PKN Orlen and PGE commence collaborating on off-shore

PGE Baltica, a company belonging to the Polska Grupa Energetyczna, and Baltic Power, controlled by PKN Orlen, have signed a letter of intent on the collaboration in off-shore wind farm projects. The agreement was concluded during this year’s Economic Congress in Krynica. It concerns sharing of experience, knowledge and information between the companies that will be constructing off-shore wind farms.

Keeping up with the global trends

Polish companies see global trends in renewable energy developments and do not want to be left behind. This is why Grupa PGE and Grupa ORLEN during the Economic Forum in Krynica have signed a letter of intent on the development of off-shore wind power sector. The Polish champions intend to jointly help in the growth of the off-shore wind power sector bearing in mind the positive impact this technology has on Poland’s economy, including maximisation of the share of Polish suppliers and contractors.

Plans for the construction of off-shore wind farms on the Polish Baltic Sea area as in 2018. Graphic by BiznesAlert.pl

Terms and conditions of collaboration

The collaboration defined in the Letter of Intent also provides for the information campaigns on the role of wind as an important source of energy and on promoting off-shore wind power in Poland and abroad. The document covers:

sharing of know-how/information or joint acquisition of data necessary for the construction of off-shore wind farms;
preparations for investments in the scope of maritime infrastructure and supply logistics including the assessment of the key availability parameters of Polish ports, the services they offer and readiness for supporting the construction of the future wind farms;
potential collaboration on the design and construction of the connection infrastructure in agreement with the transmission system operator;
coordination of actions aimed at meeting the requirements on delivery of materials and services in the off-shore wind power sector should such requirements be introduced by the provisions of the general law;
joint or coordinated activities aimed at maximising the Polish content of the off-shore wind power supply chain;
analyses of the possibilities to provide the operation, repair and maintenance services for the wind farms in operation on the Baltic sea or for the auxiliary infrastructure;
coordination of public relations activities targeted at the key stakeholder groups, including jointly delivered information and education campaigns on the significance of off-shore wind farm projects for the energy security of Poland and the benefits from implementing these projects in the economic, social and environmental dimensions;

PGE’s assessment – talks with four potential partners

“The goal of the initiated collaboration is to combine the potential of two national champions to deliver the investments of key importance for the energy security of Poland and a gradual transition to a low-emissions economy. We count on using the synergy effect to boost the dynamics of the process so that the energy from off-shore turbines feeds the Polish power system as soon as possible” – says Henryk Baranowski, CEO of PGE Polska Grupa Energetyczna.

Baranowski: By 2030 the share of RES in the Polish energy mix will grow to 27 percent

“Signing of the letter of intent with PKN ORLEN does not mean abandoning the off-shore programme model adopted by the PGE Group. We are continuing the partner selection process and according to plans intend to have it finalised by the end of this year” – says Monika Morawiecka, CEO of PGE Baltica.

Morawiecka: Offshore needs legal certainty

“We are at the last stage of the selection process. We have shortlisted four candidates. By the end of October perhaps we will be able to disclose the two invited to negotiations” – said CEO Baranowski.

As he added, PGE has not yet received the final proposals. The CEO insisted that the selection of the partner by the end of the year is possible. At the end of January, PGE has closed the first stage of selection of potential strategic partners willing to participate in the preparation, construction and operation of an off-shore project in the Baltic Sea. The request to participate in the project attracted thirteen potential partners. Ultimately PGE intends to sell to the strategic partner it shall select 50 percent of shares in the two special purpose vehicles responsible for the off-shore wind farm projects and then together with the partner implement them as joint ventures.

Orlen’s assessment – Talks with “double-digit number” of partners

“We wish to utilise the value of off-shore wind power sector for the development of the Polish economy. We are also keen on ensuring that the local communities gain from the projects implemented. We count on operating benefits such as optimisation of costs, network and technical solutions and maritime logistics. The partnership will also allow streamlining and reinforcing the communications, among others with joint talks with the non-governmental organisations and suppliers of key elements” – says Daniel Obajtek, CEO of PKN ORLEN.

“Wind farms make a perfect fit with the energy mix of PKN ORLEN. Generation of electricity from the wind farms will be balanced with generation from the flexible gas-fired sources” – said Jarosław Dybowski, Executive Director for Energy at PKN ORLEN.

Dybowski: We are seeking an experienced investor in off-shore

After signing the letter the CEO of the corporation has said that PKN Orlen was talking to a “double-digit number” of partners for the off-shore wind farms construction in the Baltic Sea project. “We are talking with a double-digit number of partners for the construction of off-shore wind farms project. They come from Europe but also from outside. We wish to select the partner before the end of the year” – CEO Obajtek told the journalists.

CEO Obajtek added that the costs of implementing such projects keep decreasing with every year, therefore, it is difficult to estimate the cost of the investment now. “The just signed letter of intent on the collaboration on the construction of off-shore wind farms in the Baltic Sea project between PKN Orlen and PGE is aimed at cost optimisation and intensification of work concerning, among others, the research, designing the connector networks and logistics” – stressed the CEO of Orlen.

Polish Development Fund’s (PFR) assessment

“The intention to collaborate on off-shore wind power expressed in the letter by the two biggest Polish power companies is in the opinion of the PFR one of the best examples of investments in the sustainable social and economic development of Poland” – says Paweł Borys, CEO of the Polish Development Fund.

Ultimately, both companies intend to implement the project together with an international industry giant having experience in the delivery of such investments. Both at the PGE and at PKN ORLEN procedures are progressing on the selection of strategic partners for participation in the preparation, construction and operation of licences on the Baltic Sea.

PGE’s potential

PGE Baltica, the company responsible for the off-shore programme at the Grupa Kapitałowa PGE, wishes to build turbines with a total capacity of 2.5 GW by 2030, giving it the leader’s position on the Polish off-shore power industry market. At present the company is coordinating three projects –Baltica 1 (EWB1) Wind Farm, Baltica 2 (EWB2) Wind Farm that in this January has received from the Polish Power Grid (PSE) the proposal for technical conditions of interconnection with the Polish National Power Grid for 1.5 GW and the Baltica 3 (EWB3) Wind Farm with a connection agreement with the PSE for 1 GW. All three companies have the location planning permits and currently, the procedure is in progress to obtain the environmental decisions for two of them – EWB2 and EWB3.

PKN Orlen’s potential

In turn, the company responsible for the off-shore wind power project at PKN ORLEN, the Baltic Power has commenced at the beginning of this year the environmental studies and wind conditions measurement at the area covered by its licence. The objective is to obtain the decision on environmental conditions and to determine the productivity of the off-shore wind farm with a planned capacity of 1.2 GW. The analysed construction of off-shore wind farms is one of the strategic growth directions of Grupa ORLEN for the nearest years. The company is one of the key electricity producers in Poland and its assets, including two CCGT units in Płock and Włocławek, provide a good source for balancing the wind farms in case of power scarcities.

Polska Grupa Energetyczna/PKN Orlen/Polish Press Agency/Bartłomiej Sawicki