Cogeneration and district heating

PGE is a leading producer of useful heat in Poland. We produce most of our heat at our CHP plants throughout the country. We are using energy resources effectively because we produce electricity at the same time.

The specific nature of CHP operations (different from regular power plants) led us to start working on carving out cogeneration assets into a separate organisational unit. This will facilitate more effective management and implementation of an optimal model for developing the district heating segment.

We see strong potential in developing and creating value based on numerous operational and cost synergies and a strong position on regional district heating markets. We see wide potential for developing integrated solutions for the heating industry (cogeneration / trigeneration on various scales and district heating networks).

Cogeneration (How it works?) 

Why district heating?

• Poland is one of the largest district heating markets in Europe
• Favourable EU regulation drafts - supportive of effective use of energy,
• Alignment with the dispersed energy development mega trend
  • Enhancement of national energy security
  • Support for local social and economic development, including through the use of local fuel sources
  • Outlook for air quality improvement (reduction of smog)
  • Supports achievement of climate objectives – reduction of CO₂ emissions
  • Product that does not readily have substitutes for clients

Reorganisation of PGE Group's existing cogeneration assets is just the beginning of our development in the district heating space. We are actively analysing and researching modernisation potential for smaller CHP plants located throughout the country. We are reviewing potential acquisitions as well as organic growth of district heating networks.

The proposal to purchase EDF's assets is also a step by PGE in the direction of district heating.

PGE's benefits from the acquisition of EDF's heating asset

• Transaction in line with PGE's strategy
• Increase in share of stable regulated EBITDA
• Decrease in overall operating risk for the Group
• Guaranteed leading position on the heat production market in Poland
• Fuel and geographic diversification within the country
• More effective presence in large agglomerations (outside PGE's distribution area) as a market for electricity sales - approx. 4.5 million residents within the growing agglomerations
• Cost synergies – management, fuel supplies, sales
• PGE's responsible policy - more active involvement in reducing low emissions and improving air quality

The dynamics and directions of growth and integration will depend on:

• changes in regulatory environment (including future support for cogeneration, remuneration mechanism for district heating investments)
• technological development (selection of the most economically effective solutions)
• local conditions (prospects for investments in district heating and their financing in specific locations as a result of demand for heat)