Enea and Energa have completed detailed analyses of the Ostrołęka C Project

Enea and Energa have completed detailed analyses of the Ostrołęka C Project. The analysis has demonstrated the rationale for changing the project to a gas-fired power plant. Also on 2 June this year, Enea, Energa and PKN Orlen signed a trilateral agreement setting out the main rules of their cooperation on the project going forward.

The analyses of the project carried out by Enea and Energa have demonstrated the rationale for continuing the project in a technology using natural gas as fuel in the electricity production process. The outcome of the analysis was affected both by regulatory changes at the European Union level and by lending policies adopted by certain financial institutions, as a result of which funding is much more available for energy projects based on natural gas combustion. Another important factor was the fact that control over Energa SA has been acquired by PKN Orlen, whose strategy does not envisage investments in coal-based electricity generation projects.

Technical analysis has confirmed that the gas-fired scenario can be executed at the current site of the unit currently being built. Information on detailed solutions will be provided along with the progress in negotiations and arrangements regarding the project. The project remains important for Poland’s energy security and the functioning of the National Power System. It is also in line with the on-going modernization of the Polish energy sector.

On 2 June 2020, Enea, Energa and PKN ORLEN signed a trilateral agreement defining the key rules of cooperation within the framework of the gas-fired project. They include in particular: continuation of cooperation between Enea and Energa within the existing special purpose vehicle, namely Elektrownia Ostrołęka Sp. z o.o., settlement of project-related costs between Enea and Energa and settlements with the contractors in the project in accordance with existing rules. They also consider the possible role of PKN Orlen in the gas-fired project as a new shareholder and participation of Enea in the gas-fired project as a minority shareholder with limited financial exposure, as a result of which Enea will not be one of the parties exercising joint control over the Ostrołęka Power Plant. The rules of cooperation also indicate that the activities to secure financing for the gas-fired project will be undertaken by Energa jointly with PKN Orlen.

The signing of the new shareholder agreement pertaining to the execution of the gas-fired project in accordance with the rules of cooperation discussed above will be announced by Enea in a separate current report.

The low-emission technology using natural gas to produce energy offers the ability to respond flexibly to demand for capacity and may be used to support balancing of the RES sector. Poland’s demand for energy is increasing; according to the most recent projections of the Polish Power Grid Company included in the Transmission System Development Plan until 2030, net demand for electricity in Poland will increase by approximately 28%, from 159.9 to 204.2 TWh, between 2020 and 2040.  Accordingly, energy transformation should be carried out in a sustainable manner and ensure that such demand is satisfied. Construction of a production unit supporting the National Power System is consistent with the system’s security assumptions.