Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Polska Grupa Energetyczna SA (PGPKY, Financial) reported a stable EBITDA for Q3 2024, matching the previous year's results despite variable market conditions.
- The company achieved a 4% increase in energy generation volume, with a significant 29% growth in renewable energy generation from wind and solar sources.
- PGPKY successfully launched the Gryfino power plant, contributing positively to the gas-fired generation segment.
- The company is actively investing in modern energy projects, including offshore wind farms and energy storage facilities, with significant interest from the financial sector.
- PGPKY is the largest operator of energy storage facilities in Poland, with over 1,000 megawatts installed, and is actively participating in the balancing market services.
Negative Points
- The company faces challenges in securing funding due to its coal-based assets, which limits the number of potential lenders.
- There is a negative outlook for conventional energy in 2025, with expected pressure on generation volumes and lower margins on sales.
- The draft law on freezing energy prices in 2025 could negatively impact PGPKY's financial results.
- The lignite power generation segment is expected to face significant challenges in 2025, potentially impacting production volumes.
- High volatility in electricity prices and market conditions poses a risk to the company's financial stability and operational planning.
Q & A Highlights
Q: Are you planning to present a new strategy for the upcoming years given the lack of decision on setting off coal assets?
A: We are considering revisiting and transparently communicating our strategy. The debate on setting off coal assets is ongoing, and we are more receivers of information, waiting for political decisions. Despite market volatility, we are actively investing in gas capacity, energy storage, and offshore wind energy to build PGE's value.
Q: How will the draft law on freezing energy prices in 2025 affect the company's results?
A: If adopted, the draft law is expected to have a negative impact. We will likely need to apply for a tariff change for households by April 30, 2025, which would alter conditions mid-year. We will provide more information as the situation develops.
Q: Will the Żarnowiec storage facilities project be completed?
A: We hope to move forward with the Żarnowiec project. We are analyzing bids from two companies, but the bids exceed the estimated value. We need further analysis to ensure profitability before making a final decision.
Q: How will the participation of Rybnik and Dolna Odra power plants in the capacity market by 2028 affect their situation?
A: The situation is complex. Dolna Odra is currently unprofitable, and we are in dialogue with PSE to determine its necessity. Rybnik is a different asset with ongoing gas-fired unit construction. Decisions on their future will depend on market needs and profitability.
Q: What is the outlook for lignite and hard coal generation in 2025?
A: We expect lignite to face significant challenges in 2025, potentially suffering more than hard coal in terms of production volumes. This is due to market dynamics and expected decreases in hard coal prices.
Q: Does the company expect an increase in the distribution tariff for next year?
A: We do not anticipate major changes in the distribution tariff process. It is an evolutionary business with cost inflation considerations, and we aim to maintain competitiveness without aggressive price increases.
Q: Can the Żarnowiec project hope for support from KPO, and will it participate in the capacity market auction?
A: While Żarnowiec has a high probability of not benefiting from KPO under current provisions, we are monitoring developments. We are preparing for the capacity market auction and considering Żarnowiec's participation.
Q: What are the expected costs for the Baltica offshore project?
A: The Baltica project's costs are estimated at PLN30 billion, based on contracts made during Baltica 2's development. Current contracting would likely result in higher costs due to increased CapEx.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
