Enea optimises and adjusts the raw materials and energy concern’s functioning model to the market environment. The Group announced the new Development Strategy until 2030

Enea will be an active participant of positive changes in the Polish economy and will strengthen the Polish energy security, becoming a part of the Responsible Development Plan for Poland and development of the national energy policy. The Group will increase its shares in particular market segments and will focus on the development of new, innovative business lines and technologies. Enea Innovation will become one of the centres of implementing such solutions resulting from the strategy.

Growth in the profitability of equity and share in the electricity sales market

The primary objective specified in the announced strategy is growth in the value of Enea Capital Group for Shareholders. The Group will pursue the achievement of the return on equity (ROE) on the level of 10 per cent, and the return on assets (ROA) on the level of 5 per cent until 2025.

- Facing significant changes in the corporate environment, which we forecast, it is indispensable to adjust the Group’s functioning model to new challenges. It will guarantee us competitive advantage, expected growth in the value for shareholders and necessary development potential. In order to face the new technological challenges and Customer expectations, the key assumption of our strategy is transforming Enea into an innovative raw materials and energy concern, knowledge-based, implementing balanced development and efficient asset management. It will be a leading supplier of integrated raw materials and energy products and services for a wide range of Customers, appreciated for the quality, comprehensiveness and reliability  – signals Mirosław Kowalik, Enea’s president.

Enea’s Strategy foresees increasing electricity sales to end Customers to the level of 20.1 TWh in 2025 (growth by 24.4 per cent in relation to 2015). The growth will relate to the extension of own, conventional generating capacities. Notwithstanding the start-up of 1,075 MW unit in Kozienice Power Plant, Enea plans its engagement in the construction of new sources or acquisitions of the already existing ones on the level of additional 1,500-2,000 MW until 2025. Some of these activities will be implemented via partnerships with other energy groups. At the same time, the Group foresees the modernisation of the existing 200 MW and 500 MW units in Kozienice Power Plant within the scope necessary for guaranteeing the efficiency of their operation and satisfaction of environmental standards, and as a consequence the possibilities of assets functioning on the market until 2030. The implementation of the strategy will mean a significant growth in Enea’s importance in electricity generation for the needs of the Polish Power System. The total installed capacity of conventional generation sources is to increase from the current level of 3.2 GW to 5.8 - 6.3 GW in 2025. It will allow the Group to generate 20.7 - 22.8 TWh electricity from own sources and mean electricity generation and sales balance.

Clean coal technologies, development of distributed poly-generation, hybrid RES

Enea estimates that a considerable element of the foreseen growth in electricity generation is to be the investment in the modern unit in the clean coal technology, the so-called IGCC (Integrated Gasification Combined Cycle) with the capacity totalling to 300 – 500 MW. The project business model is being intensely analysed. With a great likelihood, the company assumes that it will be located near fuel sources, which will allow for increasing the economic efficiency of the investment. Enea informs that from the beginning of 2016 it has been conducting an intensive dialogue with Polish and international business partners from the area of gasification and coal liquefaction, the result of which is an efficient gasification of a trial batch of coal from the Polish mine. The company foresees also a future transformation of the market towards the development of distributed generation sources and island energy markets (local balance areas). In in relation to that the Group will focus on a strong development of distributed generation, investing in local poly-generation sources (electricity, heat, cold and other products). Enea also accents the further development of the segment of heat which guarantees a safe return on investment via development of cogeneration sources and combined production of electricity. Within the renewable energy sources the Group will focus mainly on a growth in the operating efficiency of already held assets perceiving its chance in the development of hybrid RES.

Balance of generation and bituminous coal mining

In the new strategy Enea foresees a balanced extension of assets in all the links of the chain of values, aiming at securing fuels for the needs of its own generating activity. The Group estimates that increasing its own conventional capacities to the level of 5.8 GW will increase the demand for bituminous coal from the current level of ca. 5.5 million tonnes annually to ca. 10.9 million tonnes annually.

In the area of mining Enea plans to maintain the role of an efficiency leader e.g. by “Smart solutions mine” programme. It’s goal is implementation of technological and IT innovations leading to the further growth in the mining effectiveness and underground work automation. The Group intends to apply the best practices in mine management to develop a new business line - mining plants operator’s services in the whole region of the Central and Eastern Europe.

- Building an appropriate synergy of mining and generation assets based on one of the most efficient mines of bituminous coal in Poland - Lubelski Węgiel Bogdanka - creates great growth perspectives for us on this market. We want to successfully transfer the knowledge of our employees and modern technological and organisational solutions to other mining enterprises – adds Mirosław Kowalik, Enea’s president.

Income stabilisation due to developed distribution

Enea assumes maintenance of a strong market position and financial standing in the strategy due to further strengthening of the area of distribution which already today constitutes ca. 47 per cent of the Group’s EBITDA, The Group will maximise the grid reliability improving SAIDI index to the level of 144 min. and SAIFI to the level of 1.69 until 2025, including via the application of modern IT tools allowing for a quick detection of grid failures and separation of damaged sections (FDIR) and modernisation of overhead lines. The company will also invest in a smart distribution network initiating the transformation from the electricity supplier towards a multi-service enterprise.

Enea Innovation: Electromobility, energy clusters, prosumers and the Internet of Things

The Group declares a considerable growth in the innovativeness of its actions and concentration on the Customer. From the total number of 60 strategic initiatives as many as 31 are innovative in nature and relate to the development of new business lines. Thanks to them the Group plans to diversify the revenue structure in the future, including via offering package products with added value for Customers. Enea Innovation will become one of the significant centres of implementing innovative solutions in the Group, as results from the strategy. In this entity and in the structures established to that purpose, Enea will create professional mechanisms of implementation project management and build a team capable of transforming initiatives into real products offered by the Group.

- We wish Enea to become active in such segments as the development of energy micro- and macro-clusters, electromobility, prosumer installations or solutions from the field of the Internet of Things as well, such as a smart house or smart company. In the future, the Group will also earn on a professional provision of widely understood services, including on the operation of the energy infrastructure of industrial plants, local balancing areas and even mines. We foresee supporting the development of local and keeping local social relations, as an element of a responsible business policy. The Group will take care for the development of particular regions of Poland, including as an attractive employer, entity stimulating social development and supporting local vocational education. – announces Mirosław Kowalik, Enea’s president.

- Focusing on new, diversified added services is an unprecedented change in the model of energy groups functioning in Poland. Works over the development of a detailed offer will be commenced on the day on which the strategy is announced so that it is being presented to our Customers successively during the coming several months. With our innovative strategy we wish to give an explicit signal that Polish concerns may be leaders of changes, and not only followers of market trends – Enea’s president adds.

A current example of the Group’s innovative operations is a strategic cooperation with external entities, including other energy groups, within the establishment of an electromobility centre in Poland.

Corporate social responsibility

In the strategy the Group foresees strong support for the development of local and keeping local social relations, as an element of a responsible business policy. The Group will take care for the development of particular regions of Poland, including as an attractive employer, entity stimulating social development and supporting local vocational education.

Fixed costs and capital expenditures optimisation

The Group foresees operating efficiency management within which it estimates the fixed cost optimisation by PLN 700 million until 2025 in relation to 2016 base year. It means the continuation of the current efficiency improvement programme conducted in the Group for over 3 years.

Enea plans to implement the capital expenditures efficiency growth programme. As a result of conducted analyses, the Group optimised the capital expenditures on RES, cogeneration sources and heating networks planned in the previous strategy until 2020. CAPEX potential generated this way and the Group’s financial situation will enable Enea to designate additional PLN 6.2 billion until 2025 and PLN 5.3 billion in 2026 - 2030 on development investments. The expenditures constitute the maximum investment budget the Group may allocate to economically attractive investments, including acquisitions.

- Stable financial position locates us in a very advantageous place as regards obtaining attractive assets. We will be watching carefully the changes occurring on the market identifying the places which may strengthen the Group's position the most in all the elements of the chain of values of the raw materials and energy concern. It is important that the additional investment budget was designed in such a way so as to maintain the net debt/EBITDA ratio on a safe level. The assumption is one of the key priorities set in our strategy – underlines Mirosław Kowalik, Enea’s president.

Additionally, Enea’s goal is generating additional EBITDA from the development of new, innovative business lines. The Group assumes that until 2025, 5 - 10 per cent of EBITDA will be new segments of operations. Thus, Enea plans to obtain additional financial capabilities enabling investments in the development of innovative products on the level of PLN 3.2 billion until 2025 and PLN 2.5 billion in 2026 - 2030. Financing the development will be assumedly performed via strategic partnerships with external entities, including State-owned companies and small and medium enterprises, and also acquisitions of specialised entities. It will allow for the Group’s business growth without any material increase of capital expenditures.