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Press release on the Ostrołęka power plant

May 25, 2016

The Management Board of the Energa S.A. Group has repealed the decision made in 2012 to suspend the construction of a power unit in Ostrołęka. The new decision will enable the conduct of preparatory work aimed at achieving readiness for a tender. The Supervisory Board of the Energa S.A. Group has issued a favorable opinion on this course of action.

The resolution to suspend the execution of the project to build a new power unit in Ostrołęka was adopted in September 2012 by the Company’s Management Board at that time.

The purpose of relaunching the project is to achieve readiness for a tender and then to select a general contractor for a modern coal-fired power plant with a capacity of 1,000 MW.

At the same time, action will be taken aimed at securing a strategic investor or a co-investor whose involvement will be necessary due to the scale of the investment project and the establishment of the recommended financing structure for the project. The main assumption is to establish the financial structure of the project outside the Energa Group’s balance sheet.

“The decision to ‘unfreeze’ the project means the opening of the procedural path for preparatory work which should lead to the closing of the financing structure and the selection of the general contractor,” emphasizes Dariusz Kaśków, CEO of Energa SA.

The Ostrołęka C project is part of the government’s plan aimed at ensuring the country’s energy security. The execution of the project will require the existence of legal and systemic mechanisms supporting the implementation of new investments in the conventional power sector. The bill of the Capacity Market Act announced in the Responsible Development Plan presented by Deputy Prime Minister Mateusz Morawiecki is expected to be submitted to the Sejm already in June 2016.

“The regulatory environment and the national energy policy are essential for ensuring profitability of energy generation in the long term and for financing investment projects. That is why the plan to build new capacity should be consistent with Poland’s energy policy which for many years to come will be based on coal. The regulatory changes being currently prepared by the government are aimed at creating mechanisms to support investment in high-performance conventional energy generation. Among the key solutions that will provide opportunities for the execution of profitable projects in this area are, without limitation, the capacity market and contracts for differences,” says CEO Kaśków.

Creating a well-run capacity market in Poland will enable the replacement of de-capitalized power plants with new high-performance which will form the necessary supplement for the developing renewable energy sector. By 2020, according to current data, 6 GW of new capacity will be added and 4.2 GW generated in outdated power plants will be withdrawn from the system. According to a number of experts, in order to avoid the risk of a blackout in the next decade, decisions on new investments should be made today.