In previous reporting periods, PGE Group recognised substantial impairment losses on property, plant and equipment in the Renewables segment. Impairment tests carried out at the end of the first half of 2021 showed the need to reverse the entire impairment loss. The key assumptions used in the impairment tests carried out as at June 30, 2021 are described in PGE Group’s interim consolidated financial statements for the 6-month period ended June 30, 2021.
At the end of the reporting period, the Group performed an analysis of indications in order to determine whether these assets are impaired.
The following cash generating units are identified and analysed in the Renewables segment:
- considered as separate CGU belonging to PGE EO S.A.
- total pumped-storage power plants,
- total other hydropower plants
- individual wind farms owned by PGE EO S.A.
- individual wind farms owned by PGE Klaster sp. z o.o.
Analysis of indications for CGU PGE EO S.A.
The analysis included the following key factors:
- analysis of the 2021 financial plan implementation,
- confirmation that the investment plan is up-to-date,
- analysis of prices for energy and certificates of origin,
- analysis of assumptions regarding the capacity market.
- analysis of estimated margins on the production and sale of electricity in future periods in light of the price forecasts for energy,
The analysis of the premises in the area CGU PGE EO S.A. showed that the generating units of the Wind area carry out the financial plan above the assumed values, which is related, inter alia, to higher prices of electricity and energy and certificates of origin with a simultaneous lower production volume, caused by worse weather conditions than the assumed windiness.
The higher result in Hydro was driven by factors such as higher electricity and energy and certificates of origin prices and higher electricity production due to favourable hydrological conditions. In the case of pumped-storage assets, the higher result is mainly due to higher electricity prices, resulting in significantly higher sales revenues. Lower projected revenues from the Capacity Market compared to the tests performed as of June 30, 2021 do not pose a risk that the useful value of the assets will decline below book value due to the fact that the tests performed as of June 30, 2021 showed a significant surplus. No major changes in the levels of planned capital expenditures are expected. The electricity price and volume assumptions are also consistent with those used in the asset impairment tests performed as of June 30, 2021.
Accordingly, the Group came to the conclusion that there are no grounds for impairment testing of generation assets at the balance sheet date of December 31, 2021.
Analysis of indications for CGU PGE Klaster Sp. z o.o.
The most important factors analysed include:
- analysis of the 2021 financial plan implementation,
- confirmation that the investment plan is up-to-date,
- analysis of energy prices.
The premise analysis for CGU PGE Klaster Sp. z o.o. indicated that the company is executing its financial plan above the approved values, mainly as a result of higher electricity prices despite a slightly lower production volume. No major changes in the levels of planned capital expenditures are expected. The electricity price assumptions are also consistent with those used in the asset impairment tests performed as of June 30, 2021.
Accordingly, the Group came to the conclusion that there are no grounds for impairment testing of generating assets at the reporting date of December 31, 2021.