Poland’s largest power producing company, PGE (Polska Grupa Energetyczna) pledged to transition into a low-carbon-intensive utility by 2030 and to become climate-neutral for its customers by 2050 in the framework of its recently released strategy. The Group’s investment policy will see a clear shift towards renewable sources in the upcoming years.
“Already within a decade, the PGE Group will become a completely different company,” announced Wojciech Dąbrowski, President of the Management Board of PGE. The transition will happen through increased investments in low and zero-carbon energy sources as well as the development of network infrastructure.
The current generation portfolio of the Group is over 80 per cent based on hard coal and lignite. By 2030, the share of renewable energy in the Group’s portfolio will be increased to 50 per cent and carbon dioxide emissions will be reduced by 85 per cent, translating to 120 million tonnes less CO2 emissions. By 2050, PGE intends to achieve climate neutrality, which means zero net CO2 emissions and 100 per cent green energy.
The long-term investment strategy of the Group is to reflect these increased ambitions. PGE believes to be in the best position to play the role of a leader in changes in the energy sector given the need for large-scale investments.
“In the 2030 horizon, we intend to maintain our position as the leader in generation based on strengthening the portfolio of renewable generation sources and conversion of coal fuel to gas in district heating,” said Mr Dąbrowski.
Investments will be concentrated in the following core areas: energy generation based on renewable sources, low- and zero-carbon district heating, reliable network infrastructure and modern energy services. Over the next ten years, this translates to 75 billion złoty (16.3 billion euros) of investments.
The share of RES in investment outlays will amount to 50 per cent and will gradually increase. By 2030, the share of low-carbon sources in the PGE Group’s heat production will be at least 70 per cent.
The expansion of PGE’s RES portfolio is based on wind and photovoltaic. By 2030, the Group intends to build 2.5 gigawatts (GW) of new capacity in offshore wind farms, 3 GW in photovoltaics and expand its onshore wind farm portfolio by at least one GW.
The investments in renewables will be accompanied by the construction of flexible gas-fired generation capacities and a programme of energy storage facilities (800 megawatts of new energy storage facilities by 2030) to ensure the flexible operation of the power system and enabling greater use of the power of renewable sources.
Additionally, PGE will also invest in the development of the network infrastructure to enable the integration of newly emerging renewable sources and to link the energy sector with the heat, industry and transport sectors, which will be systematically electrified.
“We know that the energy transition is a multidimensional process, therefore the construction of the RES market share, apart from large-scale investments, will be strengthened by long-term cooperation with our customers,” underlined the President of PGE.
PGE’s ambitious targets had a positive effect on the Group’s business profile and its credit profile according to Fitch Ratings. However, main uncertainty relates to the timing and conditions of the planned separation of coal-fired assets in Poland into a separate entity.
By outlining this roadmap, PGE wishes to lead the energy transition in the Polish energy sector. However, the company noted that a successful energy transition is also dependent on adequate financing especially in light of the Commission’s updated emission reduction targets. PGE’s Vice-President for Finance, Paweł Strączyński told Euractiv that linking the EU funds to the Taxonomy Regulation will undermine the transformation effort as investments in technologies which will not be regarded as sustainable won’t be able to secure EU funding.
“In the Polish energy system, where gas capacities have not been so far developed on a larger scale, the role of natural gas as a transition fuel is essential,” pointed out Mr Strączyński.
In its quest to become climate neutral by 2050 PGE plans to rely on natural gas is a transition fuel in the next 20 years. Subsequent investments in gas sources will depend on the pace of development of alternative technologies.