The Company’s development prospects

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The development outlook for Zespół Elektrociepłowni Wrocławskich KOGENERACJA S.A. and its subsidiary EC Zielona Góra S.A. is closely related to the implementation of the District Heating Strategy of the new business line PGE District Heating of PGE Polska Grupa Energetyczna S.A. (the ultimate parent).

Maintenance of high profitability and stable EBITDA remains on top of the agenda of KOGENERACJA S.A. and EC Zielona Góra S.A. as driver of the value of the two companies. This goal will be achieved by further optimisation of revenue streams of both companies, minimising variable costs, keeping fixed costs down, increasing the sales of heating-related and multi-energy services and asset optimisation. The Group’s performance will also be affected by the settlement of compensation for stranded costs at EC Zielona Góra S.A.. Taking into account the available forecasts of electricity prices, the compensation amounts received will be subject to a partial reimbursement in the future.

An increase in energy efficiency remains an important goal for the Group companies. The consistent upgrade of assets have a positive impact on the efficiency of production. As a result, in the following years, high reliability of production assets will be maintained to guarantee energy security for customers, as well as competitiveness of the Group’s products: heat and electricity. The key issue for the future of KOGENERACJA S.A. is the decision to build new facilities at the EC Czechnica, which should enter service before 1 January 2023. Currently, advanced analytical work is under way on this project, and an investment decision is expected to be taken by the end of 2018. The position of EC Zielona Góra S.A. is different. The company has modern production facilities (CCGT, and gas and oil boilers), which ensure that it will remain an environmentally friendly and reliable producer of heat and electricity also in the future. Currently, the Group also conducts analyses with regard to adaptation of its assets to the requirements of the BAT/BREF conclusions, which will come into force in 2021. After completion of the planned modernisations projects, the companies will comply with all the stringent norms in this area.

Both KOGENERACJA S.A. and EC Zielona Góra S.A. are leaders of the local heat markets and intend to remain heating companies of the first choice for heat buyers also in the future. Thanks to efficient flue gas desulphurisation and denitrification installations in Wrocław, KOGENERACJA S.A. is poised to remain an ecological producer of heat for the city's residents. Promoting network heat is an important part of the efforts to limit low emission sources and smog, thus contributing to the improvement of air quality in the region. In this respect, KOGENERACJA will continue to maintain partner relationships and work closely with local authorities and with the heat distributor. Joint activities will result in the annual connection of 40-50 MW to the heating network for new buyers, also thanks to financing under the KAWKA programme and the Integrated Territorial Investments (ITI). Similarly, EC Zielona Góra S.A., as the owner of the municipal heating network in Zielona Góra, intends to upgrade and expand its network in the following years. Both companies will invariably follow the overarching rule of responding to emerging challenges and taking advantage of development opportunities.

Safety of employees and contractors will be a priority for the Group. The goal is the same: “zero accidents”. In this area, activities will be continued to improve safety and increase employee involvement in building a safe work culture.

The positive involvement of KOGENERACJA S.A. and EC Zielona Góra S.A. in the life of the regions will not change. The Group companies will continue to engage in a partner dialogue with local communities and support sustainable development based on corporate social responsibility and the values of the entire PGE Group.

The Management Board of the Parent Company is convinced that the implementation of all the activities described above is a firm guarantee that the companies of KOGENERACJA Group will continue robust performance going forward as well.