Earnings call transcript: PGE Reports Record EBITDA in Q1 2025

Polska Grupa Energetyczna (PGE) reported a record EBITDA of €4.3 billion for the first quarter of 2025, highlighting robust performance despite challenging market conditions. The company also reduced its net debt by €900 million to €8.1 billion. PGE’s stock saw a modest increase of 0.52% following the announcement, continuing its impressive year-to-date return of 116.67% and six-month gain of 100%, according to InvestingPro data. The company’s strong liquidity position is evidenced by a healthy current ratio of 4.9, reflecting solid financial health.

Key Takeaways

• Record high EBITDA of €4.3 billion in Q1 2025.
• Net debt reduced significantly by €900 million.
• Continued investment in renewable energy and storage projects.
• Strong position maintained in the Polish energy market.

Company Performance

PGE demonstrated strong performance in Q1 2025, achieving a record EBITDA of €4.3 billion. The company continues to strengthen its position in the Polish energy market through diversification and strategic investments in renewable energy. Despite a slight decline in electricity consumption, PGE increased energy generation by 1.9 terawatt hours, showcasing its operational resilience. InvestingPro analysis indicates the company maintains a GOOD overall Financial Health score, with particularly strong momentum metrics. Get access to detailed financial analysis and 12+ additional ProTips with an InvestingPro subscription.

Financial Highlights

• EBITDA: €4.3 billion, a record high for the company.
• Net debt: Reduced to €8.1 billion, down by €900 million from the end of 2024.
• CO2 emission credit costs: 4.8 billion PLN.

Outlook & Guidance

PGE plans to continue its investment in transformation areas, focusing on distribution, renewable energy, and gas projects. A strategy presentation is scheduled for mid-June 2025, where further details on future initiatives, including nuclear energy exploration, will be discussed.

Executive Commentary

Macie Gursky, Vice President, remarked, "A lot of pleasant records in our activities," highlighting the company’s achievements. Executives also confirmed the Baltica 2 offshore project remains on schedule and within budget, underscoring PGE’s commitment to renewable energy.

Risks and Challenges

• Volatile electricity prices influenced by wind generation levels.
• Significant costs associated with CO2 emission credits.
• Ongoing dialogue on the future of coal energy assets.

While PGE faces challenges such as market volatility (reflected in its beta of 1.4) and regulatory pressures, its strategic investments and financial discipline position it well for future growth. With the next earnings announcement scheduled for July 28, 2025, investors can access comprehensive analysis and Fair Value estimates through InvestingPro’s detailed research reports, available for 1,400+ top stocks.

Full transcript - Polska Grupa Energetyczna SA (PGE) Q1 2025:

Unidentified Moderator, Conference Host/Moderator, PGE Group: Good morning, ladies and gentlemen, very warm welcome at the presentation of financial and operating results for the first quarter twenty twenty five of PGE Group. At our today’s press conference, we will have Macie Gursky, Vice President of the Board for Operations Przybylav Yaszczemski, Vice President for Finances and Piotr Sodow, Director of the Financial Division. Before I, give the floor to, the management board, I would like to congratulate to director Savitsky on his, third in a row, award of the journalist of the year granted yesterday. Also, I would like to, congratulate to all those who are finalists, in this competition. And after this brief, digression over to, president Gursky.

Good morning, ladies and gentlemen. Macie Gursky, vice president of the management board of PGE Polska Grupa Energeticna. We are meeting at the presentation of PGE, Porska Grupa Nerga Tejna S. A. Ladies and gentlemen, you probably, have already had a chance to get acquainted with the the information we published.

The first quarter twenty twenty five was a record one, and that’s good news. That’s good news in the context of the beginning of this year at our group. The key numbers, the key figures are displayed in the slide. First of all, we achieved record high EBITDA for the quarter at EUR 4,300,000,000.0, in fact, EUR 4,300,000,000.0. We spent EUR 1,900,000,000.0, that’s slightly below what we had planned.

However, these differences result from deferment of certain payments. Then the next item contracts for funding under the National Resilience and Recovery Plan. We will tell you more about this in a moment, but this number shows that our efficiency in the group and also in terms of all activity of our stake stakeholders for whom energy security is important out of those PLN 18,000,000,000, more than PLN 12,000,000,000 will be spent on distribution. The beneficiaries of those loans, interest bearing loans at a very good interest rate will be PG Distribucia SA and PG Energia Takakoleova, our two subsidiaries. Another area where we are going to spend money from this fund is offshore wind energy over PLN 5,500,000,000.0 will be allocated to the construction of Baltica 2.

These are agreements that we concluded when, we closed the funding for this project. As you might recall, this event took place at the January. The next record breaking contract was the agreement for the reconstruction of our and probably the largest in Poland, storage facility of, electrical energy, which is being built in the Zardnoviet in collaboration with LG. We are planning to install the batteries with a total capacity of over a thousand megawatt hours. This is one of those storage facilities for energy for which we have obtained as you might recall a contract in the power market.

Two key parameters, from the perspective of operations, that is generation of electrical energy and sales of heat. In generation, we recorded growth in spite of the decrease in the overall energy consumption in Poland. And as regards heat sales, there was a slight growth in the first quarter twenty twenty five compared to to an the first quarter twenty twenty four resulting in particular from weather conditions. Also, the, the end of our financial year, some events financial quarter, some, interesting events took place. You might have read, the information we have published, but, also, you might, have attended a conference in March when mister told you about what we were doing and where we were going.

Key events after the balance sheet date, participation, successful participation in supplementary auction and the power market for the second half twenty twenty five. We obtained contracts with a total capacity of 2.2 gigawatt. And that was also loan agreement with EBI for Porompka Jhara and development of our renewable energy portfolio. And the event, we are going to participate in tomorrow that is going to be the official opening of, the power, and heat plant in Novaceknitsa for almost 180 megawatt. The general message regarding the events of the first quarter would be this, a lot of, pleasant records in our activities.

Also, a good start of the year, the first year in which we as the management board, operate have been operating in full composition right from the beginning of the year. I think we are effectively showing the market that we have good and viable ideas for managing Polska Grupa Energeticna. In mid June, on the occasion of the planned presentation of the strategy by 2035, we will give you some more details. So if today you ask any questions about expectations, I will refer you to mid June because I want I don’t want to spoil the results of our presentation because that might be a spoil major spoiler to our later presentation. Today, you will probably hear the the information regarded to the power market and balancing services, the revenue area that is becoming increasingly important to us and increasingly important source of our margin.

In those 2.2 gigawatts that we contracted for the second half twenty twenty five, mostly we have coal fueled power plants. And probably preempting your questions, we obtained contracts for coal units from each conventional energy facility. That shows that we are adept in handling the negotiations with the regulator in order to achieve the instruments to ensure energy security from conventional sources, and we are able to use them effectively. As for key investment projects, because that’s another interesting area, in this slide we are showing what we are dealing with right now. Those almost 2,200,000,000.0 PLN that we spent in the second quarter, mark the beginning of another major project this year.

An extremely important project in gas energy, we continue the Rebnik project. That’s a major gas unit in CGT technology. We installed a gas turbine. That’s a very significant milestone for us. As for offshore wind energy, obviously, Baltica too and, FEED, in January.

We are doing both, on, shore, inland work, that is being done by PolyMex, a Polish company, and we’re also preparing for the first foundations on the seabed. Another important piece of information in this context is the service and maintenance base in Ostka is a smaller contract at about 1,000,000 PLN, but here we also obtained a contract as a general contractor. We are very happy because that consolidates our efforts in ensuring local content in the development of this sector within Polska Grupa and Erdetichna, but also as part of development of offshore energy in Poland in general. Energy storage facilities in Sarnoviets, we hope that in the planned schedule that envisages opening in the first half of twenty twenty seven, it will actually, open. And heat generation, here, we, mainly installed gas, engines.

Probably, Bitgosh is, the most advanced facility where we managed to offer the first energy to the grid. Slightly less advanced project in Krakow where we are finalizing procurement procedure for gas engines for almost 100 megawatts and Gdansk, where we managed to effectively take part in an auction for cogeneration premium. That is in a nutshell what happened in this quarter in operations. As for investments in energy market, you, probably follow the current developments, but I will, give you a brief, overview, nevertheless. As a curiosity, with, energy consumption that was lower in the first quarter, than last year by almost one terawatt hour.

We had higher energy generation by almost two terawatt hours, 1.9 to be exact. So 2.7 terawatt hours is the balance. Mainly, that was linked to the fact that wind was at relatively low levels in the first quarter. So we had to support the consumption in Poland because if there is no wind, that’s not unique to Poland, but that is also something experienced in our neighboring countries. And that influenced energy prices, spot prices in the first quarter, which were higher than, we had expected with term market prices at between $4.20 and PLN 4 70 PLN as you can see in the slide.

Today, the prices are at an even lower level. We will come back to this topic in a moment, and, we will tell you more about how it affected us as Polska Grupa Energeticna. In the following slide, you will see a very brief summary that we keep presenting that is our generation slightly higher distribution of energy with a slight increase in c plus r, which offset a decrease in a tariff. So we stayed at the same level at last year. Sales to end users, slightly lower as a result of sales decrease in sales to business customers.

And there is another important area that is railway energy, where the volume was at a very similar level.

Unidentified Executive, Additional Executive, PGE Group: Offset.

Unidentified Moderator, Conference Host/Moderator, PGE Group: Like I said

Unidentified Executive, Additional Executive, PGE Group: before, for heating, we had slightly lower temperature, about 1.5 degrees, which has meant that the volume was slightly higher. Now for the business customer,

Unidentified Moderator, Conference Host/Moderator, PGE Group: it’s a reflection of the

Unidentified Executive, Additional Executive, PGE Group: economic dynamic. But also, on the other hand, we have seen a smaller number of days this year as compared to last year, which always has a slight impact on the volume of electricity sold. Very briefly, the slide that I believe keeps us some of us awake at night, but raises a few eyebrows as well. People wondering how in such a volatile market one can make money and how to cope with it when it comes to the supply response. This graph presents prices in March 2025.

This was the month when a lot has been happening for electricity prices, and most certainly this would be a sign telling us that more and more attention will have to be paid to the balancing power market. As you can see in our report for the first quarter, this is a new category of revenue that appears this year in the first quarter. Last year we didn’t disclose these because there was a reform of the balancing market in June. So from our point of view, this means that what’s more and more valued is flexibility and availability and this means that our efforts in terms of operational management of our units, generation units, and on the other hand our ambitions in the investment plans are increasingly targeted towards flexibility. This means that in the power market, traditional power markets, we have had an increase of revenue in the first quarter twenty twenty five up to almost PLN1 billion compared to just under 700,000,000 last year.

Now for the balancing market, like I said, the revenue cannot be compared, but the ballpark is 350,000,000 zloty this year, and I believe that that’s important news, good enough to take a closer look at the the issue. So that will be all in terms of a quick introduction and a few slides, but, of course, and more details will be presented in reports. And I think after part of Tremec’s presentation, we will be able to respond to some of your questions. Thank you. Thank you very much, chairman.

And now mister Tremeczwaf Yastrzemski, who is responsible for finance, vice president. Good morning, ladies and gentlemen. First, a few words about the main factors that have contributed to the development of EBITDA in the first quarter of this year. Now for the electricity and heat margin, lower cost of fuels and lower cost of CO2 emission credits have impacted, and that’s 1,100,000,000, this cost. But on the other hand side, we have lower revenue from the sales of electricity because the actual price was lower and that’s just over 900 per megawatt hour and this impact means 1,400,000,000.0.

All in all, the generation output has increased vis a vis the compare comparable period of last year by 2,921,000,000, which is the outcome of a higher volume. It’s PLN PLN. And as was mentioned by Mr. Gorski as well, slightly higher revenue from heat sales, which resulted from different weather conditions. So for us, weather conditions, meaning the average temperature was lower in the same period.

We have noted also higher overall revenue from support mechanisms, and that’s a positive impact reaching almost $490,000,000. You can see some positive outcome in the distribution activity. Wagon RAB are higher, thanks to the investment program that we are consistently rolling out. So the positive contribution to the margin on distribution accounts for over 200,000,000. For selling electricity to final customers there’s an increase because the tariff products have a slightly bigger margin.

Now regarding the increase in costs, the inflation effect is visible in overheads. We can see an increase by 107,000,000 And one important component that has implemented that has impacted this is the increased sea renewable and gas as resources, so offshore renewable and gas. We have also eliminated some of the provisions for contracts that’s mainly for PG contracts. The amount vis a vis last year was lower. And, some words concerning the spending.

This was partially covered by mister Gursky. We, spent about a hundred and 80 million PLN less than last than in the first quarter of last year. However, there is a final investment decision that has been made for Baltica too, and that for sure means that this is a transitory trend. So a big role will be played by the timetables for investment settlements. So I think that this is a situation that I would not consider extremely important.

We have noted an increase for gas energy about 200% more or less and renewable which is an increase by just under 80%. In the gas energy sector we can mostly observe the investment in the Rybnik power source and for renewable you can see quite important increase in the Baltica project but also for solar paneling. In this sector additionally we are rolling out some investments in the energy storage but looking at the data from quarter one we mostly see expenditure on modernizing Parompkajar pumped storage power plant. We have $280,000,000 in minus and rail a 16 a decrease respectively in distribution and railway, but that’s basically low voltage grids and metering. We are looking at, speeding up.

We have been given preferential financing from the recovery program, so we’re expecting higher dynamics. Now for heat, we can see a decrease as well, compared to the, same period of last year. The main factor there was smaller outlay for Technica CHP. But as mister Gorski has already mentioned, both this investment and that we are opening, formally opening now, but also regarding other towns, I think you will hear more tomorrow. Now regarding investment in our investment policy, we maintain the same approach, invest in transformation areas that build the value of the group.

And we attached a lot of discipline to our expenditure on conventional energy. This is well reflected in the data, in fact these are only maintenance costs in this area. Can we have the next slide please? The net debt in quarter one of this year. We keep emphasizing that we are looking at this area intensely we want to make sure that this level is secure we’re paying attention to quite significant investment expenditures that ahead of us next year Now the reporting that net debt reported net debt was €8,100,000,000 and that’s €900,000,000 less than at the end of twenty twenty four.

What are the factors here that have impacted this result? The generated EBITDA 4,300,000,000.0, a positive impact of CO2 settlements that’s SEK 2.4 and the opposite outcome investments 1,900,000,000.0 but as a matter of fact all in all the debt has decreased. Some fluctuations here are caused by the change in the operational equity. So you should not really get attached to these levels working the working capital because there will be some changes in the subsequent quarters. I mentioned this at the previous conference as well.

That’s one very important thing that we attach importance to in managing finance is the high cost of CO2. The generators from PDE group have purchased CO2 emission credits at prices that were lower than last year, but this is the market prices change. Still, the costs incurred by the group in quarter one of this year are 4,800,000,000. So even compared to the record high EBITDA, you can see the scale of it and how much higher the level is of these amounts. So we really need to analyze this thoroughly and be very cautious when it comes to managing the finances and liquidity.

Now the economic view looking at future payments and settlements of CO2, the debt of the group is 16,600,000,000.0 PLN. The economic net debt to twelve month EBITDA in coefficient is one thirty one. And the next slide here, towards the end, a few words about, the potential perspectives in our EBITDA until the end of this year. As a rule, we won’t change these perspectives very much, but there are some slight changes that we have observed over the first quarter for renewables as it has been mentioned already. We have seen that the first quarter had weak winds.

So as a matter of fact, right now we’re not quite so sure as we were before that we can obtain higher yields, higher volumes in the whole year perspective. Slightly higher expectations are attached to our revenue from the balanced power, which will support conventional sources, contracted revenues especially, that’s a supplementary auction that president Gorski has mentioned. And we have some regulate regulatory changes in the supply, sector that, shift the requirement for tariffs, which can cover the lack of purchase in electricity but the risk against the backdrop of the current regulation is still only going to be impacting quarter four of this year. And I think that it brings us to the end of my presentation So thank you. That’s all from me, and I believe it’s time for questions.

That’s right.

Unidentified Moderator, Conference Host/Moderator, PGE Group: Thank you so much. So traditionally, the first two questions will be ones that we have received by email. And in a moment, I will give the floor to those present here. The first question, at which stage are you now with the transaction of buying assets from Zepak? Do you see any danger of it not being finalized, mister Gursky?

Thank you very much. As we communicated, we had signed a term sheet with the company. And in the first half of this year, we wanted to conclude the agreement. The transition is on track, on schedule, So I do not see as of today any material circumstances that would require comments on the transaction. And what was the second part of this question?

Do you see any risk of it not being finalized? Of course, such a risk, always exists because by the time you have signed all documents and closed the transaction, there’s always the risk that a given transaction is not concluded. However, today it is not a risk that would be above the standard level for this type of capital transactions. And secondly, as you might also hear at various meetings with representatives of management board of Posca Group Energia Tichina, we want to develop in the area of gas energy. That is a major direction for us in the context of value building.

So we uphold our interest in concluding this transaction. So I hope that at our next meeting, we will be able to present you more specific information about the structure of this transaction and its further schedule. Thank you. And the second question, which is more financial. How much this year and in 2026 will you use the loans at the cost of 0.5 percentage points from the recovery program?

Under those loans PG distribution obtained about 9,500,000,000.0 PLN, Railway Energy 2 point 6 billion PLN and the funds are available by 2036 according to the rules of the program. However, we would like to start spending the money as soon as possible. Disbursement of individual tranches can be based on current capital expenditures as well as it can regard costs that had been incurred earlier. So bearing this in mind, it seems that first funds under this pool of available fund money will be in mid twenty twenty five. Thank you very much.

Now I would like to invite those present in the room to ask questions, and please remember to use the microphone. Pavlo Puhalski Santander. After those record high results, can we expect a dividend paid from next year by PG? That’s my first question. And the second, you are after FID in offshore.

So I would be very happy to get some more information about this project. For example, specific load factors, whether 30,000,000,000 is the final CapEx or maybe it’s going to be increased slightly. So I’m interested in any information about offshore as you can provide as as much information as you can provide. The first question about dividend. As mister Gursky mentioned, in mid June, we will publish and announce our strategy.

So this document will most likely, divulge more information about this. We don’t want to give you any spoilers, before this presentation of the strategy. Let me add to this. Of course, when we have a discussion about cash flow, operating on financial cash flow, how it can be used, It seems that today our investment ideas are pretty good, especially the ones regarding development directions that are communicated on a regular basis. And, the strategy which will, summarize our plans for the upcoming years will, show you that, our vision, our picture of the situation is quite complete, and hopefully that will also make you feel comfortable about managing shareholder expectations with respect to our management of cash flows.

Secondly, as for offshore, there is not much that could be said here about the assumptions of the project because it seems that in January when we published information about FID, we presented a lot of information. So there is no reason today why we should expect any change in planned capital expenditures. The project is implemented on plan, on schedule, on budget. We are not encountering any circumstances or events that would give rise to any concerns on our part. That is good news.

But on the other hand, we are also trying to enjoy little events that surround this project. In particular, this relates to the increase in the share of our local content in the offshore project. This is good information for us as the investor because hopefully in the following projects the local content will be growing. And hopefully, that is also good news to our investors because that is proof that deliveries can be provided in accordance with the term sheets and contracts. The secondary steel is going to be the contract implemented by Polish companies, which is good news.

Procurement process is still underway, so hopefully we will have some more reasons to be happy. And as for load factor, no changes here either. In our business case, that was about four hundred thousand hours, and the reality will be as we will see. It is significant for our project, obviously, because that will determine the economic developments. But in Baltica 2, that is this project where we have support for about 100 full load hours, this the area which gives us no reason to believe that we might be at any risk of not benefiting from this, not having a chance to use those funds.

We see no reason to change the assumptions. Thank you very much. Are there any other questions? I would like to ask you about the forecast for emission rights. I understand that you do not show your own forecast, but can you refer to a COBISSA figures?

What would be the impact for the company if €200 materialized in the market? We indeed refrain from commenting on forecasts. I might ask you what what is material. 200 is material. The previous reference level was €85.

As you can see, a lot is happening in the market and there is quite significant volatility here. So forecasting becomes increasingly, difficult. We had a weekend change, of the order of, several percentage points between Friday and Monday, the prices of emission rights dropped, then they started to rebuild their level. We obviously make efforts to anticipate market developments and at the same time, are prepared to respond to the to the volatility. And one way of responding to this variability is the way in which we manage conventional energy, coal energy, by anticipating the volatility and the demanding situation in terms of, supplying flexible, balanced power.

We brought about this the reduction of minimum levels in our power plants fueled by coal. So, renewable, sources which are dependent on weather conditions, automatically, fall within the system. And on the other hand, we are, better prepared to respond to the supply to the balanced power reported by PSC, and that is reflected in our financial results. And on the other hand, as you might have seen in our results in the nonstandard first quarter with lower generation from wind sources, which is local in its nature, with simultaneously high prices of gas that resulted from low levels of gas in storage facilities in Europe, we were able to respond to a greater gen by greater generation from lignite. Whatever our views of emission rights prices might be, let me, highlight that we make sure that our management of assets is, focused on this two track or dual management, to make our generation fleet as flexible as, feasible.

Robert Mai, Ipovo Mai Securities. I have a question about sales segment in the fourth quarter and the outlook for 2025. You mentioned the lower risk of noncovering of costs. Can we expect that the result will be going to be EBITDA at zero plus, zero minus? And the second question is about recovery program.

Have you applied for any other significant amounts apart from what you already have? Let me start with the second part of your question. Yes. In distribution, And maybe I should start with a general information that as a group, we have obtained loans for 12,000,000,000. Previously, we had a loan on Baltica too, and we are still working intensely on obtaining smaller amounts, taking advantage of various programs that are announced as programs funded by EU, like PHOENIX program.

So this activity will not be hampered, will not slow down. We have obtained quite a lot of, funds. The amount is significant, but the topic is not closed yet. And as for the first part of your question, it’s hard to make any forecast as it depends on decisions which are beyond our control. So I will not be able to give you any answer how we assess and forecast that.

I would like to add that sales is not an area where we earn significant amounts of money. You know, this is an area that is regulated, so we are trying to take activities in coordination with what is happening in the regulatory regulatory market. The purpose here is to stabilize, the market and ensure security of those customers who are most exposed to the risk. We have balanced approach to this area. So today in the term market we see a decrease in prices which might also make clients in G tariff to anticipate price levels.

Your question contained a bit of the answer. The discussion is more about whether it’s going to be zero plus, zero minus, or whether that’s an area we are going to achieve significant margins.

Unidentified Executive, Additional Executive, PGE Group: RRP is the keyword here. We’re hoping that out of this very widespread program that’s been planned for energy, we will be able to get some benefits out of it. I think it’s worth stating in the conference as this one because the BGK is communicated in its intention, but in our dialogue with it, well, we can see that we have a common interest. So some of the negligence of RRP that we saw in 2021 and 2022, are now compensated for, quite effectively. So we do have, we do share an interest together with BGK to make sure that the funds are, allocated to the area of distribution, which is really the backbone of energy.

The number of investments we can complete will, at the end of the day, determine the, available sources that we can connect to, how many clients we can connect to the grid, how many storage facilities can be created. And all the storage is something that we speak about openly. You must know, I’m sure, about the program that’s been launched by National Fund of Environment Protection and Water Management for the support of large scales where storage of electricity. We’re part of this program. We’re submitting applications and hoping to get some support from this program.

However, this is quite competitive. A lot of competition in the program and I think to a large extent this might, be connected to how the terms and conditions have been formulated in the supplementary auction. It’s just at the level of 12% which determines the dynamic of a power storage facility. So like every developer or every company we’re trying to look for alternatives and how to get the economics right of the new projects in the area of electricity storage. So we’re hoping that we can get some funds, some aid from this program thank you My question is about generation.

This sector looked very nice in the first quarter. So since it’s been so doing so well and we can see 286,000,000 in EBITDA profits. Mister Gorski is talking about an increase to potential 1,000,000,000 of revenue from the power market, 350 the balancing market if I understood well. So why would you isolate coal if this works so well? And since the figures are so good from generation, would this be even needed?

And could you perhaps see some other proposals projects that you would like to introduce to the government that could be supplementary to the balancing services that could help support your work in the generation area. That’s a very broad topic. I don’t know who’s to take this question. I can start. Difficult topic.

Not because we want to evade the answer here, but mostly what needs to be emphasized is that when it comes to the future of coal energy in Poland is not solely the decision of energy companies, not even the Polish network, but it’s a joint decision that will be taken also with the Ministry of Industry and state assets and I think it’s more complex than it might look. So we are trying to be very active in the preparatory work because such work has been carried out by the Ministry of State assets. So there is some information available on how we manage the assets based on choline lignite We’re an SPG group a very important player on this market. And we do feel the responsibility on our shoulders, also resulting from the security energy energy security. So it’s mostly about dialoguing with the other stakeholders than just trying to impose a preset scenario.

So I think, yes, actions are being taken by us, also Polish network, elect electrical network to make sure that these assets can be financed in a profitable manner. The supplementary auctions is just but an example of such measures. Like I said before, just the fact that we launching these initiatives in order to make these assets more flexible and in order to make it possible for them to generate revenue from the new areas such as the balancing services market etcetera. This shows that we are making as much effort as possible to skillfully cope in a situation where well the decision on the future of the ownership of the coal assets is still missing today. Right?

Minister Yavorovsky declares, as we have heard, that it’s an important issue for him, that the future of these assets is on the agenda today of our government. So we feel secure knowing that it’s not something that’s been left to us solely, but it is a matter that both the regulator and stakeholders on the government side are still working, but also the operator of the transmission grid. So that’s point number one. Now regarding the question of how much money we are going to be making or not making on conventional energy. Like I said before, quarter one has been specific.

It was specific, so there’s been some coincidences resulting in profitability on coal assets and on the EBITDA level it was noted. But it’s very difficult to forecast such non standard quarters in the future, right? So like I said, already we are trying to actively respond and have the preparedness to make sure that in every area of our operations we can cope with volatility in the market. Let me just add perhaps one more thing. It’s hard to assess and to base your conclusions on individual results at a certain point in time because we’re looking at the whole idea of how these coal assets are going to be operating in the long term like ten years or twenty years perspective.

So seeing that in a specific quarter there is a positive deviation or even in the scale of one year, well it’s not enough. We need to look at how these acids are going to perform over you know a dozen years for example. So these individual peaks shall we say are not perhaps a good enough reason to assess them as long term a positive power generator, right, or cash flow generator. So I think we should, you know, bear that in mind. It’s about a strategic approach and seeing these assets in the long term system.

Short term results should not really be ignited such a discussion. Hello. ESB News here. I wanted to ask if you sustain the opinion that the CapEx in 2025 from SCIO will grow without Baltica two. I know that the outlay in the first quarter was lower than planned.

Thank you. Now for the first quarter, I’ve already mentioned when we spoke about investment outlay. Quarter is a relatively short period of time. The decreases resulted from things such as the timetables of settlements, etcetera. We spoke about the cash perspective.

It seems that what was, said during the previous conference is remains true. The increase excluding Baltica will be up to 10 and I think that’s something that we can keep. Thank you very much. At the front, we have a question. Good morning, WNP.

I wanted to ask briefly about heat and auctions. What is the current level you’re showing the gas investments. What is the exact date, the planned date of, you know, abandoning coal in the heat industry? That’s one thing. And I would like to say I would like to know more about auctions.

The season’s quite rich in the power market this year. So the two and two point two gigabytes contracted for the auction in the first semester, you said how much coal was inside that? You said most of this was coal, but how much exactly? And then how much coal power are you going to submit for the supplementary auction this year for 2 twenties 2026. And what is the portfolio of gas project for the supplementary auction?

And then what is the portfolio the gas portfolio for the main auction in December. That’s a lot, but this is the characteristics of the season. Thank you. Thank you very much. Now regarding our auction strategy for this year and the subsequent years, I will give you the details right now.

That was a joke. Well, got some scared. That’s one of the components that we’re looking to work in inside our office is and I think that we’re being quite efficient in doing so. So perhaps, let me make reference more to what has happened and less reference to what’s going to happen. So regarding the 2.2 gigabytes that have been contracted, 2.1 is from coal, not point one is DSR and our mines.

So our assets, all of them, those are like I said units from our all of our coal power plants. This should be publicly available but a big picture mostly shows you that we have used to the maximum potential capacity what has been offered by BSE in terms of the support mechanism for coal energy for this year. To those that can participate, our installed capacity is significantly larger. Those are the units that could take part in the supplementary action auction. So that’s point one.

Now, the actual intense season and I don’t think we’ve had a year before where where there would be so many action auctions not just in the power market but we also take part in auction auctions for the generation. So actually, I don’t think there isn’t a quarter or even perhaps a month, without one. Then yes, we’re there. For supplementary auction twenty twenty six, we are currently analyzing this and again, and as much as possible, we will want to take advantage of the fact that the system has been made so as to keep the profitability for conventional energy. And we are hoping that we can repeat the success that we had with supplementary auctions for the second half of twenty twenty five.

Actually, today, we are devoting quite a lot of time for discussions and analysis for the extra auctions in June, July this year. It’s a very interesting topic and I think that we will be able to participate in this auction with quite significant volumes. We are preparing some projects, and some of them have been presented on the list published by PSC, the list of entities that have, submitted their applications for connection to the grid. We are trying to maintain some flexibility here as to our strategy for the main auction and the extra auction because they are somehow interlinked with one another the extra one has some difficulties resulting from the timetable that leaves us half a year less to implement the project. The regime of the extra auction will be the same as the main auction from December 2024, so the year of supply the 01/01/2029.

So the question arises to what extent we can implement oil projects we’re thinking of today in such a way that we can limit, the potential risk of failing their requirements, for the supply period. Justin Kim.

Unidentified Moderator, Conference Host/Moderator, PGE Group: But, yes, we will participate in the supplementary auction in, the third quarter, and yes, we will also participate in the main auction for nurse, supplies in 02/1930. That will be the auction in which we will attach the greatest importance to our new gas capacity. And as for the auction in December next year, that is still doubtful. I’m talking about the main auction in December 2025. We do not know the rules of the game regarding KWD, especially with respect to storage.

We know that the conditions for storage are very demanding in the supplementary auction, so it’s very difficult to make the project add up, given, the prices, going down. We, we will see how the situation develops. But the heat, is the second area where there are no reasons as of today for us to change our basic scenario by when we want to decarbonize. So the announced date remains in force. That is a very demanding deadline.

Obviously, we are trying to do as much as possible, But first, need to spend a lot of money in this area and that is not the major problem. But it is also the area which faces a number of other challenges. We are now investing, for example, in gas engines. We are talking about thirty, fifty, one hundred megawatts, while our total installed power is over two gigawatts in heat. Part of that has already been decarbonized, but we want to decarbonize a significant part.

So today, that is the first wave of investments that are relatively compact and easy to implement. We already see that what is ahead of us are very large investments like Chechnica that will require long preparation and long implementation. Derek Mazzek, president of Polska Grupa Nel Gatitsna at Chechnica, will tell you more on the occasion of official opening of this investment. And I think also there, you will get some information about our ambitions in heat and CapEx there. That is for the upcoming months and years.

Thank you. Thank you very much. We should wrap up if there are any other questions. One, maximum, two. Well, then I will have one final question.

When do you intend to start your nuclear project in Bohatov? Because in the press reports and in the announcements of your managers, there is this recurring theme of nuclear energy being the future for Bohatov. So what is the progress of work in this project? Thank you very much for this tricky question. Let me encode it first.

As for our engagement in analytical and preparatory work for regarding potential locations for the second site of nuclear energy in Poland, This work is at a very early stage. So as of today, we are definitely not talking about involvement of PGE in any construction of a nuclear power plant, because a) we are not designated to perform such activities b) it’s distant future and c, this is not on our agenda. So if, the announcements of those managers that you quoted, were unclear, I would like to clarify that we are having talks about preparatory work. Unlike in other projects, preparatory work for nuclear energy, that’s already a topic in itself. Some ten years ago, we had similar work done for the first location in Hochewo.

Now, Polsky Electrode Neonrova is the company responsible for this project. We can handle studies for other projects in nuclear energy. So we allocate time and money to studies in Dohatuf. So this is the kind of work we are beginning. In particular, concerning the interpretation of the information that has already been collected about the geological and geotechnical conditions around Beohatu.

We concluded an agreement with a consortium including GH and chief mining institutes, and they are supposed to prepare the first study on geological and geotectonic conditions in the vicinity of Dohatov. This is so called excluding studies. Information had been gathered since nineteen seventies and that should analysis of this information should confirm whether we should or should not exclude Beohatu as a potential location for this type of nuclear project. We follow the methodology of the International ATOM Agency stipulates carrying out some work that should be done before being able to say what a given location should be excluded from being considered as a potential location of a nuclear power plant. So we are doing this type of studies to make sure to what extent the declaration concerning possibility of building a nuclear power plant in Bohadrov is backed with facts.

You might know that together with the pack group and Konin, Some studies have already been carried out, and we have already conducted those first excluding studies. We participate in meetings, discussions, conferences on whether or not, new locations could be considered as possible locations for SMRs. This is a challenge because those SMRs are not there yet. Although we are increasingly able to define the nature of this small nuclear energy as not being very different from bigger scale nuclear energy plants. So maybe at some point we will be able to study our location in Turuv.

And, we are increasingly aware of, the type of questions we will have to ask our technical advisers, geologists, and other, technicians regarding the criteria that such a location should meet. The second criterion, to which we will pay increasing attention soon is water because that is the second, determining factor. Probably that is a very distant prospect who, when, how we’ll build nuclear power plants. We as Postgre Rupa and Ergatitschna dedicating our time to studies, analyses, and that is a completely different set of questions, a completely different discussion from the discussion on the shape of the business model and the proportions of those investing in nuclear power. Completely two different sets of discussion points.

Thank you very much, mister Savitsky. The last question. Very briefly, please give me one number. Revenues from repurchase of energy in the first quarter. Piotr?

I do not have the number here on me, but we will get back to you with the answer. Ladies and gentlemen, why is it important? Is that a question to a question? Well, I’ll be malicious in answering. Your competitors quote this number, so I wanted to know what it is in your company.

Right. Ladies and gentlemen, thank you very much for participating in our conference. Thank you, and see you at the next meeting.

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