Assets

In the conventional energy segment, PGE Group operates through PGE GiEK S.A., based in Bełchatów. This company comprises 12 branches located within 9 voivodeships across the country. These include: 2 lignite mines, 4 conventional plants and 8 CHP plants.

Our production is largely based on lignite, mined from our own mines, and on hard coal, gas and biomass procured from domestic suppliers.

Installed capacity and production in branches of Conventional Generation segment 

Lignite mining

Existing deposits

PGE is currently conducting operating activities in two mining complexes: Bełchatów and Turów. Each of them includes an open-pit lignite mine and a plant that uses the lignite extracted from the adjacent mine. The complex in Bełchatów includes two deposits: Bełchatów field and Szczerców field.  

Prospective projects

In order to ensure continuity and secure PGE Group's value based on modern and effective lignite-based generation capacities, work is under-way to obtain a concession for lignite mining at the Złoczew and Gubin deposits.

Project Złoczew

In 2016, this project mainly involved a procedure to obtain a decision on environmental conditions for the investment and introduce changes in planning documents for municipalities located within the planned investment's area. According to the schedule, a lignite mining concession for the Złoczew deposit is expected to be obtained in October 2017.

Project Gubin

In 2016, this project mainly involved a procedure to obtain a decision on environmental conditions for the investment and changes in planning documents for municipalities located within the planned investment's area. According to the schedule, a lignite mining concession for the Gubin 2 deposit is expected to be obtained in 2020.

Reclamation activities

In line with current regulations (act on protection of agricultural and forest land, geological and mining law), post-mining land is subject to reclamation. This is why mines conduct post-mining land reclamation once their mining activities are complete. (See more in chapter Reducing our footprint)

Key financial figures

Key amounts in the conventional energy segment

Negative EBIT in 2015 was affected by the impairment write-off on generating assets of the Conventional Generation segment.

Key factors having impact on segment results

Key EBITDA divergences in the Conventional Generation segment [in PLN million].

The major EBITDA drivers in the conventional energy segment in 2016, in comparison with the previous year, are as follows:

• Lower electricity sales volume,largely due to lower output at Elektrownia Bełchatów due to unit 1 operations being limited to 1500 hours in 2016, in line with specific requirements for peak sources under the IED directive.
• Decline in electricity sales prices, which caused a decline in revenue from sales. Average electricity sales price realised in the conventional energy segment in 2016 was PLN 168/MWh, compared to PLN 173/MWh in 2015.
• Higher LTC revenues due to a PLN 148 million LTC settlement adjustment being recognised in 2016 after the following court rulings: (i) positive ruling from the Appeals Court regarding adjustment of stranded costs for 2010 for Elektrownia Opole (PLN 173 million); (ii) negative ruling from the Supreme Court regarding a gas adjustment for 2009 for CHP plant Lublin Wrotków and rejection of a cassation appeal regarding a gas adjustment for 2010 for CHP plant Lublin Wrotków and CHP plant Rzeszów (PLN -25 million).
• Lower revenue from property rights, mainly as a result of restatement of property rights inventories at CHP plant Szczecin (PLN 118 million).
• Higher revenue from regulatory system services, largely as a result of Elektrownia Dolna Odra (units 1 and 2) providing the Cold Intervention Reserve Service to PSE S.A.
• Lower cost of fuel consumption, including hard coal, biomass and natural gas. This was driven by lower hard coal-based electricity production and lower hard coal prices as well as less electricity produced in biomass co-firing due to a decrease in the profitability for this technology (impact of the renewables act and lower prices of green certificates). Decline in costs of natural gas used despite a higher consumption volume, resulting from lower exchange prices. The main differences in each of the fuels are presented in the chart below.
• Higher costs of CO₂ due to a higher unit cost of CO₂ and the receipt of a smaller quantity of free-of-charge allowances for CO₂ emissions.
• Lower environmental fees, mainly due to lower electricity production and thus lower emissions of pollutants (SO₂NOx), as well as higher efficiency of desulphurisation and denitration units due to stricter emission standards.
• Higher personnel costs, mainly due to higher costs under a Voluntary Leave Programme.
• Change in reclamation provision as a result of changes in technical assumptions for reclamation and development of post-mining areas and as a result of a change in discount rate.
• Lower capitalised costs,due to a lower quantity of overburden removed from mines and recognition of lower costs of overburden removal as asset.

Capital expenditures

Capital expenditures in the conventional energy segment in 2016, 2015 and 2014.

The largest expenditures in 2016 were as follows:

• construction of units 5 and 6 at Elektrownia Opole - PLN 3 467 million;
• comprehensive reconstruction and modernisation of units 7-12 at Elektrownia Bełchatów - PLN 518 million;
• construction of unit 11 at Elektrownia Turów - PLN 498 million;

More about investments in 2016 in the chapter Organic growth.

Growth perspectives in the conventional generation segment

Responsible approach to natural environment

Protection of air

From January 1, 2016, PGE GiEK S.A. installations operate in line with emission standards set out in the IED Directive or use the derogation mechanisms provided therein. Derogation is intended to give existing installations additional time to technically adapt to the more rigorous emission requirements specified in the IED or exempt them from the requirement to observe these if modernising such a facility would be unjustified due to a limited expected life-cycle.

In 1989-2016, PGE GiEK (applies to the following plants: Bełchatów, Opole, Turów and Dolna Odra) reduced emissions as follows: SO₂ by 94%, NO_x by 60 %, particulate matter by 99%.  

Management of waste and by-products

The generation of waste is an unavoidable consequence of producing electricity and heat in conventional plants using fossil fuels and biomass. Waste is mainly produced directly in combustion processes or in support processes.

The Company consistently improves and expands the scale of usage for combustion waste, conducts research and seeks new applications in line with sustainable development rules. These actions are aligned with EU policies directed at re-using waste, protecting natural resources and minimising adverse impact on the environment, including through limiting the quantities of waste deposited at storage sites. 

Management of water and waste water

Conditions for managing waste and waste water are specified in relevant permits, including in particular integrated permits and water-law permits. Monitoring is conducted at PGE GiEK S.A. branches on an on-going basis as regards the quantity and quality of water collected and waste discharged. 

Mitigation of noise emissions

Permissible noise emission levels for each installation are specified in relevant permits, mainly integrated permits. Noise emission measurements are performed every two years or ad hoc upon request or complaint by external entities.

More about PGE Group's responsible approach to the environment in chapter Limiting our footprint.