More than half of energy production from RES and good results of the Energa Group in the first half of 2023
Three years after the incorporation of Energa into the ORLEN Group, the energy company based in Pomerania has achieved further good consolidated financial and operational results. Revenues in the first six months of 2023 increased by 41% YoY and closed at PLN 13.43 billion. In the same period, EBITDA amounted to PLN 2.61 billion, which means an increase by 29 YoY. As a result, the net profit of the Energa Group in the first half of 2023 amounted to 1.42 billion (an increase by 35% YoY).
In the first half of 2023, the Energa Group generated approx. 1.7 TWh of gross electricity, of which 53% came from renewable energy sources, mainly hydroelectric power plants and wind farms. As at the end of June this year, the Group had approx. 0.6 GW of renewable energy sources installed, which were used to produce 921 GWh of gross electricity in the first half of this year.
At the end of the first half of 2023, the number of final consumers of electricity (Energy Consumption Points) was 3.3 million. In the Sales Business Line, there was an increase in the number of customers by approx. 61,000 YoY. The G tariff group covering households is responsible for the increase in the customer base.
In the discussed period, the number of newly connected customers in the Distribution Business Line amounted to 36,000. 1,470 km of high, medium, and low voltage lines were modernised and new RES sources with an installed capacity of 800 MW were connected.
“Energa Group is reinforced by business synergies resulting from its integration with the ORLEN Group. The awareness of the importance of energy transformation is what drives us to consistently implement the assumptions of the ORLEN2030 strategy and to further dynamic development of investments in energy distribution networks as well as zero- and low-emission sources of energy production”, said Zofia Paryła, President of the Management Board of Energa SA.
Energa sails to the Baltic with ORLEN
On May 30, the Ministry of Infrastructure announced the results of the process of awarding six new wind farm locations planned in the Polish waters of the Baltic Sea. The ORLEN Group received the highest number of points for five locations.
The company Energa Wytwarzanie from the ORLEN Group received two locations in the areas 14.E.1 and 14.E.2, which will allow for the implementation of renewable energy projects with a total capacity of approximately 1800 MW. The licenses secured by the ORLEN Group relate to locations near Kołobrzeg and Łeba and are located about 30 kilometers from the shoreline.
Investments in distribution and new energy sources
In the first six months of this year, capital expenditures in the Energa Group amounted to PLN 1.73 billion and were nearly PLN 0.8 billion higher (+85%) than in the same period of the previous year. Investments in the Distribution Business Line accounted for 54% of the total expenditures made by the Group and amounted to PLN 0.94 billion. Expenditures related to the construction of a CCGT in Ostrołęka amounted to PLN 324 million, and PLN 246 million were allocated for the construction of a CCGT in Grudziądz.
The power unit in Ostrołęka is one of the key projects of the ORLEN Group in the construction of low-emission balancing sources in the National Electricity System. The new unit will support the stability of electricity supply during Poland’s ongoing energy transition.
In April 2023, two photovoltaic farms – PV Wielbark (Warmian-Masurian Voivodeship) with a capacity of 62 MW and PV Gryf (Greater Poland Voivodeship) with a capacity of 25 MW were launched by Energa Wytwarzanie, a subsidiary of Energa. The company invested approx. PLN 260 million so that the green energy produced in these systems could power approx. 43,000 households.
By the end of this year, the farm in Wielbark will be expanded, and its capacity will increase to 70 MW. Next year, more photovoltaic systems with a total capacity of approximately 68 MW will be built in the vicinity of the Gryf farm. The implemented projects effectively enable the ORLEN Group to expand its renewable energy production portfolio, thus increasing Poland’s energy security and bringing the Group closer to achieving carbon neutrality by 2050.
In June, the Ostrołęka gas and steam unit project reached a key milestone. The company conducting the investment in the power plant with a capacity of approximately 750 MW signed an agreement for external loan financing in the project finance formula for a total amount of PLN 2.64 billion with a consortium consisting of Polish and international financial institutions.
In April, the construction of pipeline lines began. The power plant will be equipped with a closed cooling system, thanks to which its demand for water from the Vistula river will be limited to the necessary minimum.
In May, the corner stone for the foundation of the gas power plant was laid in Grudziądz, and shortly after the ceremony, the foundation for the first key equipment was made – the recovery boiler or HRSG (heat recovery steam generator). Similar works were also carried out in Ostrołęka.
Both investments in gas and steam units in Ostrołęka and Grudziądz will support both Poland’s decarbonisation goals and those of the ORLEN Group itself. In its energy segment, the Group aims to reduce carbon dioxide emissions by 40% per MWh (megawatt hour) by 2030 and to achieve full carbon neutrality by 2050.
Another million energy meter
In April, Energa Operator announced that it was not slowing down the pace of implementation of remote reading meters in its network and announced a tender for the purchase of nearly a million devices of this type. The company plans to remotely measure all its customers’ consumption by 2026.
Remote reading meters are necessary to balance the power system based largely on RES. They provide the ability to more accurately forecast the demand for electricity and power, thus facilitating the proper planning of the operation of generating sources.
Factors significantly affecting the results
In the first half of the year, Energa Group’s sales revenue was significantly impacted by compensation of PLN 2.24 billion from the Zarządca Rozliczeń company covering the loss of revenue from customers covered by regulations on electricity and gas prices and distribution service rates.
The Distribution Business Line was the greatest contributor to the Energa Group’s EBITDA in H1 2023 (61%), while the contributions of the Sales Business Line and the Generation Business Line were 28% and 14% respectively.
The largest EBITDA increase YoY by PLN 435 million to PLN 742 million was reported by the Sales Business Line. However, this was mainly the result of an accounting event – the dissolution of part of the provision for onerous contracts, which was created in December 2022 – and a one-off event, which was the receipt of an “exit fee” for the transfer of processes and functions related to the wholesale trade of electricity from Energa Obrót to ORLEN Energia.
The Distribution Business Line also recorded an improvement in EBITDA by PLN 314 million YoY to the level of PLN 1.59 billion. This was primarily related to the increase in margin on distribution of electricity (with network losses), attributable to a higher average distribution service rate as well as advantageous valuation of estimated unbilled network losses.
The Generation Business Line’s EBITDA for H1 2023 was PLN 366 million, compared to PLN 453 million in the same period of the previous year. The Line’s EBITDA was primarily driven by such factors as lower revenue from the sale of electricity, and higher cost of consumption of key fuels for its production (high coal prices).