous link at the end of 2021. This mechanism enables the best economic use of available transmission capacities between countries. 
    • Start of process of granting new location permits for offshore wind farms.
  • Rising energy consumption in Europe and supply constraints may significantly impact the level of cross-border exchange of electricity, resulting in higher prices on the wholesale market and higher load on PGE Group’s units. 
  • Persistently high fuel prices, especially for natural gas, in European markets may temporarily have a positive impact on margins generated by PGE Group’s generating units, despite risk related to high redemption costs of CO2 emission allowances
  • Hard coal-fired generation grew by 30% in 2021 due to high energy demand, lower wind and rising gas prices in European markets. In the short term, this results in increased consumption and upward pressure on coal prices on the Polish market. In the long term, coal consumption and production are expected to be steadily reduced as a result of structural changes in the energy sector, the development of renewable and gas capacities and the phase-out of solid fuels in households.
  • Continued upward pressure on energy prices in Poland in the long term may have a negative impact on energy-intensive users’ consumption and the competitiveness of electricity against other energy carriers, and thus on the sales volumes generated by PGE Group
  • An increase in prices for retail customers may have an adverse effect on margins in PGE Group’s Supply segment.
  • New natural gas supply potential (construction of the Baltic Pipe gas pipeline and expansion of the LNG terminal in Świnoujście) will make it possible to develop CCGT generating units and implement investments in high-efficiency gas cogeneration under the support system.
  • PGE Group is participating in a project to carve-out coal-fired generation assets from State Treasury-owned companies. The implementation of this project will significantly change the Group’s generation profile into a low-emission one and will reduce risk related to the level of margins and output in coal units.
  • The capacity market is an opportunity for a gradual transformation of the power structure in the NPS towards the construction of highly efficient base-load power generation units, flexible peak sources, and a gradual decommissioning of units which do not meet environmental requirements.
  • Renewable energy auctions allow investors to secure the revenue side of their projects while maintaining a competitive cost of RES development for end users.
  • Changes in the balancing market are intended to enable the market valuation of reserves and system services, strengthen price signals and provide an incentive to invest in flexibility on the part of generators and customers. 
  • Causing greater activity on the part of end users will allow the PGE Group to develop its product offer in new cooperation models.
  • Development of offshore wind energy is one of the pillars of PGE Group’s transition – PGE Group’s long-term development strategy sees the construction of at least 6.5 GW by 2040.

*(na podstawie SPRAWOZDANIA ZARZĄDU z działalności PGE Polska Grupa Energetyczna S.A. oraz Grupy Kapitałowej PGE za rok 2021

MAIN DIRECTIONS OF CHANGE POTENTIAL IMPACT ON PGE CAPITAL GROUP
Development of new technologies
  • We observe the growing competitiveness of wind (including offshore) and photovoltaic technologies, which is confirmed by prices achieved in RES auctions and the rising number of micro-installations. 
  • In some countries, the dynamic dissemination of full-scale, new energy storage technologies, providing, among other things, regulatory services to the electricity systems or enhancing local security of energy supply, is clearly visible.
  • The systematic development of prosumer power generation and the dynamic growth in the number of micro-installations.
  • The development of electromobility.
  • The development of information and telecommunications technologies for new applications in the energy sector.
  • Increasing the competitiveness of new RES installations affects affects the dynamics of their growth and changes the working conditions of conventional units.
  • The falling costs of the offshore technology enable it to be used to maintain the PGE Group’s leading position in generation with a significantly reduced average level of the portfolio’s carbon footprint.
  • The commercialisation of energy storage on an industrial scale will enable better use of RES, complementing conventional capacities in the role of system balancing and improving local energy security. 
  • With the development of prosumer power generation, the variability of network operating conditions at the local level increases, which means the need to invest in infrastructure (connections, modernisations), while limiting the volume of distributed electricity. In the conventional power generation segment, there is a higher demand for highly flexible generation units in order to balance distributed power generation.
  • The development of electromobility will increase demand for electricity and change its daily profile, which may slightly alter the operating conditions of some conventional units. However, this development requires investments in the development of grid infrastructure and charging points, as well as a charging management system. It is also possible to use batteries in electric cars as storage facilities for energy produced by RES.
  • The PGE Group’s use of new technologies and the potential of data resources may allow it to develop in new roles and areas of activity, as well as improve its operational efficiency

*(na podstawie SPRAWOZDANIA ZARZĄDU z działalności PGE Polska Grupa Energetyczna S.A. oraz Grupy Kapitałowej PGE za rok 2021

Surroundings

Societal expectations define the vision for energy

The energy sector has undergone profound changes in recent years. Public expectations are now directed towards energy produced in an environmentally friendly way and solutions that are tailored to customers’ needs and give a sense of independence. The main trends defining the future of the sector are Decarbonisation, Decentralisation, Competition. Regulatory changes have emerged tightening the European Union’s environmental policy, aiming to achieve climate neutrality by 2050. With social and regulatory changes, the policy of banks and investors to finance projects in the energy sector has also changed. These days, money flows to investments in zero-carbon generation sources and grid infrastructure.

DECARBONISATION

  • targets aiming for climate neutrality
  • electrification of district heating and transport
01
03

DECENTRALISATION

  • development of distributed energy
  • new energy market roles and participants
  • change in conditions for power grid operations
  • automation and digitalisation
01
03

COMPETITION

  • the growing image of environmental neutrality
  • new players from outside the energy sector
  • simple and attractive product offerings supported by new technologies
01
03

Energy transition as element of economic model

Fiscal and investment policy linked to environmental targets

  • Targeting funds for investment in zero-carbon generating sources and grid infrastructure
  • Reducing the availability of finance for fossil fuel-based power generation
  • Companies and cities striving for sustainability

Changes in the surroundings are not only a threat and a challenge for the sector, but also an opportunity to provide an investment boost to the economy through the construction of new generation sources and the modernisation of energy infrastructure. The transition of the energy sector should translate into economic development, sustainable growth for companies and cities, as well as an equitable transition of regions hitherto associated with coal mining. Energy transition is becoming part of the economic model. PGE Group’s investments will focus on renewable energy, district heating transition and grid infrastructure. The total planned investment expenditures in 2021-2030 will amount to PLN 75 billion, of which approx. 50% will be allocated to the development of renewable energy sources (offshore and onshore wind farms, photovoltaics, zero-emission co-generation sources).

Economic development

Investment stimulus thanks to power grid modernisation

Just transition

Creating an opportunity for post-industrial regions to develop new specialisations

Independence

Use of renewable energy resources and energy storage assets

Challenges for energy companies

Adapting the organisation to competing in a new surrounding

Changes in the surroundings are not only a threat and a challenge for the sector, but also an opportunity to provide an investment boost to the economy through the construction of new generation sources and the modernisation of energy infrastructure. The transition of the energy sector should translate into economic development, sustainable growth for companies and cities, as well as an equitable transition of regions hitherto associated with coal mining. Energy transition is becoming part of the economic model. PGE Group’s investments will focus on renewable energy, district heating transition and grid infrastructure. The total planned investment expenditures in 2021-2030 will amount to PLN 75 billion, of which approx. 50% will be allocated to the development of renewable energy sources (offshore and onshore wind farms, photovoltaics, zero-emission co-generation sources).

This direction is inevitable. Poland's energy sector needs a leader of change.

PGE wants to play the role of a leader in the transition and modernisation of the energy sector in Poland and to support the building of a market environment conducive to energy transition. PGE Group is ready to carry out transition processes in the sector and prepare the conventional base of the power system to function under a new ownership structure. As a transition leader, PGE is committed to reducing its environmental impact by achieving climate neutrality in 2050. Sustainable decarbonisation is planned by changing generation technologies, expanding the RES portfolio and enabling customers to participate in the energy transition through attractive product offerings. The company will pioneer the development and operation of offshore wind energy.

Market environment

Electricity prices – domestic market

DAY-AHEAD MARKET (RDN, SPOT MARKET)

Market/measure Unit Q4 2021 Q4 2020 % change 2021 2020 % change
RDN – average price PLN/MWh 617 246 151% 398 209 90%
RDN – trading volume TWh 7.73 7.62 1% 31.06 28.73 8%

Analysis – selected price factors affecting RDN quotations

Factor Unit Q4 2021 Q4 2020 % change 2021 2020 % change
CO2 emission rights EUR/t 68.16 26.59 156% 53.87 24.14 123%
Polish Steam Coal Market Index PSCMI-1 PLN/GJ 11.35 11.82 -4% 11.42 11.91 -4%
Wind generation NPS TWh 4.97 4.09 22% 14.23 14.17 0%
Ratio: wind generation/ NPS consumption % 11% 9% 8% 9%
Ratio: international trading/ NPS consumption % 7% 0% 8%

In the fourth quarter of 2021, the average electricity price on the day-ahead market was PLN 617/MWh and was higher by 151% than average price (PLN 246/MWh) in the preceding year. The increase in energy prices resulted mainly from lower net import in comparison to the fourth quarter of 2020 (-4.4 TWh). Higher demand for electricity (+ 1.2 TWh y/y) also contributed to the price increase.

In full year 2021, the average price on the day-ahead market was PLN 398/MWh, which is 90% higher than the average price recorded in the preceding year (PLN 209/MWh). The increase in price was connected with the situation on related markets – average price of CO2 emission rights in 2020 was by 123% higher than in the base year and amounted to EUR 53.87/t. The PSCMI1 index in 2021 averaged PLN 11.42/GJ – down by 4% y/y. On the other hand, price increase pressure was exerted by the net import volume lower by 94% y/y. The prices were also affected by a increase in demand by 8.9 TWh y/y.

Forward market

Market/measure Unit Q4 2021 Q4 2020 % change 2021 2020 % change
BASE Y+1 – average price PLN/MWh 515 227 127% 385 232 66%
BASE Y+1 – trading volume TWh 28.35 29.09 -3% 104.44 126.75 -18%
PEAK5 Y+1 – average price PLN/MWh 567 261 117% 428 272 57%
PEAK5 Y+1 – trading volume TWh 3.48 4.00 -13% 12.38 14.07 -12%

Electricity prices on forward market are shaped by the similar fundamental factors, as the prices on the Day-Ahead Market described above. The observed forward market price increase y/y for the whole year for BASE_Y+1 is related to increased demand for electricity and very high prices of CO2.

1 Monthly average index level for forward contracts for the next year (Y+1), baseload and peak, weighted by the trading volume.

Electricity prices - international market

Wholesale market (comparison of day-ahead markets)

Chart: Comparison of average electricity prices on Polish market and on European markets in the fourth quarter of 2021 (prices in PLN/MWh, average exchange rate EUR/PLN 4.62).

Source: TGE, EEX, Nordpool

Chart: Comparison of average electricity prices on Polish market and on European markets in 2021 (prices in PLN/MWh, average exchange rate EUR/PLN 4.56).

Source: TGE, EEX, Nordpool

Source: TGE, EEX, Nordpool

In the fourth quarter of 2021, the y/y change in prices on neighbouring markets ranged between PLN 444 and PLN 651/MWh (i.e. approx. 302-370%), whereas in Poland the average price level has increased to a lesser extent, by PLN 371/MWh y/y (increase by approx. 151%). The low correlation of energy prices results from differences in the technological mix (share of renewable energy sources) and the situation on the markets for related products. The price of hard coal in ARA ports rose by 191% y/y, while the domestic pulverised coal price index, PSCMI-1, decreased by 4% over the same period.

Source: ARP, Bloomberg (API21MON OECM Index), own work.

1 The comparison is illustrative only. Methodologies of counting the ARA and PSCMI1 indexes are different. Among other things, the ARA index includes insurance and delivery costs. The PSCMI 1 is an ex-mine index without insurance and delivery costs. Standards for calculating the caloric values are also different (ARA – 25.12 GJ/t vs. PSCMI1 caloric value – range 20-24 GJ/t). The aim is to compare the trend and not the absolute level. For illustration purposes ARA index is recalculated from USD/t to PLN/GJ.

On an annual basis, average energy prices on neighbouring markets increased by PLN 254-306/MWh y/y (i.e. by approx. 221-226%), while the average price in Poland increased by PLN 189/MWh y/y (approx. 90%). The price differential between Poland and neighbouring countries was largely attributable to differences in coal and natural gas prices at home and abroad.

International trading

Monthly imports, exports and cross-border exchange balance in 2020-2021.

Source: own work based on PSE S.A. data.

Source: own work based on PSE S.A. data.

In the fourth quarter of 2021, Poland was a net exporter of electricity, and the commercial exchange balance was -1.4 TWh (3.9 TWh import, 5.2 TWh export) and was lower by 4.4 TWh on a y/y basis. Export to Czechia and Slovakia together with import from Germany, Sweden and Lithuania had the largest impact on the balance of commercial exchange.

In 2021, the balance of commercial exchange reached 0.8 TWh (import 15,1 TWh, export 14.3 TWh) and was 12.4 TWh lower on a y/y basis (i.e. by approx. 94% y/y). Export to Czechia and Slovakia together with import from Germany, Sweden, Lithuania and Ukraine had the largest impact on the balance of commercial exchange.

Source: own work based on PSE S.A. data.

Global increase in fuel prices (which translate into an increase in the costs of electricity production from natural gas and hard coal) and, additionally, lower windiness translated into an increase in energy prices in neighboring countries, which in turn limited electricity imports to Poland.

Retail market

The diversity of electricity prices for retail customers in the European Union depends both on the level of the wholesale prices of electricity and fiscal system, regulatory mechanism and support schemes in particular countries. In Poland in the first half of 2021 an additional burden (over sale price and cost of electricity distribution) for individual customers accounted for 41% of the electricity price and in comparison to EU average of 39%. In Denmark and Germany the proportion of additional charges in the price of electricity exceeded 50%.

Chart: Comparison of average prices for individual customers in selected EU countries in the first half of 2021 (prices in PLN/MWh, average exchange rate EUR/PLN 4.47).

Source: own work based on Eurostat data.

2 Parallel exchange – exchange between synchronised system on borders with Germany, Czechia and Slovakia

3 Eurostat data on retail market are published in semi-annual intervals.

Prices of certificates

In the fourth quarter of 2021 the average price of green certificates (index TGEozea) reached PLN 273/MWh and was higher by 94% compared to the analogical period of the previous year. An obligation to redeem green certificates has remained unchanged in 2021 as compared to 2020 (19.5%). The average price of green certificates in 2021 was at PLN 192/MWh and was higher by 39% compared to 2020. The closure of a certification system for new units and the upcoming end of a 15-year support period for first installations that had entered the system in 2005 and lower windiness in 2021 resulted in limited supply of cetificates on the market, what in consequence led to the prices increase.

Chart: Average quarterly prices of green certificates (TGEozea).

Source: Own work based on TGE quotations.

Prices of CO2 emission rights

EUA (European Union Allowances) prices are one of the key factors determining wholesale energy prices and PGE Group’s financial results. Installations emitting CO2 in the process of electricity or heat production bear the expenses for purchasing EUA allowances to cover the deficit (i.e. the difference between CO2 emissions at PGE Group’s generating units and the free-of-charge allowances received under derogation in accordance with the National Investment Plan). Wherein, last allocations granted free of charge were planned for realisation of investment tasks for 2019. It means that the free allocations for electricity generation, in accordance with the currently used method, ended when 2019 allowances were received.

Following a sudden slump caused by the outbreak of the COVID-19 pandemic in mid-March 2020, the prices of CO2 emission allowances began recovering until reaching dynamic growth from November 2020. In the fourth quarter of 2021, the weighted average price of EUA DEC 21 was EUR 68.16/t and was considerably higher (by 156%) than the average price of EUR 26.59/t for the EUR DEC 20 instrument in the similar period of the previous year. In whole year 2021, the weighted average price of EUA DEC 21 was EUR 53.87/t and was by 123% higher than the average price of EUR 24.14/t for the EUR DEC 20 instrument in the previous year.


Source: own work based on ICE exchange quotations

CO2 emission rights granted free of charge

The Group received emission allowance allocations for heat generation for 2020 on April 23, 2021, after verification of asset and financial reports for investments included in the National Investment Plan. Allocations for electricity producers are no longer awarded from 2020.

On July 7, 2021, the climate minister published a list of installations along with the final volume of CO2 emission allowances allocated for the production of heat for 2021-2025 in accordance with the Act of June 12, 2015 on the ETS scheme.

The publication of this list is the final step in the process of determining the allocation of emission allowances on the basis of reports concerning key data submitted by installation operators by June 30, 2019. The input data for the allocation concerned the period 2014-2018.

The publication of the list completes the process of determining the final volume of emission allowances allocated to installations in accordance with Commission Delegated Regulation (EU) 2019/331 of December 19, 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council.

The final volume of emission allowances published is subject to adjustment based on the average level of production in the two years preceding the year for which emission allowances are granted. Data on production levels is provided by March 31 of each year starting from 2021 in ALC reports. Based on this data, emission allowance allocations are either decreased or increased if the average production level in the past two years exceeds the ±15% threshold (if the threshold is exceeded, the threshold in the following years will be ±5 percentage points above 15%). The final volume of emission allowances granted to an installation is determined on this basis. The adjustment will be performed on an annual basis in accordance with rules specified in Commission Delegated Regulation (EU) 2019/1842 of October 31, 2019.

On October 12, 2021, emission allowances were issued to the installation’s accounts in the Union registry, in line with the announcement of the Minister of Climate and Environment in the Public Information Bulletin. This issue concerns the final annual number of emission allowances allocated for 2021, resulting from the application submitted in 2019 and approved by the European Commission in June 2021, assuming no changes, resulting from the ALC reports submitted by the end of March 2021. The current issue of emission allowances does not include the adjustment of the allocation of emission allowances in terms of the additional number of allocated emission allowances. In the case of installations where the allocation of emission allowances has been reduced, such issuance has been suspended due to a change in the level of activity. The adjusted final annual number of emission allowances for an installation determined as a result of the adjustment of the allocation of emission allowances will be issued immediately after its approval by the European Commission.

Emission of CO2 compared to the allocation of CO2 emission allowances for 2021 (in tonnes).

Product CO2 emissions in 2021 Allocation of CO2 emission rights
for 2021*
Electricity and heat 70,746,382 638,274
*Allowances for heat production.

Competitive environment

The electricity sector in Poland comprises four operating segments:

  • generation of electricity,
  • transmission, responsibility of the TSO – PSE S.A.,
  • distribution,
  • retail sales.

District heating sector may be also distinguished, within which PGE Group is active in heat generation, distribution and sales.

The key participants of the electricity market in Poland are four nationwide, vertically integrated energy concerns: PGE, TAURON Polska Energia S.A., ENEA S.A. and ENERGA S.A., which was acquired by PKN Orlen in 2020.

PGE Group is the undisputed leader in electricity generation with a market share of approx. 43%. The Group produces more electricity than all of the competitors on the consolidated market combined, whilst having the largest achievable capacities, both conventional and renewable. Aside from integrated energy groups, significant producers on the market include PKN Orlen S.A., ZE PAK S.A. („ZE PAK”), and PGNiG TERMIKA S.A. („PGNiG”). While ZE PAK’s production is based on industrial plants, Orlen’s and PGNiG’s production is based on cogeneration units generating electricity together with heat.

In 2021 54% of the electricity produced in the country was hard coal-based – and this is a key fuel for PGE Group’s competitors.
Approximately 26% of the electricity produced in Poland was lignite-based. Aside from PGE Group, ZE PAK also bases its electricity production on lignite. Wind farms as well as gas units have approx. 8% share in electricity generation. The use of other fuels is of relatively low significance from the viewpoint of the NPS.

 

Source: own work based on information published by the companies and Agencja Rynku Energii S.A. (”ARE”).

Energy production from renewable sources is much more dispersed than the conventional generation market. In the previous year wind photovoltaics was the most dynamically developing sector. As of the end of December 2021, this technology had the largest share in total installed RES capacities – 7.7 GW, although the vast majority of installations (5.9 GW) belonged to over 800 thousand prosumers. The development of photovoltaics is an element of PGE Group’s investment plan, which sees the construction of approx. 3 GW in capacity by 2030. So far, PGE Energia Odnawialna has secured approx. 3 thousand hectares of land for the purpose of building farms with a capacity of more than 2 GW. Moreover, in 2021 the company received approvals for the implementation of new projects with a total capacity of nearly 200 MW. PGE Group remains the entity with the highest installed wind capacity – 688 MW and has an approx. 10% share in total wind capacity installed in Poland. Other notable wind farm operators include EDP Renewables Polska sp. z o.o., TAURON Ekoenergia sp. z o.o. and PKN Orlen S.A.

Offshore wind farms are an emerging RES segment in Poland. In the system’s first phase, support is awarded by way of an administrative decision issued by the President of the Energy Regulatory Office, and from 2025 offshore wind farms projects will be able to participate in the auction system. In 2021, the President of the Energy Regulatory Office awarded support to two offshore projects with a total capacity of 2.5 GW, which are being implemented jointly by PGE and Ørsted (JO 50/50). The European Commission must still confirm compliance with the internal market of the public aid granted to a producer in order to receive support.

Growth in the market prices of energy allows for the development of RES investments also outside the support system, based on PPAs.

In the distribution area, the country is divided into regions, with four large distribution system operators (the “DSO”) on the market, who are required to carve out distribution activities from their other business: PGE Dystrybucja S.A., TAURON Dystrybucja S.A., Enea Operator sp. z o.o. and Energa-Operator S.A.

Aside from the above-mentioned energy groups, another significant entities include Stoen Operator sp. z o.o. (company from E.ON Group, previously innogy Stoen Operator sp. z o.o.), responsible for electricity distribution in Warsaw, as well as PKP Energetyka S.A. managing the railway electric network throughout the country.

A historical division of the distribution areas has substantial impact on the operating conditions of the business, and this specific situation is reflected in the distribution tariffs approved by the URE president. PGE Group operates in an area that is less urbanised and industrialised, meaning that it has more than 5.5 million clients throughout an area of approx. 130 ths km2. For comparison, TAURON has a similar number of clients in an area nearly twice smaller and distributes a larger amount of energy.

Chart: Areas of operation of Polish distribution system operators.

Source: own work.

Chart: Share of particular energy groups in volume of energy distributed in 2020 and sales of electricity to final off-takers after three quarters of 2021.

Source: own work based on information published by the companies, ARE and ERO.

In the retail segment, which covers sales to end customers – individual, small and medium enterprises as well as large industrial customers – most of the sales are conducted by the four largest energy groups and E.ON Polska S.A. (formerly innogy Polska S.A.). PGE Group and TAURON remain the leaders, having over 50% of the market. Both PGE and TAURON sell electricity to over five million clients. Despite a growing number of competitors in the segment, including companies for which electricity is not a core product, companies from outside the four largest Polish groups continue to control little market share. The leaders control over 80% of the market, while other significant player is E.ON Polska S.A., based on sales connected with serving as distributor for the Warsaw area, as well as PKP Energetyka S.A.

The district heat production market in Poland is highly dispersed, with the four leading producers accounting for less than 40% of production countrywide. PGE Group is the undisputed leader of this market, too with a share at a level of over 20%. This market is of a local nature and bears the traits of a natural monopoly, with heating prices being set in an administrative procedure – tariffs approved by the President of the Energy Regulatory Office. The dominant producers focus their production activities in different urban areas therefore sector competition is limited and is local in nature. Besides PGE Group, the key producers of heat are PGNiG (focused on production mainly in the Warsaw agglomeration) and Veolia Group (Poznań agglomeration, Łódź).

Energy group profiles

Podział sektora elektroenergetycznego na segmenty znajduje swoje odzwierciedlenie w segmentach The electricity sector is divided into segments, what is reflected in the operating segments of the respective energy groups. In contrast to the other energy groups in Poland, whose dominant EBITDA driver is the electricity distribution segment, PGE Group derives much of its operating profit from the generation segment, even though the group is the country’s second-largest electricity distributor by volume. This allows to optimally deploy its competences and capitalise on opportunities arising in the generation area (both conventional and renewable) as well as in wholesale energy trade, whilst generating high and stable EBITDA on regulated activities.

With acquisitions of the Bogdanka mine and Połaniec power plant and the launch of a new unit at the Kozienice power plant, ENEA increased its share of EBITDA from the generation segment. This brought ENEA’s profile closer to that of PGE Group.

A key feature of all the groups is a relatively small contribution of retail sales to operating profit, which is a result of sales margin levels, driven by strong competition in the segment.

Chart: Profiles of Polish energy groups (size of the chart is proportionate to share in the 9M 2021 EBITDA of respective business segments and the amount of total EBITDA).

Regulatory environment

PGE Group operates in an environment with a significant impact of domestic and foreign regulations. Presented below is a summary of the most significant decisions, which took place in 2021 and which could have an impact on PGE Group’s operations in the coming years.

 

Segments

Regulation Regulation objectives Latest conclusions Next stage Impact on PGE Group
The bill on the amendment to the Energy Law.

CM list: UC 17

Parliamentary document: 808

Act of May 20, 2021 on amendment of the act – Energy Law, and certain other acts.

The amendment to the Energy Law contains a number of changes of systemic importance, including:
  • comprehensive arrangements concerning the energy storage issue,
  • the introduction of the obligation to install remote reading meters,
  • the appointment of an energy market information operator whose role will be to establish and develop a Central Market Information System („CSIRE”).
The act entered into force on July 3, 2021 with certain exceptions when the vacatio legis period was extended to 12, 24, 30, 36 months.

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The proposed solutions will affect all operating segments of the PGE Group, in particular the Supply and Distribution segments. The draft prepares the market for the further implementation of directive 2019/944 on common rules for the internal market for electricity.
The bill on the amendment to the Energy Law and the Renewable Energy Sources Act.

GLC list: UC 74

  • The draft act includes, in particular, proposals for provisions implementing into the Polish legal system Directive (EU) 2019/944 of the European Parliament and of the Council of June 5, 2019 on common rules for the internal market in electricity and amending Directive 2012/27/EU.
  • The draft expands on the directions of changes in regulations initiated in the act of May 20, 2021 on amendment of the act – Energy Law, and certain other acts. These include:
  • the technical ability to change electricity supplier within 24 hours, starting from 2026,
  • implementation of civic institutions of energy communities,
  • the customer’s right to voluntarily and temporarily reduce electricity consumption (“DSR”), aggregation, contracts with dynamic electricity prices,
  • definition of the aggregator’s function on the electricity market, along with its tasks and authorisations,
  • definition of demand response and active customer on the energy market,
  • allow DSOs and TSOs to own certain energy storage installations,
  • expand the Energy Regulatory Office’s authority,
  • regulations concerning system services, flexibility services and changes in balancing,
  • introduction of provisions introducing the separation of transmission and distribution activities from energy storage – (an energy system operator, with the exceptions provided for in the draft, cannot be the owner of and cannot build, operate or manage an energy storage system).
The deadline for submitting comments was June 23, 2021. On January 19, 2022 the Ministry of Climate and Environment published a set of responses to the comments submitted. Publication of draft following consultations, sent to Council of Ministers for further work. The proposed solutions will have an impact on all of PGE Group’s operating segments, especially the Supply and Distribution segments. The draft introduces or applies numerous EU laws addressing the electricity market, including directive 2019/944 on common rules for the internal market for electricity, and grid codes.

The bill on the amendment to the Energy Law and the Renewable Energy Sources Act

GLC list: UD 162

The bill includes proposals for legislation to abolish the exchange obligation and to tighten liability for electricity market manipulations. The ERO President will have at their disposal appropriate tools to prevent abuses and attempted abuses in the electricity market. According to the explanatory memorandum to the bill, the abolition of the obligation is included in the Polish Electricity Market Reform Implementation Plan. Comments submitted during public consultations were published on April 8, 2021. Submitted for further work in the Council of Ministers. The proposed change to abolish the exchange obligation will have no adverse impact on the PGE Group’s operations.

Act amending the Act on the Capacity Market and certain other acts. The bill promoter’s intention is to align the Act on the capacity market to the provisions of Regulation (EU) 2019/943 of the European Parliament and of the Council of June 5, 2019 on the internal market for electricity and to improve the capacity mechanism taking into account lessons learned from organisation of capacity auctions to date and the associated processes (promulgation of regulations and rules, definition of auction parameters, certification processes). On August 7, 2021, the law was signed by the President. It entered into force on September 1, 2021,   with the exception of Art. 6, (concerning the provision of data and information by the Distribution System Operator via CSIRE),  which comes into force on July 1, 2024.

The amendment is of key importance for PGE Group, the holder of a significant stake in the capacity market.
Act of December 17, 2020 on promoting electricity generation in offshore wind farms.

Parliamentary document: 809

The Act provides for enabling the development of offshore wind power generation. Offshore wind farms are important for the fulfilment of international commitments in the field of renewable energy in the long term. The key to these is to create legal regulations that will stimulate the growth of this sector.

The Act provides for:

  • A support system for the offshore technology, adjusted to its technical and economic conditions, consisting in granting the so-called right to cover the negative balance to be calculated on the basis of the offshore installation’s LCOE,
  • modifications of administrative procedures related to the investment process, taking into account the specificity of the project to construct offshore wind farms.
On January 22, 2021 the act was signed by the President of Poland. It entered into force on February 18, 2021. The act is of key importance for the development of offshore wind farms and thus for PGE Baltica sp. z o.o., a company responsible for the implementation of the Offshore Programme at the PGE Group and coordinating preparations for the construction of offshore wind farms.
The bill amending the Act on renewable energy sources and certain other acts.

GLC list: UD 107

Parliamentary document: 1 129

The bill envisages in particular:
  • abolishing the concession obligation for facilities below 1MW,
  • extending the life of the discount/FIT (guaranteed tariff scheme)/FIP (surcharge to the market price) support system by 5 years (possibility to enter the system while retaining a 15 years’ period of support),
  • introducing the obligation for the Minister of Climate to publish, in advance, RES energy volumes to be subject to support over the next 4 years,
  • increasing the PV capacity threshold for PV above which it is required to include facilities and protection zones around them in local zoning plans,
  • possibility of executing lease contracts for the State Treasury’s agricultural property without a tender between the National Center for Agricultural Support („KOWR”) and capital companies, as referred to in art. 1 sec. 1 of the Act of March 18, 2010 on the special powers of the Minister responsible for state assets and their implementation in certain capital companies or groups operating in the electricity, crude oil and gaseous fuels sectors in order to build, modernise or expand equipment or installations related to generation of electricity, ensuring safety and maintaining the functionality of property disclosed in the uniform list of facilities, installations, devices and services being part of critical infrastructure.
On October 4, 2021 the act was signed by the President. It entered into force on October 30, 2021. The bill regards mainly the RES segment, extends the period within which new RES projects may apply for support. It also facilitates planning the development of this segment by introducing the obligation for the Minister of Climate to publish the schedule and capacity volumes for RES which may apply for support in the next 4 years.

Draft act on amendment of act on renewable energy sources and certain other acts.

Sejm print no.: 1 382

The act introduces a change in the settlement method for renewable energy prosumers by replacing the current discount system, which provides for the possibility of storing energy in the grid and consuming it at any other time, with a net billing system, which means that energy is ultimately valued according to the value from the hour of generation and hour of consumption.

Furthermore, the act requires prosumers entering the system from April 1, 2022 to pay a distribution fee (previously paid on behalf of prosumers by energy vendors).

In order to enable vendors to settle with prosumers, the act requires DSOs to provide vendors with detailed metering information. Vendors will be required to provide detailed billing information to prosumers via a dedicated ICT system.

The act also introduces the institution of collective prosumer (effective from April 1, 2022) and virtual prosumer (effective from July 2, 2024).

On December 14, 2021 the President signed the act. The act enters into force on April 1, 2022, with the exception of provisions pertaining to the acquisition of the right to participate in the existing prosumer support system, which went into effect on December 22, 2021 and provisions concerning the virtual prosumer, which will enter into force on July 2, 2024. The draft is of key importance for the Supply segment, which currently has obligations to settle with prosumers and pay a distribution fee on their behalf to DSOs, and for the Distribution segment, which will be required to collect and compile metering data on prosumers.
Amendment of the act on investment in wind farms.

GLC ref. no. UD207

Modification of rule 10H – mitigation by allowing municipalities to define in local spatial development plans (after consultation with local communities) a distance less than the statutory distance for wind farms from residential buildings, but not less than 500 m. The deadline for submitting comments to the draft act was June 4, 2021. Publication of draft, further consultations or submission of draft to Council of Ministers for further work. The draft is of significance to the development of the Renewable Energy segment.

The Act of April 15, 2021 amending the Act on the greenhouse gas emissions trading scheme and certain other acts. The Act is meant to transpose Directive (EU) 2018/410 of the European Parliament and of the Council of March 14, 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814 („Directive 2018/410”), which establishes the so-called Modernisation Fund to operate in 2021-2030 and finance the modernisation of large power facilities as well as smaller-scale projects (insulation of single-family dwellings, modernisation of district heating sources and systems, development of low-carbon dispersed generation).

Although the Act does not prejudge what projects will receive financing, it provides that the function of the national operator of the Modernisation Fund will be held by the National Fund for Environmental Protection and Water Management (Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej, NFOŚiGW). In consequence, the Fund will provide project financing within the framework of the NFOŚiGW’s priority programmes.

On April 15, 2021 the bill was passed by the  Sejm,  aside from exceptions, the Act went into effect on June 25, 2021.

The Act can open the way to apply for financing for PGE Capital Group investment projects.

The bill on amendments to the Electromobility and Alternative Fuels Act and certain other acts. Within the scope of its regulations, the bill transposes into Polish law a number of EU directives, including in particular Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity and amending Directive 2012/27/EU, as regards the construction of charging stations by DSOs. The act provided for the removal of the so-called intervention mechanism for building the charging infrastructure. According to the proposed act, DSOs will not be responsible for the construction of missing charging points in municipalities that were required by the Act on electromobility to reach a certain number of charging points. On December 9, 2021 the draft was signed by the President of Poland. The act entered into force on December 24, 2021.

The act will have no adverse impact on the operations of the PGE Group. The removal of the so-called intervention mechanism is associated with the abolition of obligations imposed on Distribution and Supply segments.
Draft act amending the act on maritime safety and the act on maritime areas of the Republic of Poland and maritime administration.

Print no. 2 071

The draft act contains provisions aimed at ensuring safety during the construction and operation of offshore wind farms in the Polish exclusive economic zone of the Baltic Sea and equipment for the off-take of power from these installations. To achieve this goal, the legislation provides for the implementation of appropriate oversight mechanisms over the design, construction and operation of offshore wind farms, including a certification system and oversight activities related to the investment implementation process. On December 22, 2022 the draft act was adopted by the Council of Ministers and referred to the Polish parliament. On March 7, 2022 the draft was referred to the Committee on Maritime Affairs and Inland Navigation for first reading. Consideration of the draft act by the Committee on Maritime Affairs and Inland Navigation. Further proceedings on the draft act in the parliament. The draft is of significance to investments in the development of offshore wind farms. The introduction of excessive certification mechanisms may delay the investment and increase the cost of the investment to develop offshore wind farms.
The regulation of the Council of Ministers on the maximum quantity and value of electricity from renewable energy sources that may be sold by auction in 2021. The aim of this regulation is to facilitate auctions to take place in 2021, thus continuing the upward trend in the use of renewable energy sources, which will contribute to the fulfilment of new EU obligations. The draft regulation was published on December 22, 2020 and, bypassing public consultations, was promulgated on  December 28, 2020.

The regulation entered into force on  January 12, 2021.

The regulations will make it possible to place the Group’s photovoltaic projects in auctions scheduled for 2021.
Regulation of the Minister of Climate and Environment on reference price for electricity from renewable sources in 2021 and periods applicable to producers that won auctions in 2021. Important parameters for renewables auctions that were held in 2021. Small changes in relation to the 2020 prices. Regulation adopted on April 16, 2021.

– 

Important from the point of view of planning and development of RES investments in the PGE Capital Group.
Act amending the Act on disclosure of information about the environment and its protection, public involvement in environmental protection and environmental impact studies and certain other acts. The Act aims to transpose the EIA Directive (specifying the principles of environmental impact assessment) as regards Article 11(1) and (3), i.e. regulations concerning public access to justice in the area of the environment by granting environmental organisations new powers affecting the possibility to use decisions on environmental conditions of projects significantly affecting the environment and to obtain further investment decisions in the investment and construction process. Regulation was signed on April 20, 2021 by the President of Poland, went into effect on May 13, 2021.

– 

The Act affects all business segments of the PGE Group that implement infrastructural investments.

Regulation of the Minister of Climate and Environment on the change in the volume share of electricity resulting from redeemed certificates of origin confirming the production of electricity from renewable energy sources in 2022.

Climate and Environment Ministry list: 638

The regulation specifies the level of the obligation to redeem certificates of origin for energy from renewable sources („PM OZE”) for the so-called obligated entities in 2022. The regulation reduces the level of the obligation for PM OZE (the so-called green certificates) by 1pp – from 19.5% to 18.5% – compared to the level in effect in 2021. At the same time, the justification to the regulation provides for the possibility of further lowering the level of the obligation in the coming years. The regulation was published in the Journal of Laws and went into effect on August 28, 2021. The reduced level of the obligation may slow down the growth in Renewables-segment revenue from the sale of PM OZE. At the same time, it reduces the burden on the Supply segment with the need to purchase a certain amount of PM OZE in relation to the volume of electricity traded.

Draft regulation of the Minister of Climate and Environment on technical requirements, connection conditions and cooperation of micro-installations with the power system

Government Legislation Centre list: UD 19

The draft Ordinance is an implementation of the authorisation contained in art. 9 sec. 4a of the Energy Law, which imposes on the Minister responsible for climate matters the obligation to determine:
  • technical requirements for connecting micro-installations to the grid and the conditions for its cooperation with the power system,
  • conditions for connecting micro-installations to the grid and the mode of:
    • issuing connection conditions for this installation,
    • notifying the connection of the micro-installation.

In accordance with the guidelines contained in the statutory authorisation, when specifying the above-mentioned elements, the need to increase the share of electricity generated by renewable energy prosumers in micro-installations in the country’s energy balance, safety and reliable operation of the power system, as well as requirements for the construction and operation of devices, installations and grids were taken into account.

The main purpose of the regulation is to reduce and simplify formalities related to connecting micro-installations, and thus to make the investment process in this type of installation more attractive.

The draft introduces, among other things: a standardised form of micro-installation notification, as well as a template of an application for a micro-installation connection conditions.

Detailed technical requirements for connecting micro-installations to the grid and conditions for its cooperation with the power system and detailed conditions for connecting micro-installations to the grid are set out in an appendix to the regulation.

On June 28, 2021 following negotiations the draft was sent to be examined by the Legal Committee at the Government Legislation Centre. Examination of the draft by the Legal Committee and submission of the draft for signature by the Minister. The draft regulation has a significant impact on the Distribution segment as regards the connection of micro-installations to the distribution grid and the Supply segment as regards prosumers’ settlements, including for sellers obligated to purchase electricity introduced to the distribution grid from micro-installations.

The Distribution segment will be required to register and share metering data on the surplus energy generated in the micro-installation and fed into the distribution grid.

Companies in the Supply segment will be required to settle surplus energy generated in micro-installations and fed into the distribution grid under the agreement.

Draft regulation of Climate and Environment Minister regarding energy market processes

Government Legislation Centre list: UD 603

Draft regulation of Climate and Environment Minister regarding energy market processes implements the statutory delegation contained in art. 11zh sec. 1 of the act – Energy Law. The draft regulation is to enable the preparation of IT systems (remote reading systems for electricity distribution system operators and the central energy market information system) in connection with new challenges on the electricity market. The definition of a full catalogue of energy market processes is necessary to ensure the transparency of obligations of all energy market participants, both electricity system users obligated to implement energy market processes through the Central Energy MarketIinformation system („CSIRE”), and for the Energy Market Information Operator („OIRE”) so that it is possible to assess the fulfilment by the above-mentioned entities of the obligations imposed on them.

The regulation will define a catalogue of energy market processes, the implementation of which through CSIRE will be obligatory for system users. The catalogue of energy market processes includes the basic processes currently implemented on the electricity market, taking into account the greatest usefulness of CSIRE for system users.

On January 11, 2022 the Minister of Climate and Environment signed the regulation, which went into effect on January 25, 2022. The regulation will have a significant impact primarily on the Distribution segment, but also on the following segments: Conventional Generation, Renewables and Supply.
Draft regulation of Climate and Environment Minister regarding metering system

Government Legislation Centre list: UD 507

The draft regulation implements the statutory delegation contained in art. 11x sec. 2 of the act – Energy Law, which which imposes on the minister responsible for energy the obligation to regulate therein, in consultation with the minister responsible for computerisation, the detailed requirements and standards to be met by the metering system. In addition, the draft regulation satisfies the obligation specified in art. 19 sec. 3 of Directive (EU) 2019/944 of the European Parliament and of the Council of June 5, 2019 on common rules for the internal market in electricity and amending Directive 2012/27 / EU, according to which Member States joining the introduction of smart metering systems adopt and publish minimum requirements functional and technical related to smart metering systems to be introduced in their territories. The draft has been referred to the legal committee at the Government Legislation Centre for examination. Recognition of the project by the legal committee at the Government Legislation Centre. The regulation will have a significant impact primarily on the Distribution segment, but also on the following segments: Conventional Generation, Renewables and Supply.

As regards the DSO’s activities, it will be necessary to clarify requirements for metering systems, including electricity meters and metering system.

Draft regulation of the Minister of Climate and Environment amending the regulation on detailed rules for the formation and calculation of tariffs and settlements for heat supply

Government Legislation Centre list: 641

A one percentage point increase in the possibility for planned revenue growth in tariffs for heat from cogeneration. Guaranteed minimum increase in planned revenue for tariffs shaped on the basis of costs – (generation, transmission and distribution). Additional incentive in the form of higher returns on equity for assets that were created in connection with the development of heat sources constituting renewable energy installations. A condition under which a real possibility needs to be presented for using funds resulting from increased planned revenue as approved by the President of the Energy Regulatory Office in the tariff for heat toward investments relating to the modernisation of infrastructure for environmental protection purposes. The possibility to change the tariff after a change in indicators concerning the minimum increase in planned revenue. Regulation published in the Journal of Laws on January 10, 2022 (Polish Journal of Laws of 2022, item 37). It went into effect on January 25, 2022. The regulation has a positive impact on the District Heating segment, both on heat generation in heating plants and cogeneration units. Positive changes in the tariff process may become an additional investment impulse.
Draft regulation of the Minister of Climate and Environment on the maximum quantity and value of electricity from high-efficiency cogeneration covered by support and unit amounts of guaranteed premium in 2022

Government Legislation Centre list no.: 653

The regulation specifies the maximum quantities and values of electricity covered by support and the unit amounts of guaranteed premiums. These figures are necessary for the operation of the support mechanism for electricity generated in cogeneration in 2022. Regulation issued periodically until October 31. The regulation was published in the Journal of Laws and entered into force on October 24, 2021.

 

The regulation has a positive impact on the District Heating segment – cogeneration units participating in the cogeneration support in accordance with the Act on support for cogeneration.
Draft regulation of the Minister of Climate and Environment on reference values for new and significantly modernised cogeneration units in 2022

Government Legislation Centre list no.: 654

The regulation specifies the reference values necessary to conduct auctions and recruitment for the cogeneration bonus for new and significantly modernised cogeneration units in 2022. The regulation is issued regularly until October 31. The regulation was published in the Journal of Laws and entered into force on October 24, 2021. The regulation has a positive impact on the District Heating segment – cogeneration units participating in the cogeneration support in accordance with the Act on support for cogeneration.
Draft regulation of the Minister of Infrastructure on assessment of applications in adjudication proceedings

Government Legislation Centre list no.: 81

The regulation establishes transparent, detailed criteria for assessing applications in the adjudication procedure, clear scores for these criteria and a scope of information and documents allowing for the determination of applicants’ compliance with the criteria in this procedure. The regulation addresses the qualifying minimum and the method of determining the most important criterion for evaluating applications in an adjudication procedure. On December 1, 2021 the regulation was published in the Journal of Laws.
It went into effect on

December 15, 2021.
The draft is of significance from the viewpoint of planning and developing offshore wind investments by PGE Group.
Draft Regulation of the Minister of Climate and Environment amending the regulation on detailed rules for preparing and calculating tariffs and billing for heat supply.
RCL register: 795
The draft amends the reference index, which is an integral part of the tariffing process for heat from cogeneration. The amendments concern:
  • definition of the k value, being an element of the formula for calculating the reference index so that the k value can be calculated and published by the President of the Energy Regulatory Office depending on changes in the operating conditions of energy companies that burden the production of heat in cogeneration – for individual types of fuel referred to in art. 23 sec. 2 point 18 letter c of the Energy Law.
  • determination of the k value so as to reflect the lack of a full sample of ETS sources in the average heat sale prices published by the President of the Energy Regulatory Office.
On March 3, 2022 released by the Legal Committee. Submission of the draft for signing by the Minister. The draft is of significance from the viewpoint of an increase in revenue from the sale of heat.
Draft act amending the act on the energy profile of buildings and certain other acts

RCL register: UC82

The update amends the Building Law. From PGE Group’s viewpoint, this is an opportunity to tighten the obligation to connect to the district heating network. On February 14, 2022 draft was submitted to the Legal Committee. Examination of the draft by the Legal Committee and sending the draft for signature by the Minister, if there is no need for substantive modifications. The draft will tighten the obligation to connect buildings to the district heating network, which will be positive for the district heating segment’s financial situation.
Draft act on support allowance

RCL register: 1 820

The draft is intended to provide support to approx. 6.84 million households in Poland, including the most energy-poor households, by covering a part of their energy expenses and the related growing food prices.

From PGE Group’s viewpoint, additional obligations, including information obligations, are introduced.

The act, published in the Journal of Laws of 2022 item 1, entered into force on 4 January 1, 2022 . The draft is of importance to electricity vendors. The act generates costs for vendors due to new information obligations. Protective obligations for sensitive customers are also introduced.
Draft regulation of the Minister of Climate and Environment on the rate of cogeneration fee for 2022. The draft regulation implements the statutory delegation contained in the Act on Promotion of Electricity from High Efficiency Cogeneration, which requires the competent minister to set the cogeneration fee rate for year „i” by November 30 of year „i-1.”

The draft will have a significant impact on ensuring proper operation of the support mechanism for high-efficiency cogeneration in guaranteeing financing of the support system by determining the cogeneration fee rate for 2022.

Regulation published in Journal of Laws on November 30, 2021. Regulation entered into force on January 1, 2022. The draft is of significance to the district heating segment, which can participate in the support system for producers of electricity in high efficiency cogeneration.

 

*(na podstawie SPRAWOZDANIA ZARZĄDU z działalności PGE Polska Grupa Energetyczna S.A. oraz Grupy Kapitałowej PGE za rok 2021

Segments Regulation Regulation objectives Latest conclusions Next stage Impact on PGE Group
European Green Deal/ Fit for 55 package
Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the EU (ETS Directive) as well as implementing and delegated acts,

Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme (MSR Decision).

Combating climate change.

Development of investment incentives through a CO2 price signal to develop low-emission sources.

On July 14, 2021 the European Commission presented a draft reform of ETS and MSR decision (relevant legislative proposals). ENVI is the leading committee on the draft reform of the ETS directive at the European Parliament, and Peter Liese (EPS, DE) is the rapporteur. ENVI is the leading committee on the MSR decision, and Cyrus Engerer (S&D, MT) is the rapporteur. The European Parliament wants to vote on its position on both of the legislative acts in the second quarter of 2022, so as to begin negotiations with the Council and the European Commission on the final shape of the inter-institutional agreement in the second half of the year.

Reaching a general agreement in the Council on the revision of the ETS Directive and the Market Stability Reserve decision is a priority for the current French Presidency.

The legislative proposal is being proceeded in accordance with the regular procedure by the European Parliament and Council.

The EC expects that negotiations at EU institutions may last until 2023, so that the higher EU targets can be implemented from 2024.

The deadline to transpose the changes in the ETS directive as stated in the draft is December 31, 2023.

Increased competitiveness of renewable sources and – in short-term- gas units to the detriment of generation assets using high-emission fuels.

Increase in operating costs for conventional generation of electricity.

Option to obtain direct investment support from 2021 from the Modernisation Fund and Innovation Fund.

Another revision of the ETS Directive and MSR decision is likely to cause a further increase in prices of emission allowances.

Directive 2018/2001 on the promotion of the use of energy from renewable sources (Renewable Energy Directive). To adapt legislation related to increased share of renewables in reference to EU’s new higher GHG reduction target by 2030. On July 14, 2021, as part of Fit for 55, the European Commission presented a legislative proposal that includes a draft amendment to the renewables directive. It proposes a range of measures to achieve a higher binding target of 40% of energy from renewable sources in gross final energy consumption in 2030 at the EU level. ITRE is the leading committee in the European Parliament, and Markus Pieper (EPL, DE) is the rapporteur. The legislative proposal has been sent for further work at the Council and European Parliament.

The legislative proposal is being proceeded in accordance with the ordinary legislative procedure by the European Parliament and Council.

The proposed deadline for transposing the proposal into national law is December 31, 2024.

Improvement in the competitiveness of low-emission sources of energy in comparison with high-emission sources.

Larger share of renewable sources in the Polish energy mix by 2030.

Directive 2012/27/EU on energy efficiency (EED Directive). To adapt legislation related to energy efficiency improvements in reference to EU’s new higher GHG emission reduction target by 2030. On July 14, 2021 as part of Fit for 55 the EC presented a legislative proposal concerning a draft amendment of the EED directive. It proposes a set of measures to achieve at EU level a binding target to reduce energy consumption by at least 9% in 2030 in comparison to 2020. ITRE is the leading committee in the European Parliament, and Niels Fuglsang (S&D, DK) is the rapporteur. The legislative proposal is subject to further work at the Council and European Parliament.

The legislative proposal is being proceeded in accordance with the ordinary legislative procedure by the European Parliament and Council.

The published draft does not include a deadline for transposing the directive into national law.

Improvement in the competitiveness of low-emission sources of energy in comparison with high-emission sources, particularly in heating systems.

A faster phase-out of coal-based cogeneration from heating systems in connection with the introduction of a new emission criterion.

Need for more extensive development of renewable sources in district heating systems.

A higher factor for annual final energy savings will result in an increase in burdens on the energy efficiency certificate system.

Directive 2010/31/EU on the energy performance of buildings (EPBD) Alignment of legislation related to improving the energy performance of buildings in the EU with respect to the 2050 climate neutrality target and the new higher 2030 EU GHG reduction target. On December 15, 2021, the European Commission, as part of the next stage of the Fit for 55 legislative package, presented a legislative proposal for a draft amendment of the EPBD. The new directive aims to contribute to making all buildings zero-carbon by 2050. The EC proposed a range of mechanisms to improve the energy performance of new and already occupied buildings, including modernisations. Ciarán Cuffe was elected rapporteur for the Lead Committee of ITRE (Green Party, IR). The legislative proposal was sent for further work at the Council and the European Parliament.

The legislative proposal is being proceeded according to the ordinary legislative procedure by the European Parliament and the Council.

The date for transposition of the Directive into national law is not specified in the published draft.

Greater competitiveness of renewable energy sources as a heat source in buildings.

Reduction in the heat demand of buildings due to improved energy performance.

Faster rate of displacement of fossil fuels in the heating sectors, including district heating.

Potential inhibition of growth of existing district heating systems due to proposed requirements for new and modernised buildings.

Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity (ETD Directive). To adapt legislation related to tax on energy products and electricity to the EU’s new higher GHG emission target by 2030. On July 14, 2021 as part of Fit for 55 the EC presented a legislative proposal that includes a draft revision of the ETD directive. ECON is the leading committee in the European Parliament, and Johan van Overtveld (EKR, BE) is the rapporteur. The legislative proposal is subject to further work at the Council and European Parliament. The legislative proposal is being proceeded in accordance with the consultation procedure by the European Parliament and Council.

The proposal deadline for transposing the directive is January 1, 2023.

Increase in the minimum tax rates for energy products.
Alternative Fuels Infrastructure Regulation (AFIR Regulation). The aim of the new regulation, which repeals Directive AFID, is to ensure faster development of charging infrastructure and implement targets for charging station locations, including targets concerning distances between charging points throughout the trans-European TEN-T network. On July 14, 2021 as part of Fit for 55 the EC presented a legislative proposal covering the AFIR Regulation. TRAN is the leading committee at the European Parliament, and Ismail Ertug (S&D, DE) is the rapporteur. The legislative proposal is subject to further work at the Council and European Parliament. The necessity to prepare the power grid to perform obligations resulting from the AFIR Regulation in the distribution area.
Regulation on guidelines for trans-European energy infrastructure
(revision of the TEN-E Regulation ).
Establishing guidelines for the development of trans-European energy infrastructure and new criteria for projects of common interests (“PCI”). After the publication by the EC in December 2020 of a legislative proposal to revise the TEN-E regulation, on June 11, 2021, the Transport, Telecommunications and Energy Council adopted a general approach, while on September 28, 2021 the ITRE committee at the EP approved amendments to the draft regulation and the mandate to begin tri-partite negotiations, ultimately adopted as the EP’s negotiation position.

Trilogues between the EP, EC and the Council took place on October 13, October 25, November 23 and December 14, 2021, when a preliminary agreement was reached .

The text of the regulation agreed in the course of the trilogues included a new category of radial infrastructure for offshore wind farms and new, more liberalised criteria for smart grid projects.

Approval of the agreement by the Council and EP in the first or second quarter of 2022, followed by publication of the regulation in the EU Official Journal. The definition of rules for implementing PCI is a potential opportunity for certain PGE Group investments to apply for the status of PCI projects that may receive financial support from the Connecting Europe Facility.
The regulations concerning the financial perspective 2021-2027 and financing for sustainable economic growth
The Regulation 2020/852 on the establishment of a framework to facilitate sustainable investment, changing the regulation (EU) 2019/2088 (the Taxonomy Regulation) and delegated act to this regulation determining technical screening criteria. Facilitation of funding for sustainable economic growth in EU.

 

On April 21, 2021 the European Commission initially adopted delegated act establishing detailed technical screening criteria on the basis of which economic activities will be assessed to determine whether an activity is environmentally sustainable in relation to climate change prevention and adaptation. This act does not contain technical screening criteria for gas and nuclear power.

On June 4, 2021 the EC published the above-mentioned delegated act in the national languages. Neither the EP nor the Council objected to this delegated act within the deadline.

On July 6, 2021 the EC published a delegated act under art. 8 of the taxonomy regulation, specifying rules for reporting participation in trade, CAPEX and OPEX of environmentally sustainable activities. Neither the EP nor the Council objected to this delegated act within the deadline. On December 9, 2021 a delegated act was published in the EU Official Journal, specifying detailed technical screening criteria, which will be the basis for assessment of economic activity in order to determine whether a given activity is conducted in a sustainable manner in environmental terms. The act entered into force on December 29, 2021 and is applied from January 1, 2022.

A delegated act under art. 8 of the taxonomy regulation was published in the EU Official Journal on December 10, 2021. The act went into force on December 30, 2021 and is applied from January 1, 2022.

On February 2, 2022 the EC unveiled a delegated act setting out detailed technical screening criteria for the use of nuclear power and gas. On March 9, 2022, the European Commission officially adopted this delegated act.

Publication by the Platform on Sustainable Finance of a report on the taxonomy of harmful activities and activities having no significant environmental impact, report on social taxonomy and report on technical screening criteria for further environmental objectives – Q1 2022.

Expiry of the time-limit for raising objections to the delegated act on nuclear energy and gas – Q2/Q3 2022.

Impact on availability and cost of funding obtained by PGE Group companies for investments. Direct impact on raising external capital for investments in condensation and high-efficiency gas-fired cogeneration, depending on the specified locations and meeting criteria established by an additional delegated act.

The obligation to include information on the share in the trade, CAPEX and OPEX of environmentally sustainable activities in the statement on non-financial information or consolidated statement on non-financial information.

European Commission Revised Climate, Energy and Environmental Aid Guidelines 2022 (CEEAG). Definition of new rules for award of state aid, adapted to EU’s new reduction targets resulting from the Climate Law. On June 7, 2021 the EC published a draft of new CEEAG guidelines, which are to replace the existing guidelines. Public consultations ended on August 2, 2021.

On October 20, 2021 the European Parliament adopted a resolution that includes its position on the wording of the CEEAG guidelines proposed by the EC.

On December 21, 2021, the CEEAG Guidelines were approved by the College of Commissioners.

On January 27, 2022, the CEEAG Guidelines were formally adopted by the European Commission and went into effect.

A change in conditions for obtaining state aid in PGE Group’s segments. Some of the provisions introduce stricter criteria for obtaining state aid, others clarify rules for obtaining it.
 

Revision of Regulation 651/2014 of 17 June 2014 declaring certain types of aid compatible with the internal market pursuant to Art. 107 and 108 of the Treaty (GBER regulation).

The regulation is intended to facilitate the implementation of state aid measures by Member States without prior notification in the area of:
  • regional aid,
  • risk finance aid,
  • aid for research, development and innovation,
  • aid for environmental protection and energy purposes.
On October 6, 2021, the European Commission launched public consultations on the draft revision of GBER.

The draft amendment extends the set of measures exempted from prior notification and raises notification thresholds for climate, environmental and energy measures where objectively justified. It is also intended to provide additional flexibility by taking into account higher aid intensities, in particular where the aid is awarded on the basis of a competitive bidding process. Consultations were completed on December 8, 2021.

A meeting with the State Aid Advisory Committee (composed of experts and the European Commission) will be held in the first half of 2022. It will take place after the European Commission has analysed the comments received during the public consultation. The regulation is expected to be adopted and published in mid-2022. Change in the terms for notifying public aid in PGE Group’s segments. Some provisions tighten the criteria for obtaining public aid, others specify the rules for obtaining public aid.

*(na podstawie SPRAWOZDANIA ZARZĄDU z działalności PGE Polska Grupa Energetyczna S.A. oraz Grupy Kapitałowej PGE za rok 2021

Impact of the covid-19 pandemic on PGE Group's operations

PGE Group identifies, on an ongoing basis, the risk factors that affect the Group’s performance in connection with the COVID-19 pandemic. In 2021, the impact of the pandemic on financial performance remained limited. The nature and scale of possible further effects are difficult to estimate. The occurrence and reach of subsequent waves of the disease, the possibility of introducing restrictions and their impact on economic activity in Poland will be of importance. At the same time, the accuracy of estimates remains difficult in view of a number of other factors affecting the power market, including the level of demand for electricity.

The outbreak of the pandemic caused an economic slowdown in 2020 due to economies being frozen, with GDP declining by 2.5% in Poland and 6.4% in the Eurozone. GDP and industrial production rebounded sharply in 2021 as the subsequent waves of the pandemic did not reduce economic activity in a significant manner. In real terms, GDP grew 5.7% in Poland and 5.2% in the Europe.

Nevertheless, another implementation of restrictions may result in the reduced level of economic activity, which may create risk that the lower level of domestic electricity consumption will continue periodically, what may have impact on the decrease in revenues and margins from energy generation, distribution and sales in the Conventional Generation, Distribution, Supply, as well as in District Heating segment. PGE Group largely contracts the sale of electricity produced for the next years in advance, which allows to hedge itself in this respect against the potential effects of a recurrence of the epidemic or economic recession.

If the pandemic situation were to deteriorate, the Supply segment would face the risk of a decline in demand for electricity, which could result in lower sales to end users and a higher cost to balance electricity. Also in the Distribution segment, a lower volume of deliveries made to final off-takes would directly translate into lower revenues earned on this account.

As at December 31, 2021, the impact of the expected increase in payment congestion, especially regarding receivables from small and medium-sized enterprises, was not significant. The Group created additional write-offs on receivables in the amount of PLN 12 million. On the other hand, depending on the further epidemiological and economic situation, the risk of deteriorated liquidity of PGE Group and increased impairment losses on overdue receivables still exists and is monitored on an ongoing basis. Currently, the Group does not expect the occurrence to be more material and does not identify any liquidity risk.

PGE Group’s plants are of strategic importance for maintaining undisturbed production and supply of electricity and heat in Poland. The COVID-19 pandemic has affected the change of work organisation, especially with respect to PGE Group’s generation units. In many cases, this involves additional costs resulting from, for example, the purchase of protective materials for employees. Since the beginning of the pandemic, the Group has introduced work rules that aim to reduce, as much as possible, the health risk for employees. As one of the largest employers in Poland, with approx. 38 thousand employees, PGE Group takes a number of measures related to the organisation of work to ensure business continuity, protect the health and life of its employees, including the implementation of teleworking and rotational work, raising awareness of, in particular, the basic principles of protection against coronavirus, prevention and quarantine. Due to the introduction of appropriate countermeasures at the early stage of the pandemic, PGE Group has been continuously producing electricity and heat and ensuring their uninterrupted supply.

PGE Group additionally conducts communication activities aimed at employees, to build awareness of the positive effects of vaccinations – both individual and social. In addition, internal communication is carried out related to the course of the pandemic and encouraging to minimise the risk of infection – that is, keeping a distance, washing hands frequently or using office spaces in a safe way. PGE has established a Crisis Team to collect information from all Group companies, monitor the situation in individual companies on an ongoing basis and take appropriate steps. The production branches also have plans for operation with increased absenteeism that are developed and verified on an ongoing basis, and as plants of strategic importance from the point of view of maintaining undisturbed production and supply of electricity and heat, they are in constant contact with local authorities responsible for monitoring the situation in the country in all locations of PGE Group entities.

In the area of retail customer service, PGE Group focused primarily on expanding remote service channels.

Impact of war in ukraine on pge group's activities

PGE is the largest energy company in Poland. PGE’s units meet approx. 43% of the country’s electricity demand and serve over 5.5 million customers, while PGE’s distribution area covers over 40% of Poland’s territory, including areas on the border with Ukraine and Belarus. The Group’s activities are therefore of exceptional importance for the country’s energy security. It is crucial for PGE Group to secure the continuity of operation of power plants and CHPs and distribution infrastructure so as to ensure uninterrupted supplies of electricity and heat to residents, institutions and businesses.

In connection with the situation in Ukraine, a Crisis Team has been established at the central level of PGE Group to continuously monitor threats and identify potential risks. The Crisis Team’s work includes monitoring the security of energy generation and supply and the protection of critical and IT infrastructure. Its tasks also include undertaking actions minimising the risk of a crisis situation, preparing the Group companies in the event of a crisis situation and planning, organising and coordinating works ensuring continuity of the Company’s and PGE Group’s operations.

Crisis teams have also been formed at the Group’s key companies, operating 24 hours a day, carrying out continuous monitoring and identifying potential risks in order to minimise risk to electricity and heat supplies.

All key PGE Group companies have adopted guidelines for developing business continuity plans. On this basis, companies develop and then implement their own business continuity plans that take into account the specifics of the company. A key assumption of business continuity plans is the development of a catalogue of risks for critical processes, on the basis of which emergency scenarios (instructions, procedures) are developed and adopted. The emergency scenarios are periodically tested and continuously updated. In the current situation, companies have been tasked with both urgently updating and reviewing internal regulations and business continuity plans.

Cybersecurity is also particularly important in the current geopolitical situation. PGE Group has implemented special procedures for monitoring ICT networks due to increased activity of criminal groups aiming to attack ICT (Information and Communication Technologies) and OT (Operational Technology) systems. With the CHARLIE-CRP state of alert in force, the emergency plans have been reviewed. A significant change in the company’s operating context triggered the launch of a threat analysis and risk estimation for cybersecurity incidents. There is also an increased focus on protecting the supply chain against cyberattacks.

The security of the Group’s facilities has been strengthened. In order to protect key energy infrastructure, the Group cooperates with all services responsible for security in Poland, with a particular focus on the Internal Security Agency (ABW). In addition, PGE Dystrybucja is continuously supported by the Territorial Defence Forces (TDF).

Dodatkowe informacje znajdują się w rozdziale Bezpieczeństwo energetyczne

Jesteśmy całym sercem z walczącą Ukrainą. Od początku wojny wspieramy naszych sąsiadów w tym trudnym dla nich czasie, organizujemy pomoc dla przybywających do Polski uchodźców i na pewno nie zostawimy Ukrainy bez pomocy po zakończeniu wojny. PGE posiada doświadczenie oraz kompetencje niezbędne w budowie i obsłudze sieci energetycznych. Po zakończeniu wojny na Ukrainie pracownicy PGE Dystrybucja stanowiliby cenne wsparcie przy odbudowie infrastruktury dystrybucyjnej. Deklarujemy pełną współpracę w przywracaniu niezawodnych dostaw energii elektrycznej do ukraińskich gospodarstw domowych i odbudowującej się ukraińskiej gospodarki.

Wojciech Dąbrowski prezes zarządu PGE Polskiej Grupy Energetycznej.
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