State-owned Polish utility Energa is again on fire at its Annual General Meeting as financial analysts publish an open-source online viability (NPV) calculator of the coal power plant Ostroleka C. From now on, everyone including Minister of Energy Krzysztof Tchórzewski, the mastermind behind the project, can test its own business plan. Burning money not coal is not a slogan anymore, yet an easily provable fact.

It only takes few seconds to select parameters and check whether the power plant is generating loss or profit. Users can choose from a number of scenarios, such as official government forecasts of electricity prices (the PEP2040 project of the Ministry of Energy) or coal and CO2 prices, and check under which circumstances the project has an economic raison d'être and when it becomes a cash burning machine. A great chance for Minister Tchórzewski to check the feasibility of the promises he made in the elections last year.

Online calculator

So far, four studies on Ostroleka C have been published, the last two being viability studies of the project. In an optimistic scenario dated August 2018, the loss was ‘only’ PLN -2.3 bn, while later updates indicated over PLN -6.2 billion negative NPV (net present value) - much more than the investment CAPEX. The June 2019 update sheds an even more negative light on the project - the baseline scenario suggests a loss of PLN -7.5 bn and electricity price of 500 PLN/MWh (LCOE, 117€/MWh). That is ⅓ more than the electricity cost from photovoltaics (360 PLN/MWh) and almost twice of onshore wind farms (260 PLN/MWh) according to IRENA, the International Renewable Energy Agency.

- The quality of Investor Relations at Energa and Enea has drastically decreased since the Ostroleka C project begun in 2016. The Management Board has been consequently ignoring questions about the financing structure, it has never responded to the reproach for starting a project perceived by the majority of experts and all other shareholders as a financial failure. Hence, we put our cards on the table and publish a free, online NPV calculator plus an Excel spreadsheet. To achieve again high corporate governance standards both investors ought to start a dialogue with all the stakeholders - says Michał Hetmański from the Instrat Foundation, working on behalf of the Association Workshop for All Beings (Pracownia na Rzecz Wszystkich Istot), leader of the shareholder activism campaign STOP Ostroleka C Power Plant.

The model itself gives a detailed overview of the economic situation of all similar new coal-fired power plants in Poland and Europe. Its online version runs as a calculator and is easy to use for journalists, economists, experts in power engineering and students. Everyone, investors in particular, can handle it simply by calibrating the assumption or including their own. The authors also encourage everyone to publish their own versions of calculations on Twitter under the hashtag #OstrolekaC. The model is based on CC-BY SA 4.0 license.

- For almost two years now, experts have been presenting evidence that Ostroleka C will be a financial disaster; a vast cost not only to the environment and climate but also to the state-owned enterprises and their minority shareholders. Minister of Energy Krzysztof Tchórzewski has been forcing Energa and Enea to run this project since 2016, which explains why Energa has had a constant vacancy at its CEO position for almost two years as well. Its previous full CEO, Daniel Obajtek, is now merging PKN Orlen and Lotos, state-owned oil giants. Perhaps it is time for the Minister Tchórzewski himself to finally do the math and check if his election plan fits the reality? – says Diana Maciąga from the Association Workshop for All Beings.

Previously Instrat and Carbon Tracker models showed a loss on the project (NPV) of about PLN 2-6bn. These estimates allowed analysts, banks and insurers involved in the process to justify their lack of involvement in the coal-fired power plant. Divestments from stranded coal assets are now a trend and become a base scenario for financial stakeholders.

Although the final financing structure of Ostroleka C was to be presented on January 28th, 2019, NTP (notice-to-proceed) was issued, and construction has been commenced. Around a half of the PLN 6 bn budget is still missing. No third investor joined the project, a number of banks, insurers and reinsurers are openly withdrawing from heavily coal electricity generating companies as they have to face serious social criticism - see Polish branch of Commerzbank mBank, and insurers like Poland’s #1 player PZU or Warta.


1000 MW coal-fired power plant in Ostrołęka would emit about 6 million tons of CO2 annually. Independent experts warned that it may cause up to 2,000 premature deaths, and the health costs of 40 years of its operation have been estimated at EUR 340-680 million (PLN 2.9 billion). Half of the coal will be imported, most likely from Russia. This project has been repeatedly criticised in the energy sector as unjustified, irrational and a threat to the domestic power industry - confirmed by many experts and institutions such as the Eurorating agency, the Jagiellonian Institute, the co-founder of the Polish TSO PSE, Prof. Jan Popczyk, and even the Minister of Energy Krzysztof Tchórzewski himself. The case of Ostroleka C is under proceedings of the Energy Regulatory Office (URE), Supreme Audit Office (NIK), Antitrust Authority (UOKiK) and Financial Supervision Authority (KNF). It has also been criticized by local residents, while social organizations and the Marshall of Mazovia appealed to the Prime Minister Mateusz Morawiecki to close this project. The lawsuits against Enea were filed by its shareholders - ClientEarth and one of Enea’s trade unions MZZZ Synergia.

Additional information and contact

STOP Ostroleka C campaign website elektrowniaostroleka.com/en
Banktrack on Ostrołęka C www.banktrack.org/project/ostroleka_c_coal_and_biomass_power_plant
Online calculator and the model available for download: www.instrat.pl/ostroleka-kalkulator


Diana Maciąga, Climate Coordinator, Association Workshop for All Beings
Michał Hetmański, analyst, Instrat Fundation
michal.hetmanski@instrat.pl, +48 513 748 019 +49 157 5699 3045

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