Current Report No.: 35/2024

Current Report No.: 35/2024

Date of Preparation: 28 November 2024

Issuer's Abbreviated Name: ENEA S.A.

Subject: Approval of the ENEA Group Development Strategy until 2035

Legal Basis: Article 17(1) of the Market Abuse Regulation - inside 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 28 November 2024 approving the document entitled "ENEA Group Development Strategy until 2035" ("Strategy"), on the same day, the Company adopted the Strategy for implementation.

The ENEA Group ("ENEA Group", "Group"), as a responsible participant in the energy transition, acting out of concern for the climate and energy security of Poland, intends to conduct its business in a manner that minimizes its impact on the natural environment. Acting in accordance with the objectives of the transition of the power sector in Poland, the Group will ensure a sustainable and safe energy transition based on the execution of profitable projects.

In line with its mission: "ENEA is a responsible and active participant in the energy transition, taking care of climate protection, Poland's energy security and the competitiveness of the economy," the Company has defined the following 5 key directions of development:

1) Transition of coal assets;

2) Growth of RES capacity and energy storage;

3) Development and security of the distribution network;

4) New dimension of products and services for customers;

5) Operational excellence.

These development directions form a foundation which is used to define strategic goals for the Group by 2035. The Company has decided that the Group's overarching goal is to maintain the ENEA Group's market position and increase its value. As part of the goal map, in addition to the overarching goal, ENEA has defined the following 25 goals:

Under the strategic direction "Transition of coal assets":

- Organizational transition of coal assets;

- Transition of existing generation sources towards low-carbon power generation;

- Development of new low-carbon/zero-carbon generation capacity;

- Increase in the efficiency of production infrastructure and internal optimization activities;

- Business expansion through new revenue lines;

- Ensuring socially responsible transition of regions;

- Decarbonization of the district heating system;

- Efficient management of the district heating system.

Under the strategic direction "Growth of RES capacity and energy storage":

- Dominant share of electricity generation from RES;

- Development of energy storage facilities.

Under the strategic direction "Development and security of the distribution network":

- Ensuring continuous supply of electricity with appropriate quality parameters;

- Adaptation of the distribution network to operate in a decentralized power system.

Under the strategic direction "New dimension of products and services for customers":

- Effective sale of green energy in the market;

- Organizational transition of the trading area;

- Product offering based on new technologies;

- Modern energy efficiency offering;

- Securing fuel supplies for the energy transition.

Under the strategic direction "Operational excellence":

- Standardization of support services for ENEA Group companies;

- New quality of customer service;

- Digitalization, cost reduction and optimization of internal processes;

- Growth of competences and optimization of HR processes;

- Achievement of operational excellence;

- Sustainable resource management;

- Improvements in employee safety and infrastructure;

- Acquisition of financing for the transition.

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

1. total installed capacity of 8.2 GW in 2030 and 9.8 GW in 2035;

2. installed capacity in renewable energy sources of 2.1 GW in 2030 and 4.9 GW in 2035;

3. installed capacity in energy storage of 0.59 GW in 2030 and 1.33 GW in 2035;

4. reduction in the unit CO2 emission rate to 448 kg CO2/MWh in 2030 and 278 kg CO2/MWh in 2035;

5. coal consumption by ENEA Group assets of 4.5 million tons in 2030 and 2.3 million tons in 2035;

6. SAIDI at 82.14 minutes in 2030 and 80 minutes in 2035;

7. SAIFI at 1.84 in 2030 and 1.79 in 2035;

8. distribution network loss ratio at 4.1% in 2030 and 3.9% in 2035;

9. activity ratio of ENEA Operator's participation in the energy transition at 4.0 in 2030 and 4.5 in 2035;

10. net debt/EBITDA of the ENEA Group at 2.5 in 2030 and 0.9 in 2035.

According to the Group's estimates, the implementation of the Strategy during the whole period of 2024-2035 will require total capital expenditures of approximately PLN 107.5 billion. At the same time, the Group assumes that, as part of this amount, PLN 67.1 billion will be invested using the Group's balance sheet while the remaining PLN 40.4 billion will be financed through strategic joint venture partnerships, under the project finance model or using other off-balance sheet forms. Such a strategy will enable rapid growth and thorough transition of the Group without compromising its stable financial standing. The Group's intended capital expenditures by area are as follows:

1. Conventional power generation: PLN 10.3 billion;

2. Construction of CCGT units: PLN 15.2 billion;

3. Investments in renewable energy sources: PLN 36.2 billion;

4. Investments in energy storage facilities: PLN 2.3 billion;

5. Distribution: PLN 40.9 billion;

6. Heat area: PLN 1.1 billion;

7. Other activities of the ENEA Group: PLN 1.5 billion.

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.

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 Net debt / EBITDA ratio is equal to (loans, borrowings and non-current and current debt securities + non-current and current finance lease liabilities + non-current and current financial liabilities measured at fair value - cash and cash equivalents - non-current and current financial assets measured at fair value - non-current and current debt financial assets measured at amortized cost - other short-term investments) / EBITDA.

The activity indicator of ENEA Operator's participation in the energy transition, also known as the coverage indicator of the maximum demand with RES power, is defined as the ratio of the RES power installed and connected to ENEA Operator's grid and the maximum demand generated by customers for electricity during the year.

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

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).