Adoption of the new PGE Group’s Strategy for 2035

The Management Board of PGE Polska Grupa Energetyczna S.A. (the ”Company”, ”PGE”) informs that on June 12, 2025 a PGE Group’s Strategy until 2035 (the ”Strategy”) was adopted and its motto is „Energy for a safe future”.

The Strategy was developed in response to the increasing market volatility, unpredictability of the environment, the need for responsible transition of the sector and challenges related to realisation of energy megaprojects and is based on three main pillars:

1. energy security understood as system’s stability and uninterrupted energy supplies thanks to smart grid infrastructure, modern generation sources and energy storage facilities;

2. increasing competitiveness of the Polish economy and lower costs of electricity thanks to due to investments in renewable energy sources, modern models of co-operation with Customers and increasing share of local content,

3. shareholders value creation with fair relations with employees, local communities and in line with the ESG rules.

Within the Strategy which determines flexibility as the main growth driver, the PGE Group assumes change of operating profit structure in such way that – beside regulated segments and energy from RES – new segments of flexible gas capacities and energy storage facilities will have a larger contribution what will translate into EBITDA growth from PLN 11 bn in 2024 to PLN 17 bn in 2030 and PLN 30 bn in 2035.

The Strategy assumes total capital expenditures of PLN 235 bn, including PLN 175 bn for development and maintenance, PLN 39 bn for acquisitions and PLN 21 bn for additional investment options. Within the above amount 39% of expenditures will be allocated for tariff-based investments, 22% for offshore wind farms with Contracts for Difference and 39% for investments justified by other support schemes with possibility to achieve additional profitability from energy and balancing capacities markets. As part of the investment program PLN 75 bn of expenditures will be dedicated to the distribution development, PLN 85 bn for offshore and onshore renewable energy, PLN 37 bn for new segment of flexible gas generation, PLN 14 bn for energy storage and PLN 18 bn for district heating segment.

As a result of implementation of the Strategy the risk profile of operations will improve and PGE Group assumes efficient use of external financing while improving the investment grade rating. Projected ratio of net financial debt to EBITDA will allow for meeting the covenants in current financing agreements.

The Strategy assumes return to regular dividend payments is foreseen after reaching recurring net profit, perspective of positive free cash flows for a minimum of 2 years, maintaining investment grade rating and lack of one-offs with significant impact on cash flow.

Key assumption of the Strategy is maintaining the role of the leader in modern energy through implementation of strategic ambition to achieve a leading position in 8 strategic leadership areas presented below:

1. Reliable distribution

Realisation of the investment outlays at the level of PLN 75 bn allowing the growth in connection capacities for new RES by 11 GW (+125%) and by 12 GW (+14%) for new off-takers with the simultaneous decline in SAIDI by 30% in relation to the average from years 2019-2024. The financial result will be more than two-time increase in Regulatory Assets Base to PLN 57 bn and increase of EBITDA to PLN 10 bn.

2. Energy from RES

Implementation of investment program valued at PLN 85 bn translating into growth of installed capacity in onshore and offshore wind energy, photovoltaics and hydro power plants to more than 9 GW (taking into account projects in joint venture model with partners) that will allow for growth in annual electricity sales volume from renewable energy sources to 28 TWh and EBITDA of more than PLN 10 bn.

3. Flexible gas capacities

Program of construction of up to 10 GW in flexible, low-emission gas-fired power plants (ready to conversion to zero-emission fuels), including 4 GW in CCGT technology and 6 GW in OCGT technology will require capital expenditures in amount of PLN 37 bn. Investment program is divided in two stages: a) realisation of projects amounting to 5.1 GW in capacity planned for commissioning by 2030 based on current capacity market mechanisms, b) further 4.9 GW realised in years 2020-2035 dependant on evolution of support schemes in Poland. Targeted EBITDA of the segment is at the level of PLN 7 bn.

4. Energy storage

Strategic objective is achieving 18 GWh of energy storage capacity, what will translate into approx. 60% market share. Investment expenditures assumed at the level of PLN 14 bn (including 50% of Młoty pumped storage plant project financing) are aimed at reaching targeted capacity of 10 GWh in pumped storage power plants and 8 GWh in chemical energy storage facilities what should translate into EBITDA growth to PLN 2.1 bn.

5. Clean district heat

Planned investment expenditures at the level of PLN 18 bn (including PLN 3 bn for grid acquisitions and further modernisation thereof) are to result in lowering of CO2 emissions by 60% vs 2021 and development of energy-efficient heating systems (also in co-operation with municipalities) and integration of district heating with electric power sector for greater system flexibility what will allow for achieving annual EBITDA of PLN 2.8 bn.

6. Responsible transition

Realisation of responsible transition through respecting the employees’ and local communities dialogue rules, efficient assets management while keeping the country’s energy security. As part of coal assets transition, for which expenditures of PLN 5.0 bn are expected, a full co-operation with the transmission grid operator is declared, as well as use of certain locations to pursue development projects and involvement of experienced staff in other business segments and revitalisation of post-plants areas. In nuclear energy area expenditures of approx. few hundred millions PLN solely for conducting necessary research and analyses in 3 potential locations – Bełchatów, Turów and possibly Konin.

7. Offer for business Partners

PGE Group’s offer is a response to expectations of business Customers by complex meeting their needs related to efficient management of electricity and heat consumption profile what will allow for lowering the exposure for prices volatility and ultimately will make it possible to decrease the costs. Co-operation shall consist of enabling active participation of Partners in the energy market and balancing capacities market and its scope also covers prosumer solutions (generation sources, energy storage facilities, DSR – Demand Side Response), energy services and advisory support.

8. Quality of Customer service

The highest standard of PGE customer services provides for security of energy supplies, enabling participation in energy transition, accessibility of user-friendly contact channels and possibility to buy additional services. The objective is maintaining Customer Satisfaction Index at the level of 85 points and integration and accessibility of remote channels and stationary Customer service points and effective integration of communication channels thanks to the advanced digital solutions.

The Management Board of PGE assumes that in the new Strategy horizon stable financial situation of the Group will support the country’s energy security and partner co-operation with Polish and international financial institutions will enable significant increase of project finance in investments realisation. Additionally, PGE intends to effectively use the opportunities for obtaining preferential financing, including National Recovery and Resilience Plan and aid funds.

In the Management Board’s opinion the realisation of the Strategy and consistent appliance of disciplined investment policy assuming minimal return on investments at the level of 7.5% (apart from projects with secured revenue side in form of Contracts for Difference or Power Purchase Agreements for which this requirement may be lowered) will translate into significant Group’s value growth.

The Management Board of the Company informs that the presentation on the Strategy will be published on the PGE website.

Alternative Performance Measures used in the Strategy:

EBITDA - Earnings before interest, taxes, depreciation and amortisation

NetDebt / EBITDA – Financial net debt ratio – Consolidated short-term and long-term financial debt (adjusted for financial debt from Project Finance transactions) reduced by cash and cash equivalents, short-term deposits and restricted cash (excluding cash and cash equivalents possessed by companies pursuing Project Finance transactions) in relation to the consolidated 12M EBITDA.

IRR (Internal Rate of Return) - the interest rate at which the present value of the cash inflows from the investment equals the present value of the outflows

RecEx net – Ratio of net reclamation expenses – difference between reclamation costs of generation assets and revenues from sale of liquidated assets.