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Enea GroupPoland
Sectors: energy distribution, energy plants - coal, mining - coal
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Created on: 2018-01-11 14:06:30
Last update: 2019-02-08 11:35:48
Greig Aitken, Coal Campaigner at BankTrack
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Enea Group head offices in Poznan. Photo: EneaAbout Enea Group
The Enea Group is a Polish coal mining and power company based in Poznan. Enea operates in several sectors of the energy market: coal mining, generation of electricity, energy distribution and energy trade. It has separate subsidiaries focused on each of these areas.
Enea owns and operates several large coal power plants including Ostroleka C (1,000MW) and Kozienice (2,820MW) as well as the Bogdanka coal mine, which produces 9 million tonnes of coal annually. Founded in 1904, the company is the fourth largest energy group in Poland. In September 2017 it held assets totalling PLN 25.75 billion (USD 7.53 billion).
| Headquarters |
ul. Gorecka 1
60-201 Poznan
Poland
|
| CEO/chair |
Miroslaw Kowalik CEO |
| Website | http://www.enea.pl |
| Ownership |
listed on Warsaw Stock Exchange
51.5% of Enea is owned by the Polish state. Another major share holder is PZU-TFI (9.96%). Enea's complete share holders structure can be viewed here. |
| Subsidiaries |
Headquarters location
Issues
Social issues
Several of Enea Group's operations are responsible for severe adverse impacts on the health of local people:
- Enea's Kozienice coal power plant was responsible for an estimated 650 premature deaths, 320 cases of bronchitis and 186,500 days of absence from work in 2013, and health costs due to pollution caused by this plant amounted to an estimated EUR 920 million in 2013 (Europe's Dark Cloud, 2016). Greenpeace estimates that the new unit at Kozienice (planned capacity of 1,000 MW) will result in an estimated additional 72 premature deaths and 16,352 days off work annually (Greenpeace Poland, 2013);
- the pollution effects of Enea's Polaniec coal power plant result in an estimated 178 premature deaths each year (Lifting Europe's Dark Cloud, 2016);
- the planned Ostrołęka C coal power plant will be, over its projected lifetime of 40 years, responsible for an estimated 900 to 2,000 premature deaths, 280 to 620 cases of chronic bronchitis in adults, 1,300 to 3,000 cases of bronchitis in children, between 190,000 to 420,000 days of sick leave and 100,000 asthma attacks in children (estimated statistics taken from the analysis 'Study on the health impact of the planned Ostrołęka C unit').
Environmental issues
The production of energy by burning coal has strong adverse impacts on the environment and climate change. Enea's overall power production for 2015 resulted in the emission of 12 million tons of CO2, 32,350 tons of sulphur oxides and over 17,142 tons of nitrous oxides. These pollutants are responsible for having major adverse climate change impacts, as well as on the environment and public health.
Enea is one of the 10 most emission-intensive companies in the EU - in 2018 its Kozienice Power Plant alone emitted as much as 14 million tonnes of CO2 - more than Ryanair's annual emissions. The company is currently buliding a new 1 GW coal power plant Ostrołęka C which will emit about 6 million tons of CO2 annually.
The utility has no climate policy or decarbonisation strategy. Enea's current strategy does not at all take into account the CO2 reduction path required for effective climate protection by the European Commission's long-term strategy of achieving climate neutrality by 2050, which is in line with the recommendations of the Intergovernmental Panel on Climate Change (IPCC). Although Enea assured that the shutdowns of old units would start as early as 2016, this date has now been postponed to 2029. Połaniec coal power plant is to finish its operation only in 2042 and Kozienice in 2050. Ostrołęka C is going to emit greenhouse gases until 2064.
Secondly, producing energy from coal requires heavy usage of water. In Poland, 70 per cent of water usage is used for the production of energy from coal, compared with the EU average of 13.7 per cent. The Kozienice plant for instance uses almost 100 m3 water per second for cooling its generators. In order to increase access to water for Kozienice Enea is planning to build a dam on the river Vistula. The interruption of the ecological continuity of the Vistula will have direct negative impacts on at least six Natura 2000 areas within the basin of the upper Vistula in which Atlantic salmon are protected.
Bypassing the law, Enea has built a threshold on the Vistula River for Kozienice Power Plant, which has been a physical barrier to endangered and protected fish species (including species protected under the European Natura 2000 network) for over a year now and an obstacle to shipping on the Vistula River.
The company's operations are also linked to several incidents of accidental pollution. In June 2014, a failure in the Kozienice power plant resulted in oil flowing into the Vistula river (wiadomosci.dziennik.pl). In the winter of 2016 thousands of dead fish were found near the water intake in the area of Enea's Polaniec power plant. Their deaths may have resulted from the hot water discharge by the plant (echodnia.eu).
Governance
Updates
Court win in world-first climate risk case puts future of Ostrołęka C coal plant in question
The District Court in Poznań has ruled that the company resolution authorising construction of the EUR 1.2 billion, 1GW coal-fired power plant, a joint venture between two Polish energy companies, Enea and Energa, was legally invalid. This should prompt a major rethink by the companies and their boards, and could spell the end for the costly project, which still lacks over PLN three billion in necessary financing (ClientEarth press release). ClientEarth brought the legal case against Enea over the Ostrołęka C project in October 2018, based on evidence that it poses unjustifiable financial risk to shareholders.
Poland's first free online calculator shows coal Ostroleka C’s (un)viability
Instrat analysts publish an open-source online viability (NPV) calculator of the coal power plant Ostroleka C. So far, four studies on Ostroleka C have been published showing a loss between PLN -2.3 bn to over PLN -6.2 billion negative NPV - much more than the investment CAPEX. The latest 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, IRENA). The model gives a detailed overview of the economic situation of all similar new coal-fired power plants in Poland and Europe. The model is based on CC-BY SA 4.0 license.
Shareholders seriously concerned - Enea under fire of questions about the rationale behind Ostrołęka C
Ostrołęka C provoked a heated discussion during the General Meeting of Shareholders of Enea on 20 May 2019. The shareholders are seriously concerned about the growing debt of the company, which, as one of them said, "has been running up a debt to invest in something that does not bring profits".
The company's communication of 2 May [on the agreement with Energa on financing the Ostrołęka C project - editorial note] states that the parties undertook to strive to ensure that the results of the Ostrołęka C Power Plant will not be consolidated with their results. Since Enea holds a 50% stake in a project that it does not want to consolidate, it means one thing to me - according to your financial analyses the project is loss-making - commented one of the shareholders.
The Office of Competition and Consumer Protection (UOKiK) was notified of suspected use of practices restricting competition related to PGE's involvement in the Ostrołęka C development.
The Office of Competition and Consumer Protection (UOKiK) was notified of suspected use of practices restricting competition related to PGE's involvement in the Ostrołęka C development.
The case concerns the intention to concentrate on the energy generation market with the participation of energy companies ENEA S.A., Energa S.A. and PGE S.A. in connection with the construction of the Ostrołęka C coal-fired power plant, which was not notified to the Office of Competition and Consumer Protection. On 7 January 2019, in its current report no. 1/2019, PGE S.A. announced its intention to join the construction of Ostrołęka C Power Plant. We could learn more about PGE's talks with Enea and Energa in an article by Karolina Baca-Pogorzelska "Ostrołęka more expensive and... Chinese" published in Dziennik Gazeta Prawna:
As we have established, the recently invited Polish Energy Group (PGE) decided to contribute to the investment, despite the fact that it bears the costs of completing its coal projects in Opole and Turow, and plans to build wind farms in the Baltic Sea. It is speculated that in return, PGE could finally get the green light for consolidation of the energy sector (we wrote about a possible monopoly or energy duopoly a year ago). According to our information, PGE could first "swallow" Energa, the acquisition of which had been blocked by the Office of Competition and Consumer Protection before it obtained stock exchange listing. When asked, PGE replies that it will not comment on any discussions regarding Ostrołęka C.
New report smashes Ostrołęka C - the power plant shows deep unprofitability
The latest report by Michał Hetmański,Instrat Foundation, "Ostrołęka C - what's next with the last coal-fired power plant in Europe?" shows complete lack of profitability of the largest new coal-fired power plant in the EU and serious legal doubts connected with it. Ostrołęka C can get only 15% of its revenues from the capacity market. Even under optimistic assumptions it will never provide investors with return on the investment. Ostrołęka C requires "adding" at least PLN 2.3 billion throughout its life cycle, i.e. an additional approx. 50% of the construction cost. In the optimistic scenario of a very slow increase in the prices of CO2 emission allowances and rapid rise in electricity prices - the power plant still turns out to be unprofitable. The power plant can generate electricity (LCOE) at a price of 488 PLN / MWh or even 505 PLN / MWh. This is much more than in the case of just recently developing polish wind farms (300), offshore farms (420) and even photovoltaic (440).
Extraordinary General Meeting of ENEA S.A. convened for 24 September 2018
On 24 Semptember 2018 a resolution on expressing qualified consent to commence the Construction Stage in the project Ostrołęka C will be put to shareholders vote. The qualified consent is necessary to commence the Construction Stage in the project Ostrołęka C 'consisting in the preparation, construction and exploitation of a bituminous coal fired power unit for supercritical parameters of steam with a gross capacity around 1,000 MWe'.
Financiers
The Enea Group has received finance from several financial institutions. A list of bonds underwriting and corporate loans (Enea's 2017 annual report) can be viewed below. The five bonds issued are:
- PLN 3 billion (expires 2020), led by PKO BP, Bank PEKAO, BZ WBK, Bank Handlowy
- PLN 1.0 billion (expires 2026) and PLN 0.150 billion (expires 2027), led by BGK
- PLN 1.5 billion (expires 2021), led by ING Bank Slaski, PKO BP, Bank PEKAO, mBank
- PLN 301.911 million (expires 2018), led by Bank PEKAO
banks
Bank Pekao
banks
Bond issue – underwriter
PLN 1.5 billion
- 2021
Co bonds underwriting with ING Bank Slaski, PKO and mBank totalling PLN 1,5 billion
source:
Enea Group Consolidated Annual Report 2016
link
link
Bond issue – underwriter
PLN 1.951 billion
- 2020
Co bonds underwriting with PKO, Bank Zachodni and Citi Handlowy totalling PLN 1.951 billion.
source:
Enea Group Consolidated Annual Report 2016
link
link
Bond issue – underwriter
PLN 300.041 million
- 2018
Co bonds underwriting with BGK totalling PLN 300.041 million
source:
Enea Group Consolidated Annual Report 2016
link
link
Bank Zachodni WBK
banks
Bond issue – underwriter
PLN 1.951 billion
- 2020
Co bonds underwriting with PKO, Bank Pekao and Citi Handlowy totalling PLN 1,951 billion
source:
Enea Group Consolidated Annual Report 2016
link
link
Bond issue – underwriter
PLN 1.951 billion
- 2020
Via its subsidiary Citi Handlowy co bonds underwriting with PKO, Bank Pekao and Bank Zachodni totalling PLN 1,951 billion
source:
Enea Group Consolidated Annual Report 2016
link
link
Bond issue – underwriter
PLN 1.5 billion
- 2021
Via its subsidiary ING Bank Slaski, co bonds underwriting with PKO, Bank Pekao and mBank totalling PLN 1.5 billion.
source:
Enea Group Consolidated Annual report 2016
link
link
Bond issue – underwriter
PLN 1.5 billion
- 2021
Co bonds underwriting with ING Bnak Slaski, Bank Pekao and mBank totalling PLN 1,5 billion
source:
Enea Group Consolidated Annual Report 2016
link
link
Bond issue – underwriter
PLN 1.951 billion
- 2020
Co bonds underwriting with Bank Pekao, Bank Zachodni and Citi Handlowy totalling PLN 1.951 billion.
source:
Enea Group Consolidated Annual Report 2016
link
link
mBank
banks
government funding
Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej (NFOSiGW)
government funding
Wojewódzki Fundusz Ochrony Środowiska i Gospodarki Wodnej w Lublinie (WFOS)
government funding
multilateral development banks
European Investment Bank
multilateral development banks
Related projects
Projects
Active
Ostroleka C coal power plant Poland
There are no projects active for Enea Group now.
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