Consolidated EBITDA for the first quarter of 2018 exceeded PLN 2.2 billion and was 14% higher than a year ago. EBITDA adjusted for one-off items came to PLN 2.2 billion, up by 17% y/y. This is the result of the acquisition of the assets currently held by PGE Energia Ciepła, which brought additional electricity generation volumes (+3.2 TWh) and additional volumes of heat sales (+15.2 PJ). Overall, the new assets contributed PLN 445 million to EBITDA.
The Conventional Generation segment (including PGE Energia Ciepła) had the largest contribution to PGE Group’s EBITDA in the first quarter of 2018, accounting for nearly PLN 1.3 billion. The Distribution segment closed the reporting period with over PLN 638 million. The Supply segment generated PLN 189 million and the Renewables segment PLN 114 million.
“This is the first full reporting period with the new assets being included in PGE Group. In this time, we generated very good EBITDA of over two billion two hundred million PLN, alongside a billion in net profit. The assets acquired by us significantly contributed to this, at the same time confirming how beneficial to the Group was the effective implementation of this transaction. Our assets support our market position, as proven also by our operating results. We increased electricity output by 18 percent to 17.7 TWh and tripled heat sales volumes to more than 23 PJ. This is nearly as much as we sold in all of last year,” said Henryk Baranowski, CEO of PGE Polska Grupa Energetyczna.
In the first quarter of 2018, the Group generated 17.66 TWh of electricity, of which 9.82 TWh, i.e. 7% less than last year, came from lignite-fired units. This resulted from a busier repair schedule at Bełchatów power plant and Turów power plant.
Hard coal-fired production reached 5.71 TWh, denoting 102% growth from the base period. This is due to the acquired CHP plants (Kraków, Gdańsk, Gdynia, Wrocław, Czechnica) being included in the reported results, which collectively generated 1.41 TWh, alongside Rybnik power plant, which produced 1.22 TWh.
Gas-fired electricity generation went up by 57% in the first quarter of 2018, to 1.49 TWh. This was driven by the inclusion in reporting of PGE Energia Ciepła’s CHP assets (Toruń, Zielona Góra, Zawidawie), which produced 0.53 TWh in total. Electricity distribution volume reached 9.19 TWh in the first quarter, denoting 3% growth, comparing to the base period.
By acquiring the assets currently held by PGE Energia Ciepła, PGE Group strengthened its top position on the Polish power market and became the largest supplier of district heating from urban CHP plants. For PGE, 2018 is a time of further consistent development and pursuit of the objectives listed in its business strategy.
“The development of district heating is one of the most important pillars of PGE Group’s future. We are currently focusing on integrating the acquired generation assets within the Group so as to achieve synergy effects as quickly as possible. At the same time, we are closely looking at all district heating assets and we are comprehensively analysing their growth potential. Rzeszów, where we will be launching this year an installation for the thermal processing of waste with energy recovery, is currently a perfect example of our diversification of generation sources. We are certain that, in the light of the changing waste-related regulations, this installation is the future of the sector,” said Henryk Baranowski.
“Other projects in the pipeline include the construction of the new CHP plant Czechnica, which will secure district heating supplies to our existing and new clients in the Wrocław agglomeration. We are also planning to implement new projects in Bydgoszcz and Kielce, albeit on a smaller scale. We are continuing to pursue the concept of turning Rybnik power plant into a CHP plant and are implementing a number of additional investments intended to reduce our environmental footprint,” added Henryk Baranowski.
PGE Group is continuing its key development projects. Expenditures on investments in the first quarter of 2018 reached PLN 0.9 billion. The construction of two units at Opole power plant with total output of 1 800 MW is more than 90% complete. The remaining stages and milestones are in progress. A cold startup of unit 5 equipment is under way and work on key equipment at unit 6, including boiler work, is progressing.
The construction of a 490MW unit at Turów power plant is also successively advancing. Construction of the cooling tower shell was recommenced after the winter period and assembly of key equipment and supporting systems (flue gas desulphurisation installation and carburising system) is under way. Overall progress at the construction site has exceeded 55%.
PGE is developing cooperation with startups and investing in innovative projects. PGE Ventures, which is in charge of equity investments in startups, has already signed the first investment agreements and is finalising others. PGE Nowa Energia is in charge of incubating and accelerating the earliest-stage projects as well as projects that support the launch of new business directions. This company together with PGE Obrót is currently developing the pilot project “Włącz się na przyszłość” (literally “Switch yourself on for the future”), which makes it possible to test new technologies at home free of charge, including the on-going monitoring of electricity consumption.
PGE Group has also obtained PLN 27.5 million to implement innovative projects as part of the Power Sector Research Programme. This grant from the National Centre for Research and Development will go to six projects being developed for PGE Group companies. One of them involves the construction of a robot for inspecting energy boilers in which power plants burn ground coal.
Innovativeness is one of the pillars of PGE Group’s business strategy. The Group will spend approx. PLN 400 million on the research, development and innovation area by 2020, with half of it constituting own funds and half being financed externally. The Group’s own contribution of PLN 50 million per year will be deployed to develop new technologies, products and business lines.