Direction climate neutrality

PGE was the first company in the power industry in Poland to announce a business strategy with a transition plan aiming at the Group’s climate neutrality in 2050. Implementing the goals and assumptions defined in the strategy adopted by the Management Board of PGE S.A. and published in October 2020, the Group is reconstructing its generation portfolio towards low- and zero-emission sources. The effects related to emission reductions will become visible as more investments are commissioned.

The strategy of the PGE Capital Group until 2030 with an outlook until 2050

The PGE Group’s approach to managing the organisation’s impact on the economy, the environment and people is an integral part of the Group’s business strategy, which focuses on the energy transition, decarbonisation of power generation and climate neutrality. Announced on 19 October 2020, the strategy sets out a concrete plan for a sustainable transformation of the PGE Group towards low- and zero-carbon power generation

The business strategy of the PGE Group is a response to the profound changes taking place in the energy sector in recent years and to the expectations of society, which to a large extent determine the directions of development for the whole industry. The PGE Group is the leader of transformation and modernisation of the energy sector in Poland; it supports the development of a market environment conducive to the energy transition. The transformation of the PGE Group will be carried out in a sustainable manner, in dialogue with social partners. PGE is aware of the impact of the Group’s operations on the environment – in the social, economic and environmental dimensions. Its activities are oriented towards maximising added value for all stakeholders.

Sustainable transformation of the PGE Group

The key development directions and activity reduction areas

The PGE Group’s key development areas will include offshore and onshore wind energy, photovoltaics, grid infrastructure, low-emission heat generation and modern energy sector services. Areas where operations will be discontinued include coal- and lignite-based power generation, coal trading and non-core support activities.

Mission and vision

The mission of the PGE Group is to provide energy for a secure future. According to its long-term vision, PGE is becoming the leader of a sustainable energy transition in Poland. The Group’s vision translates into three strategic priorities:

• environmentally friendly energy generation,
• the provision of modern energy services,
• the efficient and effective functioning of the Group.

Strategic priorities of the PGE Group

Activities of the PGE Group enhancing its positive environmental impact

We increase the use of reneable sources

We reduce our portfolio’s emissions

We implement circular economy

As the leader in the national energy transition, the PGE Group pledges to reduce its environmental impact by achieving climate neutrality by 2050. A permanent reduction of emissions is planned through changes in generation technologies, expansion of the RES portfolio and enabling customers to participate in energy transformation thanks to attractive product offers. By 2030, the share of low- and zero-carbon sources in the generation portfolio should be around 85 percent, and RES should account for around 50 percent of generated energy.

PGE Group’s aspirations until 2030

¹Assuming carve-out of the coal portfolio from the PGE Group

By 2050, the PGE Group plans to achieve climate neutrality and provide its customers with 100 percent renewable energy

GHG emission reduction targets for Scope 1 have also been set, which are:

• 80 percent reduction in emissions by 2030 (relative to 2020 emissions),
• 100 percent reduction in emissions by 2050 (relative to 2020 emissions).

In addition, the strategy sets targets for increasing the waste recycling rate (>65 percent by 2035) and reducing the volume of landfilled waste (10 percent by 2035).

Aspirations of the PGE Group

The PGE Group is ready to carry out sector transformation processes and prepare the conventional base of the power generation system to operate under a new ownership structure. The PGE Group will pioneer the development and operation of offshore wind energy systems. In 2030, the capacity of PGE offshore wind farms (OWF) in the Baltic should reach 2.5 GW, and – as a result of the preparation of further projects in new areas – it should exceed 6.5 GW in 2040. At the same time, the programme for the construction of onshore wind and photovoltaic (PV) capacity will continue in the coming years, with a planned increase in new capacity of an additional 1 GW and more than 3 GW respectively by 2030. In the segment of Heat Generation, the Group plans to transform its system heat sources towards low- and zero-emission ones (by 2030 their share in heat generation should be 100 percent) and simultaneously to promote the connection of individual heat sources to the grid or their replacement with environmentally friendly ones. An important role in the energy transition will be played by the implementation of circular economy principles in all areas and the minimisation of environmental impact.

Modern energy services

The foundation of the energy transformation is the network infrastructure and partnerships with customers. The Distribution segment will improve the energy supply quality parameters (reduction of energy supply interruptions by 8 percent in large cities and by 50 percent in other areas by 2025) as well as the efficiency, transparency and cost-effectiveness of connection processes. In order to fully utilise the potential of distributed sources and ensure safe operation of the system, it is necessary to modernise the grid and build energy storage facilities (plans provide for at least 800 MW by 2030). In order to achieve these goals, financial stability and the development of support in the DSO regulation model are required to guarantee the achievement of these goals, which should translate into an expected increase in free cash flow of approximately PLN 0.7 billion by 2030. The PGE Group wishes to maintain the highest customer satisfaction level in the market, resulting from the quality and range of energy services offered. The activities planned in this respect include the development of professional energy services and the integration of channels dedicated to contact with customers as well as sales of products and services.

The Group plans to build additional value by ensuring customers’ active participation in the energy transition by offering them, among other things, renewable energy installations and access to energy, capacity and system services markets (plans provide for 1 GW of capacity in market services). These measures are expected to contribute to an increase in the EBITDA of the PGE Group’s retail companies by around 25 percent by 2030 compared to the 2019 base.

Efficient and effective organisation

To meet the challenges of the energy transition and competition, the PGE Capital Group will continue to improve its operating effectiveness. The business profile will be evolving towards less labour-intensive operations and changes in core competencies. The lever for improving the Group’s efficiency will be the effective area of ICT (Information and Communication Technologies), ensuring the automation and digitisation of business processes. Demographic trends will affect the Group’s employment levels and employee career paths. The assumed decrease in employment should be around 15 percent in 2030 and 50 percent in 2050 compared to the level in 2019. This will require effective implementation of projects in the area of human capital management. Human resources development will be oriented towards the areas of renewable energy and modern energy services.

Investments

The PGE Group’s investments will focus on renewable energy generation, the transformation of heat generation and the network infrastructure. The Group will not make new investments in (either generation or extraction) coal and lignite assets, and final investment decisions concerning the construction of gas sources will be taken no later than in 2025. The total planned capital expenditures in the years 2021-2030 will amount to approximately PLN 75 billion, of which approximately 50 percent will be allocated to the development of renewable energy sources (offshore and onshore wind farms, photovoltaics). Another important area of capital expenditures will be regulated activities, including the grid infrastructure and low-carbon co-generation sources.

PGE Group investments until 2050

Decarbonisation roadmap

We will achieve sustainable decarbonisation by changing generation technologies, expanding renewable capacity and enabling customers to participate in the energy transition through attractive product offerings. Systematically moving along the decarbonisation path set in 2020, we have moved closer to our goal in the past year.

PGE Group’s path to climate neutrality

²Investments in new deposits (Złoczew, Gubin) is decision of the new entity
³Assuming carve-out of the coal portfolio from the PGE Group

PGE Group’s steps towards climate neutrality by 2050

Strategic objectives towards zero carbon

2.5 GW capacity by 2030
>6.5 GW capacity by 2040

capacities of offshore wind farms

1.5 GW capacity by 2030

new capacity in onshore wind farms

3 GW capacity by 2030

PV capacities

2×671 MW Gryfino power plant by 2024
871 MW Rybnik power plant by 2027

CCGT power plants

Up to 80% in 2040

share of zero- and low-emission sources in production of heat

0.8 GW by 2030

energy storage

2.8 GW by 2040

nuclear capacities

PGE a climate-conscious company

In addition, in 2023, the PGE Group once again took part in an international CDP study on the company’s environmental impact, once again improving its rating, which currently ranks at the level “B”.

CDP is an organisation that runs a global disclosure system for investors, companies, cities and regions to manage their environmental impacts. It is the primary environmental reporting standard and data set for the environmental performance of corporations and cities.