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Market environment

Direct market environment PGE Group comprises national electricity generators, entities involved in the transmission and distribution of electricity and selling it to end users. The current shape of the power sector market environment began to change in April 1997, when the Act on Energy came into force that started treating electricity as a commodity. After horizontal integration of utilities and vertical integration of generators, distribution companies and retail companies four major energy group were established: PGE Polska Grupa Energetyczna S.A., Tauron Polska Energia S.A., ENEA S.A. and Energa S.A. Consolidation and subsequent privatization (Energa S.A. privatization still pending) of companies was aimed establishing economically strong enterprises that will be able to bear the costs of necessary investments, and effectively compete with European companies on a common market.

Additionally to structural changes and privatization processes in the Polish market in recent years, a number of reforms aimed at liberalization were implemented. The most important events of this period, which had an impact on the current shape of the market include: the legal separation of the transmission system operator and distribution system operators (so called unbundling), termination of long-term contracts for electricity generators and at the same time introducing a system of compensations, as well as the release of energy prices, with the exception of the tariff group G consisting of households. Customers have also the right to choose their electricity supplier. Implemented in 2010 so called power exchange obligation requires (with certain exceptions) electricity generators to sell produced energy on a competitive basis through a commodity exchange or other trading platforms complements the current shape of the market environment in the power sector in Poland.

The PGE Group is one of the largest companies in the energy sector in Poland. PGE conducts activities related to lignite mining, electricity generation from fossil fuels (lignite, hard coal, natural gas), as well as renewable energy sources (hydro, wind, biomass), energy distribution and sales electricity to end-users. PGE is therefore a vertically integrated company, engaged in the entire value chain of electricity generation.

PGE Group produces around 56 TWh of electricity on annual basis (2015 data), which corresponds to approximately 38% market share.

PGE Group offers sales of electricity across the whole country. Total volume of electricity sold to final customers amounted to 39 TWh in 2015, which corresponds to about 30% market share.