Conventional Generation

This segment includes lignite mining and generation of electricity in conventional sources.

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* managerial perspective.

The main source of revenue in the Conventional Generation segment is revenue from the sale of electricity on the wholesale market, based on electricity prices that are shaped by supply and demand mechanisms, taking into account the variable costs of generation.

At the same time, the segment’s key cost items, given their size and volatility, and thus their impact on operating results, are the cost of production fuels, mainly hard coal and natural gas, as well as fees for CO2 emissions. Lignite-based production, which is of key significance for the Group, is based on own mines, therefore its cost is relatively stable and reflected mainly in fixed-cost items, i.e. personnel costs, third-party services and depreciation.

A significant item in the segment’s revenue constituted revenues from the provision of regulatory system services based on an agreement with PSE S.A. This revenue is in parallel to revenue generated on the electricity market and is related to the need to ensure stable operations for the NPS. Regulatory system services are provided by power plants of PGE GiEK, including Rybnik power plant.

In addition, this segment generates revenues from sales of heat produced both at industrial plants and at the Szczecin CHP plant and Pomorzany CHP plant which form part of ZEDO.


In the segment of Conventional Generation of PGE Group operates the company PGE GiEK S.A. based   in Bełchatów. In the reporting period, i.e. as at December 31, 2020, the company consisted of 7 branches located on the area of five voivodships.

Conventional Generation segment consists of: 2 lignite mines (Bełchatów and Turów), 5 conventional power plants (Bełchatów, Turów, Opole, Rybnik, Dolna Odra complex including power plant and 2 CHPs). Conventional Generation is the leader of lignite mining (its share in the extraction market of this raw material accounting for approx. 90% of domestic extraction), it is also the largest generator of electricity as it generates approx. 40% of domestic gross electricity production.

Main assets of the Conventional Generation segment

Conventional Generation segment consists of: 2 lignite mines, 5 conventional power plants and 2 CHPs. The generation is based on lignite extracted from mines owned by the company as well as hard coal and biomass.


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Installed capacity and production in Conventional Generation segment

Main fuel types Annual electricity generation (TWh)  Annual heat generation (TJ) Installed capacity (MWe) Installed capacity (MWt)
2020 2019 2020 2019 2020 2020
Hard coal 16.70 15.18 2.39 2.42 6,744 584
Lignite 29.72 32.12 2.66 2.65 6,465 593
Biomass 0.33 0.31 0.36 0.54 76 162
TOTAL 46.75 47.61 5.41 5.61 13,285 1,339
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Lignite mining

Lignite deposit reserves are determined based on a reserves inventory maintained in the reserves register for a given year up to February 28 as at December 31 of a preceding year (art. 101 p. 3 of the Geological and Mining Act). In the table below are presented lignite resources data as at the end of 2020 and lignite output in 2020.

Lode Resources – as at the end of 2020 Output in 2020
(Mg million) (Mg million)
Bełchatów – Field Bełchatów Industrial 17.00 2.39
Bełchatów – Field Bełchatów Industrial 593.19 32.51
Turów Industrial 279.78 5.04
TOTAL Industrial 889.97 39.94

Key financial figures

[PLN m] 2020 2019
Revenue from sales: 25,251 19,245
EBIT -647 -7,109
EBITDA 1,725 2,880
Capital expenditures 2,372 4,018

Key factors for the results of the segment

  • Lower electricity production volume in PGE GiEK by 0.9 TWh due to lower degree of use of units by TSO resulting from decreased demand in NPS and higher generation from RES.
  • Increase in electricity sales prices due to realisation of contracts concluded in 2019.
  • Higher result on optimisation of electricity portfolio due to higher volume of electricity trading by 6.6 TWh, with higher margin realized on electricity trading.
  • Higher revenues from ancillary control services, mainly from the Operational Capacity Reserve („ORM”) in Opole power plant and Rybnik power plant due to lower utilization of those generating units.
  • Higher fuel consumption costs mainly hard coal, due to higher generation of new units no. 5 and 6 at Opole power plant.
  • Higher CO2 costs as a result of higher price of allowances and lower allocation of allowances granted free of charge. The above effect was reduced as a result of lower emissions of CO2 due to lower electricity production.
  • Lower personnel expenses due to a lower level of the holiday leave provision and a lower level of employment.

Capital expenditures

Capital expenditures incurred in Conventional Generation segment in 2020 and 2019

PLN million 2020 2019 % change
Investments in generating capacities, including: 2,114 3,398 -38%
  • Development
796 1,665 -52%
  • Modernisation and replacement
1,318 1,733 -24%
Other 113 180 -37%
TOTAL 2,227 3,578 -38%
Capitalised costs of overburden removal in mines 145 440 -67%
TOTAL with capitalized costs of overburden removal 2,372 4,018 -41%

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