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Poland's PGE targets zero carbon emissions by 2050: CEO

Highlights

PGE plans green transformation

Lignite, coal produce 88% of generation

Plans for 5 GW of offshore wind and solar by 2030

Warsaw — Poland's largest utility, Polska Grupa Energetyczna (PGE), is planning to phase out coal and offer zero emission energy by 2050, CEO Wojciech Dabrowski said Sept 15.

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"PGE, as the largest company in the sector, will play a key role in achieving zero emissions by Poland," Dabrowski said at a Q2 results news conference. "Our strategic aspiration is to offer 100% green energy to PGE customers in 2050."

Dabrowski said the company is working on an updated strategy for release in late autumn that will detail PGE's green transformation. In the second quarter, 88% of the company's 13.22 TWh generation was produced in the company's five lignite and hard-coal-fired plants and two CHPs. Just 5% was generated from renewable sources, the rest from natural gas. PGE is planning to invest huge amounts to have 2.5 GW each in offshore wind and solar capacity by 2030.

PGE's CEO said the company has decided to draw up a transformation plan for the company's largest plant, the 4.93 GW lignite-fired facility in Belchatow. "Green investments can provide as many or even more jobs than current coal complexes," he said. Dabrowski said PGE would also replace coal as the "basic fuel" for the company's CHP and district heating plants with gas.

Dabrowski said the company decided last month to sell PGE Paliwa, the unit that supplies coal and biomass to the coal-fired assets it bought from EDF in 2017, and was now in talks with several unnamed potential buyers.

PGE's Q2 generation falls 5% on year

In reaction to the European Commission's proposal to increase the bloc's emission cuts from 40% to at least 55% from 1990 levels by 2030, Dabrowski expressed confidence that PGE could cope with such a target and was hoping to access funds from the EU's Just Transition fund.

He said PGE supported the proposal to spin off the coal assets of the country's three state-controlled utilities to a separate company that would be state-owned in order to help the power companies source funding for their green investments. He said the government had given preliminary agreement to the move and he expected a final decision following the cabinet reshuffle next month.

PGE said late Sept. 15 that its power generation in the second quarter fell 5% year on year to 13.22 TWh as coronavirus-related restrictions hit demand, while imports rose and solar production pushed out lignite and especially hard coal. April-June power demand fell 8.5% year on year, with net imports from Germany, the Czech Republic and Sweden rising 45% or by 0.9 TWh, and 0.6 TWh higher solar generation pushing out PGE's lignite- and hard coal-fired production.

Lignite generation dropped 8% year on year to 7.49 TWh, and hard coal-fired output fell 4% to 4.10 TWh despite the commissioning of two 900 MW coal-fired units at the 3.4 GW Opole plant in southwest Poland that saw its own generation more than double year on year.

Average Q2 lignite load was down 2.5 percentage points at 59.3% while hard coal load fell 8.9 points to just 27.5%. PGE said falling power prices -- Q2 spot prices dropped 22% and CAL-21 prices fell 12% -- in particular pushed out hard coal generation.

Gas-fired generation rose 17% year on year to 0.97 TWh thanks to higher output at the company's Lublin Wrotkow CHP plant on improved market conditions. Wind generation increased 8% to 0.28 TWh and load rose 1.4 percentage points on favorable conditions in May.

Effect of restrictions limited

Electricity sales to end users dropped 10% year on year to 9.37 TWh, thanks to 12% lower demand from business customers, while distribution dropped 8% to 8.12 TWh.

PGE benefited from an average 8% year-on-year fall in CO2 emission prices in the first half of the year. The company's five conventional plants and two CHPs emitted 29.305 million mt of CO2 in January-June, down 5% year on year on reduced demand.

The company said the effect of coronavirus-related restrictions on the economy had produced a limited impact on both the company's finances and production as of June 30 because most of the company's output was contracted in previous quarters. However, the company that demand may become depressed as the pandemic persists.

In terms of investments, PGE said it was in talks with contractors to delay the commissioning of a 490 MW unit at its lignite-fired Turow plant in southwestern Poland from October until April 2020 thanks to coronavirus restrictions. The Turow and recently commissioned Opole units would be the last units to be retired, PGE officials previously told S&P Global Platts.

PGE sees natural gas as a complimentary fuel to its RES plans and it expects to commission two combined cycle gas turbines, with total capacity of about 1.4 GW, at its coal-fired Dolna Odra plant in northeastern Poland in December 2023.

PGE: Q2 2020 GENERATION (TWh)

Q2 2020
Q2 2019
% change
New Opole units
1.49
0.69
116
Gas-fired CHP plants
0.97
0.83
17
Biomass-fired CHP plants
0.10
0.07
43
Communal waste CHP plants
0.01
0.01
0
Pumped storage plants
0.15
0.16
-6
Hydroelectric plants
0.12
0.13
-6
Onshore wind farms
0.28
0.26
8
Total lignite-fired output
7.49
8.18
-8
Total hard coal-fired output
4.10
4.25
-4
Total production (TWh)
13.22
13.89
-5
End user sales
9.37
10.44
-10
Distribution
8.12
8.83
-8
CO2 emissions (million mt)
29.31
30.94
-5
Source: PGE