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Created on: 2018-01-29 16:36:41
Last update: 2019-03-01 10:57:54 BankTrack
Fundacja "Rozwoj TAK - Odkrywki NIE"
Diana Maciaga, Climate Campaigner at Pracownia na rcecz Wszystkich Istot (Association Workshop for All Beings)
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About Energa Group
The Energa Group is a Polish state owned energy company. Its core business entails the distribution, generation and sale of electricity. Energa is one of the four largest energy companies in Poland and the third distribution system operator (DSO) in Poland in terms of volume of electrical energy supplied to end-customers. Energa operates coal, hydropower, wind, biomass, and photovoltaic power plants with a total installed generation capacity of approximately 1.3 GW. Energa's electricity generation is 57% based on coal power. This percentage share will increase if Energa starts operating the new 1,000 MW Ostrołęka C coal power plant. As of September 2017, the company held assets totalling PLN 15.54 billion (EUR 3.74 billion).
What must happen
Financial institutions should avoid financing Energa via corporate loans and bonds while the company is pursuing its plans for the Ostroleka coal power plant. The loans provided by the European Investment Bank (EIB), the European Bank of Reconstruction and Development (EBRD) and Nordic Investment Bank should be terminated due to the serious possibility of usage of those funds for the Ostroleka C plant.
Daniel Obajtek |
listed on Warsaw Stock Exchange
The Polish State Treasury is the majority shareholder (51.52%), with the Ministry of Energy as the overseeing authority. Among Energa's other key shareholders are: OFE private pension funds (8.78%), Vanguard Group (2.37%), Allianz Global Investors (1.76%), Grantham MVO&Co (1.07%). Energa's complete shareholder structure can be viewed here.
Studies have estimated that Energa's plants contribute significantly to the deterioration of health in Poland. The pollution emitted by the Ostrołęka A+B power plants is estimated to result in 129 premature deaths annually, 1,370 years of life lost and more than 30,000 lost work days. The Elblag plant is estimated to contribute to 16 premature deaths each year, 165 years of life lost and about 3,500 lost work days. The planned Ostrołęka C coal power plant would further increase these impacts. It is estimated that over its 40 years projected lifespan it would be responsible for: between 900 and 2,000 premature deaths, over 3,000 cases of bronchitis, and between 50,000 and 100,000 cases of asthma attacks in children. Lost working days would amount to approximately 420,000 (Lifting Europe's Dark Cloud, 2016).
Energa operates coal, hydropower, wind, biomass, and photovoltaic power plants with a total capacity of approximately 1.3 GW. Energa's electricity generation is 57% based on coal power. This share will increase when Energa starts operating the new 1,000 MW Ostrołęka C coal power plant.
Energa's main impact on the environment and climate change is related to its contribution to overall Polish CO2 emissions (in 2015 these amounted to 294,879,000 tonnes). In 2015 Energa was responsible for 2.4 million tonnes of CO2 generated. Its two main facilities (Ostrołęka A+B and Elblag) also emit other air pollutants. Each year together they produced almost 11,000 tonnes of SO2 and 5,500 tonnes of nitrogen oxides (Greenpeace Wegiel Zabija report). These pollutants not only harm people's health, but also corrode buildings and damage the environment by causing deforestation and acidifying waterways to the detriment of aquatic life.
The intense water usage and waste dumping at the Ostrołęka power plants have also led to the polluting of local water sources – most notably the Narew river – by heavy metals such as: cadmium, nickel, zinc, copper, chromium, cobalt and lead. Recent studies show that the Narew river is contaminated beyond the 'l geochemical' class with cadmium segments. The Narew's aquatic flora is polluted by a high accumulation of zinc, lead and chromium in the underwater roots parts.
Energa EGM votes for an NTP for Ostroleka C
On September 3, the Extraordinary General Meeting of Energa voted for issueing a Notice to Proceed (NTP) for the Ostrołęka C power plant. Shareholders holding 23,5 million shares voted against, 4.6 million abstained. Neither the members of the Supervisory Board nor the Management Board of the company were present, disregarding the good investor relations practices. Issuing NTP before the capacity auction (duo on December 21 2018) breaks the obligation towards Energa’s bondholders: in the Eurobonds prospectus from February 2017, Energa AB stated that an NTP would not be issued before the auction. Following the EGM decision, both Enea and Energa suffered drop in share prices.
In order for the construction works to start the same consent must be expressed by the EGM of ENEA, which is on September 24, 2018.
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).
Energa's rating downgraded due to Ostrołeka C
On July 16 EuroRating downgraded Energa’s rating from BBB to BBB- in response to Energa signing the contract with GE Power/Alstom to build Ostrołeka C power plant.EuroRating assessed the current structure of Energa financing as relatively weak and pointed out that another large expenditure for the construction of the Ostrołęka C power plant (mainly financed by the increase in debt) will cause its further deterioration. The agency also noted that this power plant would need to use imported coal and thus harm Poland’s energy safety and advised withdrawal from this project on its early stage.
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