PGE Q1 2025 presentation: Record EBITDA amid energy transition investments

Introduction & Market Context

Polska Grupa Energetyczna SA (PGE) presented its first quarter 2025 financial results on May 28, showcasing record-high profitability despite challenging market conditions in the Polish energy sector. The company reported significant progress in its strategic initiatives while navigating electricity price fluctuations and changing consumption patterns.

During Q1 2025, domestic electricity generation in Poland increased by 4.3% year-over-year, while consumption decreased by 1.8%. This shift in market dynamics influenced PGE’s operational strategy, as the company focused on maximizing production efficiency while securing favorable pricing in forward markets.

As shown in the following electricity market analysis chart, BASE_Y-26 contract prices fluctuated between 420-470 PLN/MWh throughout the quarter, with prices currently hovering around 415 PLN/MWh:

Quarterly Performance Highlights

PGE delivered exceptional financial results in Q1 2025, achieving a record-high EBITDA of PLN 4.3 billion, representing a substantial increase from the PLN 2.5 billion reported in the same period last year. This performance was driven by higher electricity production volumes, lower CO2 emission costs, and reduced fuel expenses.

Key operational metrics for the quarter included:

• Electricity production of 16.1 TWh, up 1.5 TWh year-over-year
• Heat sales of 20.9 PJ, increasing by 1.0 PJ from Q1 2024
• Distribution volume of 10.8 TWh, slightly up from 10.7 TWh in the previous year

The company’s improved operational performance was particularly notable in its conventional and gas-fired generation segments, benefiting from the full commercial operation of the CCGT Gryfino Dolna Odra facility and higher load factors at lignite power plants.

The following chart illustrates PGE’s key operating results compared to the previous year:

Detailed Financial Analysis

PGE’s EBITDA growth was driven by several key factors, with the most significant positive impacts coming from lower CO2 prices (PLN +1,230m) and increased production volumes (PLN +1,021m). These gains were partially offset by lower electricity prices (PLN -1,413m) and higher CO2 emission volumes (PLN -316m).

The company also benefited from lower coal prices (PLN +363m), though this was partially counterbalanced by increased gas consumption (PLN -275m) as PGE continues its transition toward cleaner energy sources.

The following waterfall chart provides a comprehensive breakdown of the EBITDA development from Q1 2024 to Q1 2025:

Capital expenditures for the quarter totaled PLN 1.9 billion, slightly down from PLN 2.1 billion in Q1 2024. The investment focus shifted toward renewable energy projects, gas-fired generation, and district heating, reflecting PGE’s strategic priorities in energy transition.

The detailed CAPEX breakdown by segment shows:

PGE significantly improved its financial position during the quarter, reducing net debt to PLN 8.14 billion from PLN 15.69 billion in Q1 2024. This resulted in a substantial improvement in the net debt to LTM EBITDA recurring ratio, which decreased to 0.64x from 1.58x a year earlier.

The economic value of net debt, adjusted for forward payment and CO2 settlements, stood at PLN 16.6 billion, with an economic net debt to LTM EBITDA recurring ratio of 1.31x.

The following chart illustrates PGE’s net debt reduction trend over the past five quarters:

Strategic Initiatives

PGE continued to advance several key investment projects during Q1 2025, reinforcing its commitment to energy transition and modernization:

1. Gas-fired Generation: Progress on the Rybnik (882 MW) project, including installation of gas turbines and waste-heat boilers.

2. Offshore Wind Farms: Final Investment Decision (FID) for Baltica 2 (1,500 MW), with construction of the onshore component underway and seabed preparation agreements secured.

3. Energy Storage Systems: Contract signed with the General Contractor for BESS Żarnowiec (262 MW / 981 MWh) and delivery of the construction site.

4. District Heating: Advancement of several projects, including CHP Kraków gas engine (100 MWe), CHP Bydgoszcz gas engine (52.6 MWe), and CHP Gdańsk gas engine (approximately 36 MWe).

The company also secured significant financing for its strategic initiatives, including a loan agreement with the European Investment Bank (EIB) for PLN 2.25 billion and agreements for approximately PLN 18 billion in financing from the National Recovery and Resilience Plan.

Forward-Looking Statements

PGE provided a positive outlook for 2025, projecting recurring EBITDA contributions across all business segments, with distribution (PLN 4,530m), district heating (PLN 1,483m), and renewables (PLN 1,344m) expected to be the largest contributors.

The company’s outlook is supported by several factors, including:

• Better results from pumped storage power plants
• Full-year commercial operation of CCGT Gryfino Dolna Odra
• Lower projected unit costs for production fuels
• Higher Regulatory Asset Base (RAB)
• Extension of maximum prices in the household tariff

The following chart details PGE’s EBITDA recurring outlook by segment for 2025:

Management expressed confidence in the company’s ability to continue executing its strategic transformation while maintaining financial discipline. The focus remains on expanding renewable capacity, modernizing conventional assets, and strengthening the distribution network to support Poland’s energy transition goals.

Full presentation:

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