Coal Energy Renewables 29 May, 2019 10:00 am   

The green pivot of Tauron is to cost PLN 5-6 billion PLN (REPORT)

Tauron updated the strategy to respond to the challenges faced by the energy sector. As the company’s management emphasizes, in the face of the announced lack of support for coal, the corporation wants to develop zero- and low-emission sources. The energy transformation of Tauron is expected to cost about 5-6 billion PLN.

Reasons of the green pivot

– We have to follow megatrends. The strategy update comes from awareness of the process in effect of which our business and its environment are changing, especially decarbonization is becoming more and more important as well as EU climate policy. This is particularly important in the context of the increase of prices for CO2 emissions. This is not a new strategy. We need to increase our flexibility in responding to the challenges we face. That is why we decided to supplement it with additional directions – said Filip Grzegorczyk, President of Tauron.

He stressed that the harsher decarbonisation and limitation of support for conventional energy means the necessity of transformation towards zero- and low-emission sources. – Tauron is challenged by decisive restrictions on coal investments and restrictions on obtaining financing for capital groups with carbon assets. Hence our pivot to renewable energy – he stated.

New capacities in RES

– By 2025, an additional 900 MW will be built in onshore wind farms and 300 MW in photovoltaics. We are also considering investments in offshore wind farms – he added.

As a consequence, the energy mix of Tauron will change. – The low- and zero-emission Tauron assets are expected to rise from the current 10 percent to 28 percent in 2025 and to 66 percent in 2030. It is no secret that the indirect goal is to increase the confidence of financial institutions in our group and reduce emissions. This is a plan to increase the value of the Tauron Group, for example through the development of renewable energy – said the president of Tauron.

According to the Vice-President Jarosław Broda, the transformation is expected to cost about 5-6 billion zlotys. – The capital share of Tauron is to be around 20 percent. Renewable energy is being considered in various financial models – he said.

As he pointed out, the priorities of Tauron are the transformation of the energy mix, which is to allow the Group to change to a greener one, as well as to maintain financial stability and optimize the portfolio of capital investments. – We want to analyze our assets, such as shares in the company responsible for the construction of a nuclear power plant and the Stalowa Wola Heat and Power Plant, and find a partner who would be interested in acquiring such assets to achieve our goals – he said.

Pressure of the EU energy and climate policy

– Tauron must optimize the mining and heating assets base. We want to sell the Janina mine. We observe certain inevitable trends related to decarbonisation and the winter package as well as emission standards of 550g / KWh. As a consequence, the demand for coal will decrease. We are evaluating the possibility of disinvestment of one of the mining plants – said Kamil Kamiński, Vice President of Tauron.

He stressed that the company is considering the sale of Tauron Ciepło. – It will enable the Group’s debt ratio to improve. Our actions are guided by the fact that the funds released in this way will allow us to enter into businesses that will enable us to obtain higher returns on capital from other investments – he said.

“Jobs are not at stake”

Representatives of the Tauron Group assured that as a result of possible ownership changes, miners from the Janina mine will not lose their jobs. – Regardless of who will be the owner of the Janina mine, miners’ jobs are not threatened – emphasized President Filip Grzegorczyk.

When asked about what will happen to the employees of the mine Janina he said that at present Tauron will verify in business terms whether such a transaction makes sense. – If it makes sense, we will act in this direction. This is a working mining plant. Do not sow anxiety even in questions. While a working mine is being sold its employees are integral part of it – he said.

As he stressed, regardless of whether Tauron will still be the owner of the Janina mine, the market will need coal from this plant. – We need coal regardless of any ownership changes. Someone has to extract this coal, and coal miners extract it. Their jobs are absolutely safe, no matter who owns the mine – he added.