The production of electricity and heat from coal is no longer a profitable business even in Poland. The largest power plant group there, PGE, had to revalue selected power plants downwards. The result is a loss of 4.9 billion zlotys (28 billion crowns) for the past year. A year earlier, the PGE group earned 3.4 billion zlotys.
According to the information published in the consolidated financial statements for 2023, last year the sales of the PGE group increased by 31 percent to 96 billion zlotys (540 billion crowns). But even this was not enough to achieve a profitable economy. “PGE Group’s financial and operating results for 2023 clearly show how the market and regulatory environment affects the energy industry and show us what challenges we will have to face in the coming years. The direction of changes is illustrated by the depreciation of conventional assets,” said Dariusz Marzec, president of PGE Polska Grupa Energetyczna.
As PGE further states in the financial statements, last November it tested the value of coal-fired power plants. The result is a reduction in their value by 8.45 billion zlotys (48 billion crowns). It concerns the three large coal-fired power plants of Belchatów, Opole and Turów. In the case of the latter coal-fired power plant, further write-offs may soon follow. In mid-March, the administrative court in Warsaw questioned the validity of the permit for mining in the Turów quarry until 2044. Mining in the border quarry Turów has long been the target of criticism from both the Czech and German sides.
The PGE Group is coming under pressure due to falling electricity prices and high payments for emission allowances. After all, the same combination of influences also troubles the owners of coal-fired power plants in the Czech Republic. Electricity production at PGE power plants fell to 56.8 TWh last year, which is 14 percent less than in 2022. Specifically, electricity production from brown coal fell by 25 percent to 29.8 TWh and from hard coal by 8 percent to 18.8 TWh .
Turów brown coal power plant near the town of Bogatynia near the Czech-Polish-German border. Photo: David Tramba
However, the problems of the largest Polish power generation group do not end there. The news website wnp.pl drew attention to the growing indebtedness. The amount of debt owed to banks, leasing companies and bondholders increased from less than 9 billion to 14.9 billion zlotys last year. Regarding the share of the segments in the creation of operating profit before depreciation (EBITDA), the PGE group earned mainly from energy distribution and heat supply last year. The production of electricity from coal and gas accounted for only 15 percent of the total EBITDA.
The Business Insider news website added to the results the information that the PGE group participates in the production of electricity in Poland by 41 percent and its share in the heat market is 18 percent. It also operates a distribution network covering an area of 123,000 square kilometers (mainly in the eastern part of the country), where it serves 5.45 million customers.
The further direction of the PGE group will affect whether it will be possible to complete the long-planned transfer of coal mines and power plants from semi-state and private energy groups to the National Agency for Energy Security (NABE). This state-owned company is supposed to operate the coal-fired power plants until they can be replaced by new renewable and nuclear sources.
David Tramba