Coal news and updates

Poland's largest electricity producer PGE expects the government to make a decision on splitting its coal and lignite generation assets into a separate state-controlled entity in the next few weeks, as rising CO2 allowance prices hit the feasibility of conventional power plants.

 

PGE president Wojciech Dabrowski said today that he understands that the government is nearing a conclusion on its plan to carve out the country's coal and lignite-fired assets. The state-controlled assets would serve to stabilise electricity supply before the country develops its first nuclear plant, which is planned to start in 2033, he said.

 

PGE expects that its coal-fired and lignite-fired plants — including the 5.1GW Belchatow, 3.3GW Opole, 1.8GW Rybnik and 1.5GW Turow plants — will become part of the new state-owned entity.

 

PGE will be better positioned to raise financing for investment in renewables including offshore wind projects, which it expects to start operating by 2026, after offloading the assets, it said today.

 

PGE has been planning the divestment of its coal and lignite assets for several months. The firm stressed that it intends to keep control of its coal-fired combined heat and power (CHP) plants, which will be converted to gas, including the 1.4GW Dolna Odra combined-cycle gas turbine (CGGT) plant under construction. It also confirmed its intention to buy coal-fired CHP assets in Poland that were put up for sale by Czech utility Cez and Finnish company Fortum. If it acquires the plants, it will convert them into gas-fired units, Dabrowski said.

 

PGE stressed that it understands that the Polish coal carve-out plan does not envisage merging electricity utilities. The government directly or indirectly has controlling stakes in PGE, Tauron, Enea, PGNiG and Energa, all of which operate coal-fired plants.

 

Poland's coal-fired plants are becoming increasingly fragile because of the surge in EU emissions trading system (ETS) prices in recent months. PGE chief financial officer Pawel Straczynski said ETS allowances reaching nearly €43/t CO2 equivalent is the "darkest scenario" that PGE could have planned for, warning that a continuous increase in carbon prices could lead to "uncontrolled decommissioning of conventional generation assets" and pose a threat to Poland's energy security. The increase in electricity prices as well as revenues from Poland's capacity market payments are not enough for PGE to compensate for carbon price increases, Straczynski said. He added that after a brief period in January-February this year when Poland reduced its net electricity imports, price premiums to Germany increased again, leading to higher imports. Polish net imports reached a record high of more than 13.2TWh last year.

 

But the company still made a profit of 148mn zlotys ($38mn) in 2020, recovering from a loss of nearly 4bn zlotys in 2019.

 

PGE generated 58.1TWh of electricity last year, stable on 2019.

 

Source : https://www.argusmedia.com/en/news