Assets

PGE Group's operating activities in the renewables area are managed by PGE Energia Odnawialna S.A. 

This segment's assets include:

• 14 wind farms,
• 29 run-of-river plants,
• 4 pumped-storage plants, including 2 with natural inflow, and
• 1 photovoltaic plant.

Installed capacity and production in power plants of Renewables segment

Key financial data

Key figures in the renewables segment

Negative EBIT of Renewables segment in 2016 results from recognition of impairment loss driven by changes in the market environment and changes in the regulatory environment.

Key factors having impact on segment results

Key EBITDA divergences in the renewables segment [in PLN million].

* excluding revenues and costs relating to balancing market not affecting EBITDA result

Major EBITDA drivers in the renewables segment in 2016, in comparison with the previous year, are as follows:

• Higher revenue from sale of electricity produced at wind farms, resulting mainly from higher production volume, which is connected with higher installed wind capacity (up by 218 MWe) as a result of commissioning new wind farms.
• Decline in revenue from sale of property rights, resulting from: (i) measurement of the production of property rights at a price lower by approx. 46 PLN/MWh in 2016 than in 2015, which resulted in a revenue decline by approx. (-) PLN 51 million y/y; (ii) adjustment of measurement of sold property rights and their inventory, which resulted in a revenue decline by approx. (-) PLN 17 million
• Increase in revenue from sale of electricity produced in hydro plants, caused mainly by an increase in volume of sale of electricity by 62 GWh y/y.
• Higher revenue from sale of regulatory system services, resulting from indexation of revenue in accordance with the contract with PSE S.A.
• Decline in personnel costs, connected mainly with employment restructuring due to integration of companies within the renewables segment in 2015.
• Unfavourable divergence in the 'other' item results mainly from an increase in repair and operations costs and property tax by approx. PLN 19 million as a result of commissioning new wind farms. The result was positively impacted by other operating activities - higher by approx. PLN 12 million, mainly due to having settled grants resulting from impairments recognised.

The renewables segment's negative EBIT result in 2016 was due to the recognition of impairment of tangible and intangible assets totalling PLN 865 million, including PLN 82 million in the fourth quarter. Impairment was caused by changes in market conditions (forecast prices of green certificates) and changes in the legal environment (increase in tax burden resulting from the act on investments in wind farms).

Capital expenditures

Capital expenditures in the renewables segment in 2016 and 2015.

The largest expenditure in 2016 was as follows:

• construction of 90 MW wind farm Lotnisko (final settlement of contract) - PLN 69 million

More about investments in 2016 in the chapter Organic growth.

Growth perspectives in the renewables segment

Responsible approach to natural environment

We are the leader in renewable energy production in Poland. The energy we produce would not have been created without natural resources. Taking this into account in our everyday business, we are committed to responsible exploitation of the resources from which we produce electricity. Of importance also are our investments intended to maintain river-beds, participation in costs incurred by river administrators and participation in costs of fishery restocking as compensation for making fish migration more difficult due to placing damming structures across waterways.

We work with the Ministry of the Environment, Regional Water Management Authorities, National Fund for Environmental Protection and Water Management and other entities involved in water management, environmental protection and "clean energy." These programmes make it possible to more effectively utilise waterways' energy potential and they reduce the negative impact of water management structures.

The following post-implementation monitoring tasks were conducted on existing facilities as part of wind farm operations in 2016:

• ornithological (monitoring local bird populations) and chiropterological observations (monitoring local bat populations) on wind farms Pelplin, Żuromin, Resko I, Kisielice I, Karnice, Malbork,
• ornithological and chiropterological observations commencing at wind farms Resko II, Lotnisko and Wojciechowo.

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