Counteracting climate change

In relation to the assumptions and objectives defined in the strategy adopted by the Management Board of PGE SA and published in October 2020, the Group continues its efforts to reshape its power generation portfolio towards low- and zero-carbon sources. The effects of the actions taken are already visible, and the positive trend related to the reduction of emissions will continue in the coming years.

As the Polish leader of sustainable energy transition towards environmentally friendly energy, PGE commits to reducing its impact on the environment through the following:

• reducing the carbon footprint of our generation capacities by changing technology, expanding the renewables portfolio and enabling customers of the Group to participate in the transition,
• increasing the use of renewables and reducing the carbon footprint of the portfolio,

• developing a circular economy,
• achieving climate neutrality by 2050 at the latest.

The development projects currently underway have already contributed to a steady reduction in our net total average carbon footprint.

Net average CO₂ emissions of PGE power generation units (t/MWh), including heat generation

Simultaneously with the implementation of the new strategy of PGE Group, decarbonisation of power generation units will be accelerated. As a result, by 2030 PGE will have contributed to reducing CO₂ emissions by 120 million tons.

PGE Group’s road to climate neutrality.

PGE Group’s impact on climate is overseen personally by Wojciech Dąbrowski, President of the Management Board of PGE Polska Grupa Energetyczna.

The applied and planned solutions are adapted to the specific profile of PGE Group companies. Conducting its operations and planning new initiatives, each of them treats the reduction of its impact on the environment and climate as a priority. In 2021, a team of internal experts was appointed to calculate the carbon footprint of PGE Group in all three scopes. The results will be presented in the non-financial statement for 2021.

Renewable assets are a key element of the ongoing energy transition, leading to a reduction in carbon dioxide emissions into the atmosphere and thus increasing the share of renewable energy sources in the National Power System.

PGE Group’s long-term strategic objective is to provide its customers with energy generated from renewable sources by 2050, which will be possible through the implementation of the following:

• offshore program

• PV program

• other renewables investment projects (including onshore)

In 2020, the renewables portfolio was expanded by nearly 140 MW, mainly in the form of wind assets, but also by four one-megawatt photovoltaic installations in the Lubelskie, Podkarpackie and Lubuskie provinces. In total, PGE Group already has over 1.1 GW of installed renewables capacity, of which nearly 700 MW comes from wind farms.

The implementation of RES projects will contribute to the diversification of PGE Group’s fuel mix, an increase in installed capacity in renewable energy sources, and thus the implementation of the EU climate policy.

PGE Group is running a PV development program with the strategic objective of 3 GW of solar capacity by 2030, reinforcing PGE Group’s leading position in photovoltaics in Poland. In 2020, PGE Energia Odnawialna commissioned four one-megawatt photovoltaic farms: PV Lesko, PV Bliskowice, PV Lutol 1 and PV Lutol 2.

As part of PGE Group’s PV development program, preparatory works are underway for the first stage of the construction of photovoltaic farms on the premises of the Bełchatów power plant. Eventually, by the end of 2025, PGE will have built installations with a total capacity of over 500 MW in the Bełchatów area.

PGE Group is running an offshore wind farm program that aims to reach 2.5 GW in offshore wind assets by 2030 in a strategic partnership with global sector leader Ørsted, based out of Denmark. The construction of the Baltica 2 and Baltica 3 farms will mark the beginning of PGE Group’s development the offshore wind. Another offshore wind farm, Baltica 1, with a capacity of 0.9 GW, is to be commissioned after 2030. Taking into account the scale of planned investments, PGE Group plans to develop its potential to independently operate and maintain offshore wind farms.

In the second quarter of 2020, PGE finished the construction of two onshore wind farms (Karnice II and Rybice/Starza) with a total combined rated capacity of 97 MW. It was the only project that PGE was able to execute after the enactment of the so-called Distance Act. PGE’s victory in a RES auction ensured the stability of the installation’s revenue and its economic viability. The wind turbines built in this project are located in the Zachodniopomorskie province.

PGE acquired Skoczykłody, an operational wind farm located in the Łódzkie voivodship, with a capacity equal to 36 MW. The Skoczykłody wind farm is a modern installation built at the end of 2015 by Eco Power, a Wento company. It consists of 12 three-megawatt turbines. The efficiency of the farm reaches nearly 32% and the annual generation is close to 100 GWh.

Another project supporting the development of renewable energy sources was the commissioning of Poland’s first electricity storage facility using Tesla Powerpack modules in Rzepedź, Podkarpackie voivodship. The installation was designed to support the reliability of the local distribution network. The container-based energy storage facility was built under the Innovative Network Services project.

PGE Group’s new business strategy establishes low- and zero-carbon objectives also in the area of heat generation.

As the leader of the heat market in Poland, PGE Energia Ciepła also wants to be the leader of the heating-sector transition. The company is replacing coal-fired sources with new low-emission sources fired with gas or oil. The company is building new generation units characterised by greater operational flexibility and reliability.

On-going investment projects include:

• construction of new gas-fired cogeneration plants – Siechnice, Bydgoszcz, Kielce, Zgierz. Other locations – Gdynia, Gdańsk, Kraków, Rzeszów – are at the stage of preparatory works,

• construction of a new reserve and peak load boiler facility with a capacity of 130 MW at the Wybrzeże branch in Gdańsk; it will consist of oil/gas-fired and electrode boilers supplied with electricity,

• major modernisation of a gas turbine in Zielona Góra.

Investment projects with a longer time horizon, i.e. programs for the development of the existing generation units in Kraków, Gdańsk and Wrocław, are also at the conceptual stage. Decisions on their implementation will be taken by 2030. The development projects under analysis provide for the use of a hydrogen-ready technology allowing co-firing of hydrogen, which in the long term offers an opportunity to significantly reduce CO2 emissions in cogeneration systems.

PGE Group conducts systematic activities aimed at reducing greenhouse gas emissions. Specific emissions of carbon dioxide are being systematically reduced. This is the result of asset modernisation and development investments. Each year high capital expenditures are allocated for this purpose. Among other things, combustion processes are being optimised and solutions are being introduced to improve generation efficiency, increase effectiveness of fuel and raw material use and reduce energy intensity of generation processes and auxiliary purposes.

The Bełchatów power plant is a significant point source of greenhouse gas emissions. This is due to the fact that it is the largest unit in Poland and in the world generating electricity based on the combustion of lignite, which causes the accumulation of emissions in one location and their significant absolute values. It should be emphasised that in 2020 the Bełchatów plant reduced its CO₂ emissions by 15% compared to those in 2012. In this period, CO₂ emissions decreased by approximately 5 million tonnes.

The implementation of projects providing for the combustion of natural gas as a transitional fuel supports the transition towards climate neutrality. The construction of two new CCGT units at the Dolna Odra plant is a project of strategic importance for the Polish economy and at the same time important from the perspective of lowering the costs of energy transition. The average CO₂ emission values of the new units are more than twice lower than the current average emission values for power generation in the National Power System (NPS). This means that the new units will result in a reduction of CO₂ emissions from energy production in the NPS by approximately 2-3 million tonnes per year.

Depending on the location, the modernisation programs cover different scopes of adaptation works. Besides those concerning adaptation to the requirements of the BAT Conclusions, it is possible to distinguish modernisation projects that had a positive impact on the efficiency of generation and thus on energy efficiency. In 2020, the modernisation of units 1-3 at the Turów plant was completed. In addition to adaptation to the indicated emission parameters, an improvement in electricity generation efficiency of approximately 2% was achieved for each unit. In the case of the Bełchatów and Turów lignite mines, the sources of CO2 emissions are related to operational activities and concern mainly transport and fugitive emissions. Both branches ensure that a rational transport policy is pursued on their premises and with regard to business trips and employee commuting.

The majority of investments in the area of electricity distribution in 2020 was related to the modernisation and development of the medium- and low-voltage electricity network and the construction of transformer stations. These investments will allow an increase in the connection capacity of the distribution network, including for renewable energy sources, as well as an improvement in electricity outage rates and a further reduction of grid losses. The energy efficiency of electricity equipment is increased by replacing transformers and purchasing metering equipment, including modern electricity meters. Renewable energy sources constitute an important element of sustainable development bringing about measurable economic and ecological effects. In 2020, 157,000 renewable energy micro-installations were connected to the PGE Dystrybucja network, which was over two and a half times more than in 2019 and over 8 times more than in 2018. The installed capacity is almost 950 MW, which is almost three times more than in 2019, and almost nine times more than in 2018.