The Enea Group wraps up the challenges of 2022 – a consistent path towards climate neutrality
Despite the difficult and volatile market environment in 2022, the Enea Group generated good financial and operational results, while carrying out transformation towards a climate-neutral company and investing additional resources in the development of renewable energy sources. EBITDA stood at PLN 2.22 billion in 2022, whereas net profit reached nearly PLN 119 million. In the period under discussion, Enea completed a rights offering whereby it obtained more than PLN 750 million to execute investment projects in distribution and development of renewable energy sources, which are of key significance for the Group’s transformation. In 2022, the Enea Group’s first photovoltaic farms were also put into operation.
- In 2022, the Enea Group generated 26.2 TWh of electricity, 0.7% shy of the previous year’s production volume.
- The decrease in the Group’s EBITDA and net profit in 2022 was largely caused by the soaring commodity prices and the provision established in the trading segment.
- The Enea Group’s capital expenditures totaled PLN 2.6 billion in 2022, supporting the Group’s growth in all key areas.
In 2022, the Enea Group generated an EBITDA of PLN 2.22 billion, or PLN 1.32 million less than the year before (in 2021, the Group’s EBITDA stood at PLN 3.54 billion). The Group’s net profit generated in the reporting period totaled nearly PLN 119 million, compared to PLN 1.8 billion in 2021. This change was largely affected by the geological and mining events of a sudden and unforeseen nature which hindered the conduct of mining operations by Lubelski Węgiel Bogdanka, a subsidiary of the Enea Group. These events seriously affected the financial and operational performance of the mining and generation areas. Deliveries of coal from outside the Enea Group also translated into an increase in costs. Moreover, the volatile situation on the power market and changes in the regulatory environment forced the Group to establish a PLN 368 million provision in the trading area, which resulted from the failure to take into account the fully estimated electricity purchase costs in Tariff G approved by the ERO President at the end of 2022 and the application of the Act on Freezing Energy Prices and Providing Support to Certain Customers in 2023. Revenue from sales totaled PLN 30.1 billion, up PLN 8.82 billion y/y. The Net Debt / EBITDA ratio stood at a safe level of 1.73. Last year, the Group allocated nearly PLN 2.6 billion to capital expenditures, mostly in the distribution area.
Good financial and operational performance in a challenging market environment
The generation area posted an EBITDA of 310.2 million (down by nearly PLN 1.3 billion y/y). The lower EBITDA resulted predominantly from the poorer performance in the System Power Plants Segment (down by PLN 1.03 billion y/y), which was caused by the increase in coal prices, which translated into a decrease in the margin on generation, an increase in fixed costs and a decrease in the margin on the Balancing Market. The generation area’s EBITDA was also affected by a decline in the RES Segment’s performance (down by PLN 243.4 million y/y), which was a consequence of an increase in biomass consumption costs and a decrease in the volume of production obtained from renewable sources. In 2022, the Enea Group generated 26.2 TWh of electricity, 0.7% shy of the previous year’s production volume. The volume of energy generated from renewable sources declined in y/y terms to nearly 1.95 TWh as a result of the scheduled overhaul of the Green Unit at the Połaniec Power Plant. Heat sales totaled 7.1 PJ, having fallen slightly by 1.3% y/y.
The distribution area posted an EBITDA of PLN 1.32 billion (down by PLN 64.2 million y/y). This was caused by an increase in operating expenses along with a concurrent greater realized margin on licensed activities and a better result on other operating activities. In 2022, Enea Operator provided nearly 20.3 TWh of distribution services to end users. Over 41,000 renewable sources (along with micro-installations) were connected to the company’s grid, and the total number of RES connected to the grid surpassed 150,000 at the end of 2022.
The trading area posted an EBITDA of PLN -76 million. This marked an increase by PLN 165.5 million y/y, driven by the larger realized margin on the retail market. In parallel, provisions related to onerous contracts grew and the result on revaluation of CO₂ contracts deteriorated.
In 2022, the sales volume of electricity and gaseous fuel to retail customers surpassed 23.7 TWh, down by 3.4% y/y. In the business customer segment, the sales volume of gaseous fuel declined by 685 GWh, while the sales volume of electricity remained at the same level. In the retail customer segment, there was a decrease in the sales volume of electricity by 150 GWh at the unchanged sales volume of gaseous fuel. In 2022, total revenue from sales of electricity and gaseous fuel increased by PLN 4.6 billion compared to 2021, having reflected the rapid electricity and gaseous fuel price increases on the wholesale market. The increase in revenue from sales was recorded in both the business customer segment and the retail customer segment.
In 2022, in the mining area, Lubelski Węgiel Bogdanka successfully fulfilled its production and sales plan at 8.4 million tons. The LW Bogdanka Group’s consolidated revenue reached PLN 2.45 billion, EBITDA stood at PLN 610 million, operating profit at PLN 200.3 million and net profit at PLN 176 million. A total of slightly more than 33 km of excavation works were completed. In Q4 alone, the production volume reached 1.24 million tons. The average yield at the end of 2022 was 66.2%, compared to 69.4% one year earlier.
Secure financing of the Enea Group’s transformation and investments in RES
In 2022, Enea successfully completed a recapitalization process, having raised over PLN 750 million to finance the Group’s capital expenditure program. The share issue has enabled the pursuit of one of the key directions of the Group’s Development Strategy, while the newly obtained funds are being spent on investments in the distribution area, including on the development of RES capacities and smart power grids.
At the beginning of 2022, the Group launched a new cogeneration source in Piła, worth nearly PLN 50 million, based on three gas engines and solar collectors the operation of which resulted in a reduction of coal consumption in the city’s heating system. The new source increased the share of heat produced in high-efficiency cogeneration from 32% to 51.4%. As a result, Piła’s heating system become truly energy efficient. The Group’s first photovoltaic power plants were also put into operation: in Jastrowie (Wielkopolskie voivodship), Lików (Zachodniopomorskie voivodship) and Lubno (Lubuskie voivodship). Additional PV projects reached the stage of readiness for the launch of investment work earlier this year.
Work is underway on the construction of CCGT power units at the Kozienice Power Plant, aimed at restoring the capacity of 200 MW-class units. Enea ELKOGAZ, the special purpose vehicle in charge of the project, announced a competitive dialogue procedure for the construction of the CCGT units. The new low emission sources will stabilize RES as they develop in the initial phase of the Enea Group’s efforts to achieve climate neutrality and will provide for the security of the electric power system and the Group’s customers.
COMMENTARY ON THE ENEA GROUP’S PERFORMANCE IN 2022:
Paweł Majewski, CEO of Enea:
“In this difficult period of the ongoing war in Ukraine, the role and importance of utility companies in Poland must not be underestimated, as their key job is to ensure the stable and safe generation and supply of electricity to all people living in our country. The conflict triggered by Russia confirmed the fact that in the modern economy the power sector is an element of the country’s security system. In 2022, Enea not only fulfilled its duties in this area, but also continued its involvement in energy transformation with a view to attaining full independence from Russian energy carriers. ENEA, as a socially responsible company, has deployed the Government Solidarity Shield the most significant purpose of which is to protect Polish citizens against the effects of a dramatic increase in electricity prices. All these efforts have been made in order for Tariff Group G customers, local governments, public institutions and micro, small and medium-sized enterprises to be spared the effects of the energy crisis.
The Group’s financial performance in 2022, specifically its EBITDA at PLN 2.22 billion and net profit at PLN 119 million, reflect the volatile circumstances on the energy market that directly affect the country’s social and economic situation. Despite the shocks inflicted on the power sector and numerous challenges significantly affecting the pursuit of our Development Strategy, we are invariably focused on our overarching goal, that is on the green change. In 2023, of key significance for this process will be the transfer of our coal-fired generation assets to NABE and the sale of our equity stake in LW Bogdanka to the State Treasury. These actions are necessary to enable us to successfully obtain financing for the rapid transformation of the Enea Group and the creation of new renewable energy capacities,” said Paweł Majewski, CEO of Enea.