As Energa, one of the four largest energy providers in Poland, prepares to greenlight the construction of the EU's last sizeable hard coal plant, a new report is highlighting that it stands no chance of being profitable, leaving the investment looking more like a political fix for Law and Justice MPs ahead of upcoming local elections.

The new report, “Ostrołęka C - next steps for the last Europe’s coal power plant”, by the Instrat Foundation shows that despite legislator efforts to skew the Polish capacity market in favour of coal, the margins of coal-fired generating units like Ostrołęka C are terminally shrinking, if not disappearing into negative territory. The plant’s financial model is based on heroically optimistic assumptions employed by the Government’s agenda and other state-owned enterprises.

The report finds, that the plant brings a huge negative NPV (net present value) for the investors of -2.3bn PLN (0.5bn EUR) compared to net CAPEX of 5bn PLN (1.2 bn EUR).

Currently no foreign bank is supporting Ostrołęka C, leaving Energa and Enea with a major problem to secure project financing. So much so that they have resorted to not paying out dividends in 2018. The two are facing similar difficulties to insure the plant, as leading insurers such as Axa, Allianz and Munich Re are severing ties with the coal industry.

Despite these potentially crippling issues, Enea and Energa are now planning to test investor appetite for risky gambles, and are seeking consent for a Notice to Proceed (NTP) from shareholders, with a vote to happen at Energa’s Extraordinary Shareholders Meeting (ESM) on September 3, 2018.

The Minister for Energy has repeatedly expressed his determination to see the construction of Ostrołęka C started ‘as soon as possible’ this year. As the plant is located in his constituency, this suggests that the true objective of this investment is to bolster his support in the regional elections scheduled for October. Law and Justice are ready to waste 1.5bn EUR and risk up to 2000 premature deaths to help him cling to power” - said Diana Maciaga from Workshop for All Beings.

“Like the German project Datteln 4 near Dortmund, Ostroleka C is about empire building and mythical job creation at the expense of people, investors and the environment. In the aftermath of the ETS reform, the margins of coal-fired power plants will shrink vastly. Even additional capacity market revenues constituting at most 15% of all revenues don’t guarantee sufficient profitability” - says Michal Hetmanski, author of the report.

“Throughout Europe the outlook for coal is dire, as the smart money has already abandoned it for renewables. Ostrołęka C is only being considered because it is being viewed through the lens of outdated energy economics or desperate politics. Nowadays in Europe, any politician that promises coal jobs will deliver unemployment, and any company that pursues coal profits will reap bankruptcy” - said Kathrin Gutmann, Campaign Director, Europe Beyond Coal.

Summary of the report


Financial analyst and report author

Michał Hetmański, Instrat Foundation, michal.hetmanski@instrat.pl, +48 513 748 019 (PL, EN) | +49 157 5699 3045 (DE)

Lead campaigner:

Diana Maciąga, Association Workshop for All Beings, diana@pracownia.org.pl, +48 502 646 890 (PL, EN)

Shareholder meeting on Monday 3 September starts at 2 pm Warsaw time. For updates from the meeting please contact:

Kuba Gogolewski, Foundation “Development YES - Open Pit Mines NO”, k.gogolewski@fundacja.rt-on.pl, +48 661 862 611

Europe Beyond Coal Coalition

Kathrin Gutmann, Campaign Director, Europe Beyond Coal, kathrin@beyond-coal.eu; +49 1577 8363 036; www.beyond-coal.eu

Background information

Ostrołeka C, 1000MW, is a highly controversial project jointly pursued by two Polish majority state-owned utilities Energa and Enea. With operation planned to start in 2023, it will emit approx six million tonnes of CO2 annually until 2063. Independent experts warn that over its entire 40-year lifespan Ostrołęka C will severely impact public health, causing up to 2,000 premature deaths and health costs estimated at up to EUR 690 million. Development of renewable energy sources in its stead could create 45-1200% more jobs, an investment market worth EUR 2.4 - 4 bn for the country, and EUR 157-204 million for the region.

Beside financial arguments, green groups are highly worried about the legal status of the plant’s integrated permit, and continue to raise legal challenges as its compliance with EU norms is questionable. Both the investor and governmental agencies treated Ostroleka C as an ‘existing’ power plant, even though it will not produce any energy until 2023. This would allow them to not comply with the most recent SO2, NOx and dust thresholds imposed by the Industrial Emission Directive and 2017 BAT conclusions.

This highly unprofitable project had already been shelved in 2012. The utilities were forced to undertake it after 2015 parliamentary elections. Building Ostrołeka C have been an electoral promise of current Minister for Energy Tchórzewski and is a Law and Justice (PiS) campaign hot spot in the upcoming 2018 local elections. The Mazovia region where Ostrołęka is located is currently ruled by the opposition parties - the very same who shelved the Ostrołęka C project in 2012. At the same time, it is the parliamentary constituency of Krzysztof Tchórzewski.

In order for the construction to start a consent to the Notice to Proceed (NTP) must be granted by ESM of both, ENERGA and ENEA.


Rafał Zasuń: The last coal power plant in Poland may be only wishful thinking

Stop Ostrołęka C campaign website and previous report with its executive summary

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