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Energa’s summary of Q3 2020

November 05, 2020

The Energa Group, part of the ORLEN Group, published its consolidated report for the third quarter of 2020. It showed solid financial performance during the period. Its EBITDA amounted to approx. PLN 0.5 billion, representing a 4 per cent improvement on the corresponding period in 2019. As much as 36 per cent of electricity generated in Q3 2020 originated from renewable sources.

The Group’s revenues in the third quarter amounted to PLN 3.03 billion. At the same time, its revenues for the initial nine months of 2020 were higher by PLN 110 million compared to the corresponding period of the preceding year.

– The Polish economy faced multiple challenges this year but Energa developed effective solutions and improved its financial performance in the third quarter. We continued to pursue our investment objectives, increasing investment layouts by approx. 13 per cent y/y, up to PLN 347 million, stressed Jacek Goliński, president of the Management Board of Energa SA.

The net profit for the third quarter of 2020 amounted to PLN 85 million. The figure, slightly lower than in Q3 2019, was primarily impacted by high financial costs due to impairment write-downs arising from valuation of the block of shares held by the Energa Group.

The adverse impact of the coronavirus pandemic on Energa Group’s EBITDA in Q3 2020 was estimated at approx. PLN 5 million (by way of comparison, it was estimated at - PLN 84 million in Q2 2020).

Distribution as the most robust business area

Traditionally, Distribution proved to be the Group’s most robust Business Line, improving its EBITDA by 26 per cent against Q3 2019. Similarly to the entire power industry, the Distribution Business Line is facing the challenges of power generation transformation. During the discussed period, Energa allocated PLN 318 million to modernization and expansion of power grids. As a result, 801 kilometers of power lines were either constructed or modernized, among other things. The Company also connected 15,000 new end users and RES installations of combined capacity of 212 MW to the grid.

The corporation improved its SAIDI (System Average Interruption Duration Index) and SAIFI (System Average Interruption Frequency Index) indices. In Q3 2020, SAIDI improved y/y by 16 per cent for scheduled interruptions and by 2 per cent for unscheduled and catastrophic interruptions (by 4 per cent for unscheduled interruptions alone). In the meantime, SAIFI saw an improvement of 20 per cent y/y for scheduled outages (remaining at a similar level y/y for unscheduled and catastrophic outages) over the same period.

Rising RES energy production

As much as 36 per cent of total electricity generated by the Energa Group in Q3 2020 originated from renewable sources. At the same time, RES accounted for 47% of electricity generated during the full 9 months of 2020.

The overall gross volume of electricity produced in Q3 2020 was 5% lower y/y, whereas renewable sources produced 279 GWh of electricity. This represents a 28 per cent increase over the corresponding period of 2019 when Energa’s renewable sources generated 218 GWh. Retail electricity sales were 5% lower y/y. The volume of distributed energy was slightly higher than in Q3 2019, by 47 GWh.

RES growth

Energa finalized a major RES investment in the third quarter, with Przykona Wind Farm (installed capacity of 31 MW) becoming operational in July 2020. According to the assumptions made, its annual output is expected to reach 75 GWh. Nine wind turbines were located on the reclaimed former mining land totaling 300 ha owned by the Group.

Greater grid automation

Energa is strengthening power grid security by completing construction or modernization of switching stations (GPZ, e.g. GPZ Bojanowo and GPZ Grzmiąca) and initiating new investment projects (e.g. GPZ Fitowo). New facilities are being built according to the smart grid technology standards. Consequently, they are not only highly-automated but also allow for more accurate remote monitoring of medium voltage power lines and facilitate connection of new RES installations to the grid.

Coal phase-out

In the third quarter of 2020, Energa Kogeneracja pursued its investment activities leading to the ultimate departure from coal as the main fuel for heat generation in Elbląg. In July, a contract was signed with a contractor for the construction of a peak and stand-by boiler house of 114 MW heat capacity. The facility is one of the two new energy sources planned by the Company as replacement for the three coal-fired boilers at the Elbląg CHP plant, the other being a system of gas engines. At the same time, modernization of the biomass unit was continued in order to increase its capacity to 42 MWt. The upgraded facility is expected to undergo testing and commissioning in the fourth quarter of 2020.

Energa Kogeneracja also reduced the capacity of one of the coal-fired boilers (marked as K5) down to 50 MW in fuel, allowing it to operate until 2024. The boiler shall operate as a stand-by source for most of the time. Completion of modernization of the K5 boiler is scheduled for the fourth quarter of 2020.