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Current Report No.: 39/2021

Title: Updated ENEA Group Development Strategy until 2030 with an outlook to 2040
Date: 2021.15.12
Report no.:  Current Report No.: 39/2021

Current Report No.: 39/2021

Date of Preparation: 15 December 2021

Issuer's Abbreviated Name: ENEA S.A.

Subject: Updated ENEA Group Development Strategy until 2030 with an outlook to 2040

Legal Basis: Article 17(1) of the Market Abuse Regulation - confidential information

Body of the report:

The Management Board of ENEA S.A. ("Company", "Issuer", "ENEA") hereby reports that, pursuant to the resolution of the ENEA S.A. Supervisory Board of 15 December 2021 approving the document entitled "ENEA Group Development Strategy until 2030 with an outlook to 2040" ("Strategy"), on the same day, the Company adopted the updated Strategy for implementation.

The ENEA Group ("ENEA Group", "Group") as a responsible entity operating in the power sector striving to meet other global challenges, intends to conduct its business in a manner that minimizing its impact on the natural environment. Acting in accordance with the assumptions adopted for the transformation of the power sector in Poland, the Group takes steps to spin off from its structures any assets related to the generation of electricity in conventional coal-fired units.

According to our updated mission: "ENEA, while carrying out the transformation of the Polish energy sector in a reasonable and efficient manner, provides reliable products and services to its customers by building lasting relationships based on respect for the environment and shared values."

Our key development directions form the foundation for defining the Group's strategic goals until 2030 with an outlook to 2040. Specifically, we have defined the following key development directions:

1) Development of energy storage projects and provision of services to third parties;

2) Involvement in offshore wind energy generation;

3) Intensification of activities aimed at gaining access to green energy through the execution of projects included in the ENEA Group's RES portfolio;

4) Development of hybrid installations;

5) Conventional energy generation based on low-emission sources (gas - as a transition fuel; biomass; RDF);

6) Development of a smart power grid;

7) Changed operation of the DSO in the new power market model;

8) Development of the ENEA Group's wholesale trade area (prop-trading, origination);

9) Construction of multi-energy products, including supply chain management;

10) Expansion of sales and enhancing customer loyalty;

11) Development of New Lines of Business;

12) Development of a modern offering for prosumers, including cooperation with local governments and urban development NGOs, and participation in the creation and management of energy islands (energy clusters);

13) Increasing the efficiency of customer service across the ENEA Group.

These development directions form a foundation, which is used to define strategic goals for the Group. In connection with the foregoing, the ENEA Group's overriding objective is a sustainable transformation increasing the value of the ENEA Group. The map of objectives includes, apart from the overriding objective, the following partial ones:

From the Owner's Perspective:

- Development of Renewable Energy Sources based on state-of-the-art technologies;

- Lasting relationships with Customers, systematically decreasing costs of reaching and retaining Customers;

- Ensuring financial security of the ENEA Group;

- Reliability and continuity of electricity supply;

- Implementation of innovative solutions and new technologies in all areas of the ENEA Group's business.

From the Customer's Perspective:

- Responsible partner in sustainable management of relations with local communities, the environment and Customers;

- Ability to satisfy the Customer's comprehensive needs;

- Attractive price to quality ratio of the offered product and service bundles;

- Development of new lines of business to be able to offer Customers new products, not only power-related ones.

From the Process Perspective:

- Producing an optimum and sustainable mix of products and services for well-identified Customers in cooperation with business and social partners;

- Reaching Customers efficiently and delivering the promised value, on time, at the right price and quality point, while ensuring responsible and ethical marketing and reliable information;

- Consistent, integrated and sustainable management of flexible, open competence groups in clearly defined lines of business, in the preferred role of business operators on entrusted assets.

From the Development Perspective:

- Modern, transparent and ethical Organizational Governance system at all levels across the entire ENEA Group;

- Efficient operating model of the ENEA Group aligned with the Group's evolution;

- Progressive education taking into account the challenges of transformation.

ENEA assumes that it will achieve the following by implementing the Strategy:

1. increase in (gross) installed capacity from renewable energy sources by 1,510 MW in 2030 and by 3,580 MW in 2040, calculated in relation to 2020 (without taking into account the capacity of the already existing "Green Unit" owned by ENEA Elektrownia Połaniec);

2. decrease in the value of the CO2 emission unit factor to 254 kg CO2 per MWh in 2030, with the aim of achieving a value of 201 kg CO2 per MWh by 2040 and achieving climate neutrality by 2050;

3. share in the sales of electricity to ENEA Group Customers in Poland's total electricity sales market of 16% by 2030 and at least 17% by 2040;

4. SAIDI at 74.59 minutes in 2030 and 70 minutes in 2040;

5. SAIFI at 2.02 in 2030 and 1.93 in 2040;

6. network losses in distribution at 5.14% in 2030 and 5.0% in 2040;

7. ROE of the ENEA Group at 6.4% in 2030 and 7.1% in 2040;

8. ROA of the ENEA Group at 2.9% in 2030 and 4.6% in 2040;

9. share of the New Lines of Business in the ENEA Group's EBITDA at 7-12% by 2030 and 10-15% by 2040, in relation to the total EBITDA of the ENEA Group.

The estimated measures of strategic objectives to be achieved by 2040 mentioned in items 1-2 and 7-9 have been calculated based on the assumption of the spin-off of coal-fired assets outside the ENEA Group.

The Group's estimated value of capital expenditures in 2023-2042 is PLN 68 billion, including:

1. Distribution area - PLN 42.5 billion;

2. Construction and further modernization of integrated gasification combined cycle units - PLN 5.8 billion;

3. Investments in renewable energy sources and energy storage - PLN 13.8 billion;

4. Other activities of the ENEA Group (including, without limitation, in the heat segment) - PLN 6.2 billion.

Please note that the term EBITDA is defined as the value of operating profit (loss) + depreciation and amortization + impairment losses on non-financial non-current assets (values for the reporting period). The term ROE means the Return on Equity, which is a measure of the value of profit generated from equity [net profit (loss) generated in the reporting period divided by equity at the end of the reporting period]. In turn, ROA means the Return on Assets, which describes the value of profit generated based on the assets held [net profit (loss) generated in the reporting period divided by the value of total assets at the end of the reporting period]. The measures specified above refer to the ENEA Group's consolidated figures and are standard measures of efficiency of any business activity, applicable in particular to the sector in which the Issuer's Group operates. The foregoing definitions and methodologies for their calculation are the same as the definitions and methodologies for the calculation of these indicators applied in the Issuer's periodic reports. The definitions of these terms are also included in the glossary of terms and abbreviations available on the Company's website (

The Issuer also points out that, irrespective of exercising due diligence, having regard to the duration of the Strategy and the possible occurrence of factors of an external nature as well as the resulting unpredictability of factors that may affect the indicators and their values presented in the Strategy, they must not be treated as operational or financial forecasts, but only as benchmarks by which to measure the achievement of the Strategy's objective which the Company will strive to attain during its term.

Moreover, below is an explanation of the technical and industry concepts included in the Strategy.

The term DSO means the distribution system operator, which is a utility company that distributes electricity. The term RDF means _#8216;refuse-derived fuel' in the form of a selected fraction of municipal waste that may be used as a fuel other than conventional fuels. The term _#8216;prop-trading' is the activity of a trading company consisting of generating a profit based on trading on the company's own account in contracts listed on commodity exchange markets, while the term _#8216;origination' refers to the development of a trading company's wholesale trading activity based on non-standard products. SAIDI (System Average Interruption Duration Index - index of the system average duration of a long and very long interruptions (expressed in minutes per Customer), SAIFI (System Average Interruption Frequency Index - indicator of the system average frequency of long interruptions in energy supply (expressed in the number of interruptions per Customer). A New Line of Business is construed as each new activity/product/service performed or provided outside the ENEA Group's core business, from which the ENEA Group will generate income following the marketing thereof by the Group.

Having in mind the diverse and international nature of Enea SA's shareholding, and also the provisions of the Best Practices of WSE Listed Companies, Enea SA guarantees the availability of its website also in English. In case of any interpretation doubts and discrepancies between the Polish and English versions, the Polish version shall prevail.