Investment and restructuring potential

The TAURON Group is conducting a broad investment program in each of its Lines of Business. The integrated structure and the full value chain: from extraction and supply of fuel, through electricity and heat generation, distribution, up to the supply to the end customers, allows for optimizing its investment and operating activities.

TAURON’s investment projects are an important element of ensuring Poland’s energy security. The Group allocates annually over PLN 3 billion per annum for capital expenditures, most of which are investments in the distribution grids.

 

In the short term, the Group will continue its investments in the expansion and modernization of the electricity distribution grid, will complete its investments in new generating units: the CCGT unit in Stalowa Wola and the 910 MW unit in Jaworzno and will complete its strategic investment projects in the coal mines: deepening of the shaft at Janina Coal Mine, construction of the shaft at Sobieski Coal Mine.

Within the time frame covered by the Strategy, TAURON is planning to decommission obsolete generating units. 120 MW units will be decommissioned by 2021, and 200 MW units will be decommissioned in 2025-2030. The investment effort will be directed to the renewable sources. The TAURON Group’s aspiration is to have additional 900 MW of capacity in wind based generation assets and 300 MW in photovoltaic capacity by 2025. At the same time, an engagement in the development of off‑shore wind farms is assumed.

In addition to the investment projects, the TAURON Group is also implementing initiatives aimed at optimizing the Group’s costs, including the Efficiency Improvement Program, whose total effect in the 2016-2018 period exceeded the initial assumptions and amounted to more than PLN 1.7 billion. Further activities aimed at improving the operational efficiency of the Group’s core operations are the Strategic Initiatives, whose total effect in the 2017-2020 period is estimated to be worth PLN 3.4 billion, including PLN 1.2 billion of the cumulative impact on EBITDA.

In the medium and long term, TAURON is planning to further change its energy mix. Successive tightening of the environmental and pro-climatic requirements, combined with the obsolete generation fleet, provides room for the construction of new generating units in renewable and low-emission technologies, as well as for significant changes to the distribution grids. The need to expand and modernize the distribution grid due to the development of distributed (dispersed) power generation is well recognized. In the Strategic Directions Update, the TAURON Group placed a strong emphasis on the development of low- and zero-emission sources. According to the assumptions, in 2030, due to the decommissioning of the obsolete units and new investments, low- and zero-emission assets will account for more than 65% of the TAURON Group’s installed capacity. In this respect, the Group’s restructuring potential is very large, and the assumed changes to the production mix will require new competences.

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