Strategy

Strategic Development Plan and Long-Term Strategic Investments Plan of the Energa Group for 2024-2030 

On 6 December this year, the Supervisory Board of Energa S.A. (the “Company”) passed resolutions approving the following documents:

– Strategic Development Plan of the Energa Group for 2024-2030 (“SDP”),

– Long-Term Strategic Investments Plan of the Energa Group for 2024-2030 (“LSIP”), which is a forecast document for the SDP reflecting the current assumptions regarding investments in the Energa Group (“Group”).

SDP replaces the Strategic Development Plan of the Energa Group for 2021-2030, while LSIP replaces the Long-Term Strategic Investments Plan of the Energa Group for 2021-2030.

Updating the Strategic Development Plan (SDP) and Long-Term Strategic Investments Plan (LSIP) is necessary due to the changes in market and regulatory environments that have occurred in recent years, which affect the electricity market in Poland. Evolving technology, digitization pressure, taxonomy, business models redefining the energy sector, business and social awareness in line with ESG, development of energy efficiency areas, signing of the Charter for the Efficient Transformation, diversification of generation sources and the decarbonization process are the main challenges affecting the Group’s long-term development. In order to remain competitive while committing to protecting the environment and pursuing sustainable development, the Group has to align its business profile and asset structure with the new challenges as well as conduct energy transformation, mainly by continuing the decarbonization process. In addition, the SDP and LSIP reflect the changes made to the “ORLEN Capital Group strategy by 2030”, which ORLEN S.A. – the Company’s strategic shareholder – announced in February 2023.

Energa Group’s main strategic goals for the years 2024-2030, as set out in the SDP, include:

• in the Distribution business:

1. development of HV, MV, LV grids necessary for connecting renewable energy sources (“RES”), energy storage and electromobility, which will translate into an increase in the installed capacity of RES connected to the grid to approx. 13.2 GW by 2028,
2. expanding the grid to increase the potential for connecting electric vehicle charging stations,
3. increase in MV line cabling,
4. improving SAIDI and SAIFI indicators,
5. achieving 100% share of remote reading meters among customers starting from 2026,

• in the Generation business:

1. development of new RES capacities (both through own investments and mergers and acquisitions) – the Group plans to reach approx. 3.6 GW of installed RES capacity in 2030,
2. replacing coal fuel with low-carbon fuel (gas) by continuing the construction of combined cycle power plants (CCGT) in Grudziądz and Ostrołęka with a total installed capacity of approx. 1.3 GW,
3. reducing the share of coal assets in the installed capacity to 2% in 2030,
4. reducing CO2 emissions by at least 40% by 2030 compared to 2019,

• in the Sales business: the main strategic goal in this business line is to carry out an in-depth digitization and cost reduction program in order to increase EBITDA (earnings before interest, taxes, depreciation and amortization). The activities will include:

1. increasing the profitability of electricity sales,
2. increasing the ability to respond quickly to changes in the market environment by digitizing business processes and building a flexible process culture,
3. increasing the share of green energy in sales,
4. developing the lighting service with a focus on asset additions and upgrades,
5. developing energy flexibility services (DSR service, among others).

According to the LSIP, total expenditures on the Group’s core and ancillary investments planned for the years 2024-2030 will amount to approx. PLN 47.9 billion, of which approx. PLN 23.4 billion accounts for the Distribution Business Line, approx. PLN 22.8 billion for the Generation Business Line (of which approx. PLN 14.3 billion for RES-related investments and approx. PLN 3.2 billion for construction and maintenance of CCGT units in Grudziądz and Ostrołęka), approx. PLN 1.6 billion for the Sales Business Line and other services.

The implementation of such an ambitious investment plan is necessary to maintain the Group’s competitiveness in the medium and long term. The anticipated source of financing for the aforementioned investments is own funds generated by the Group as well as debt instruments. In order to achieve the full scale of funds necessary to implement the investments described in the LSIP, retention of profits in the Company will also be required, which means that the Company will not pay dividend. Additional support from ORLEN S.A. is also expected. All investment activities carried out by the Energa Group must meet the criteria of minimum investment attractiveness, compliance with ESG requirements and lack of risk of compromising the Group’s financial stability.

It is estimated that the achievement of the aforementioned SDP goals and the investments envisaged in the LSIP will result in a more than two-and-a-half-fold increase in consolidated EBITDA in 2030 as compared to 2022, which should consequently translate into an increase in the Company’s value for shareholders.