Increase in the Share of Renewable Energy Sources and Decrease in Energy Prices
This is expected to result from the increase in the share of renewable energy sources in the mix and the development of technologies related to these sources, which leads to price declines on the spot market and lower valuation of futures contracts.
As the company wrote in a press release, this involves the risk of recognizing asset impairment losses in the financial statements for the first half of 2024.
Tauron Asset Impairment Tests
“(…) On July 16, 2024, the premises for conducting the asset impairment test procedure were identified (…) in connection with the update of the price assumptions of the so-called price paths in the scope of the forecasted prices of electricity, hard coal, natural gas and CO2 emission allowances for the coming years” – it was written in Tauron’s report.
It was explained that the update of the assumptions results from the increase in the share of renewable energy sources (RES) in the energy mix, which is associated with a simultaneous decrease in the importance of conventional sources fired with hard coal and lignite.
EU Climate and Energy Policy and Its Effects
“Moreover, the dynamic development of renewable energy sources and energy storage technologies determine a significant drop in the price level on the SPOT electricity market, which in turn has a direct impact on the lower valuation of futures contracts. The above-mentioned phenomena are observed both in Poland and in Europe and are the effect of the implementation of the European Union’s climate and energy policy, which is of a long-term nature,” it was explained.
“As a result of the above, the company identifies a risk related to the possibility of recognizing impairment losses on production assets in the consolidated and separate financial statements prepared as at June 30, 2024. The company will report the results of asset impairment tests in a separate current report,” it was announced on Tuesday.
Tauron’s Declarations of Clean Energy Aspirations
In recent weeks, Tauron representatives have declared that the company would like to provide its customers with 100 percent clean energy as early as 2040. In an interview with PAP in mid-June, CEO Grzegorz Lot emphasized that the energy transformation process in Poland is ongoing: the national power system shows a significant increase in installed capacity in renewable energy sources.
The company’s CEO reminded that until the nuclear power plants are launched, the units that stabilize the system and ensure its safety are coal-fired units. They maintain the stability of supplies during periods of lack of photovoltaic generation, which occur during morning and evening peaks in demand; they also ensure continuity of supplies in the event of fluctuations or lack of wind source generation.
The Role and Problems of Coal Blocks
At the same time, energy produced from renewable energy sources has priority in the network, so it is displacing coal-fired units from the system, especially smaller and older ones, which no longer operate as base units but only as supplementary units.
Asked about the paradox in which coal-fired units are needed to guarantee security of supply, and on the other hand there is no one to cover the costs of their operation, the head of Tauron stated that in the coming years disposable coal-fired capacity will be necessary in the system to guarantee the certainty of electricity supplies during low generation from RES.
Analysis of Scenarios for Coal Units
“Although no binding decisions have been made yet, we are analysing various scenarios, including one in which our 150 and 200 MW coal-fired units will be deemed unnecessary by the end of 2025. We must prepare for all eventualities. (…) If it is necessary to shut down generating units, we will provide jobs for the employees of these units,” declared Grzegorz Lot.
Currently, Tauron’s total installed capacity in its renewable energy sources is close to 700 megawatts – including 417 MW in wind farms, 133 MW in hydro, 56 MW in photovoltaic. The company is building wind farms with a total capacity of 164.9 MW, of which 121.5 MW will be put into operation this year, and photovoltaic farms with a capacity of 199 MW, of which 55 MW will be put into operation in the coming months.
Tauron’s Financial Achievements in Recent Years
In Q1 of this year, the Tauron Group generated PLN 531 million in net profit, and EBITDA – operating profit increased by depreciation and amortization and write-offs for non-financial assets – amounted to PLN 1.541 billion. A year earlier, in the same period, Tauron had PLN 1.036 billion in profit, and EBITDA in Q1 2023 amounted to PLN 2.230 billion.
In the whole of last year, the group’s net profit amounted to PLN 1.68 billion (the year before, the group recorded a net loss of PLN 134 million). In 2023, the company had PLN 6.14 billion in EBITDA and almost PLN 42.66 billion in revenues, and the operating profit amounted to PLN 3.4 billion. (PAP)
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