In October 2018 PGE, Poland’s largest utility, declared that the company's priority was not coal, but wind and gas. In response to the information announced on 7 January 2019 that the company wass considering joining the Ostrołęka C coal construction project, the prices of PGE shares are falling and analysts warn that involvement in the project is risky.
The Polish Energy Group (PGE) has started talks with Energa and Enea regarding the project to build a 1,000 MW C unit in Ostrołęka. Meanwhile, on 9.10.2018, during the MLE debate entitled "Everything you would like to know about energy prices, but were afraid to ask” Director of the Strategy Department at PGE Monika Morawiecka said that the company was not considering involvement in new projects based on hard coal. PGE's flagship and most important project at that time was to be gas and offshore wind.
Once again, Ostrołęka C. After this announcement, the company issued a rather clear statement about the agreement [with FIZAN - editorial note] that these would not be PGE's funds. So that I have nothing more to add - director Morawiecka ends the discussion (speech from 1:51 min. recording).
The head of PGE's strategy refers to the situation when in September 2018 the FIZAN fund managed by PGE became involved in the financing of Ostrołęka C. Then the company immediately issued a statement that it had nothing to do with the money gathered in the fund. Nevertheless, the value of PGE shares immediately fell. In December 2018, the PLN 1 billion agreement with FIZAN expired and investors did not issue any statement regarding its possible extension.
In their latest report, analysts of the Instrat Foundation point out that the investment in the "last coal-fired power plant in Europe" will bring investors a loss of PLN 6.2 bn. This is more than the cost of building this power plant. Despite obtaining PLN 2.7 billion for a period of 15 years from the capacity market, the project will be unviable and deeply unprofitable for the whole period of its operation, and will remain so even if it receives the main raw material, i.e. coal "for free", as in the case of wind turbines or photovoltaic panels. Paradoxically, the less hours it works, the less the loss will be.
Robert Maj, Ipopema Securities analyst, also warns PGE against becoming involved in Ostrołęka C: This is negative for PGE. The question is whether PGE will be involved in the capital investment and on what scale.
On December 28, 2018, NTP was issued to commence works in Ostrołęka. However, the PLN 6 billion worth project still has no financing. Energa and Enea will provide PLN 1 billion from their own reserves each, so they are still missing around PLN 4 billion. It remains unknown if and what banks would grant a loan for the construction. So far, the risk of power plant insurance has been taken over by PZU together with a consortium of unknown insurers. However, it is not clear whether PZU managed to split the risk among reinsurers.
The largest European institutions dissociate themselves from financing socially and environmentally harmful coal projects, which is why the risk of this absurd investment will be transferred to the state-owned PZU and Polish banks, where millions of Polish men and women hold their life savings. The money from the capacity market comes directly from our accounts, and the construction of this power plant means further increases in electricity prices. We do not agree with passing on the costs of harmful and unnecessary 'investments' to society; an “investment” which will cause the least damage if it does not work at all. Still in September it seemed that PGE would not follow this path and was beginning to understand that its dependence on coal was damaging for the company itself. So why does PGE voluntarily engage in a deeply unprofitable project that is doomed to failure? - comments Diana Maciąg from the Workshop for All Beings.
Campaign leader - Diana Maciąg, firstname.lastname@example.org
PGE is Poland’s utility most harmful for the environment, health and climate. It owns an opencast lignite mines - the most dirty fuel - and the Bełchatów power plant, which is the largest such installation in Europe, causes the highest health costs, emits the most carbon dioxide and is responsible for 10% of Poland's emissions. The company plans to build further gigantic open-pit mines, including Gubin and Zloczew. PGE is ranked third among the coal companies that cause the greatest threat to health in Europe - it is estimated that it causes almost 2000 premature deaths and health costs in the order of EUR 1.8 billion annually. The list also includes the investor Ostrołęka C - Enea, which occupies the infamous 7th place.