On Tuesday, the wholesale price of electricity on the TGE exchange reached its historical record. This is a consequence of the sharp increase in the prices of CO2 emission allowances. It turns out that the largest emitter in the country, instead of reducing it, produced this gas by 23 percent. more.
- Less downtime and commissioning of a new lignite-fired power plant unit in Turów increased CO2 emissions at PGE by leaps and bounds
- At the same time, the price of CO2 allowances is rising. In recent days, it is already scraping 70 euros per ton
- This translates into record wholesale electricity prices
- PGE estimates that CO2 prices will grow strongly in the coming years
- The PGE Group recorded a profit of PLN 561 million in the third quarter. However, this is the effect of selling CO2 hedging contracts for delivery in December and replacing them with those for delivery in March next year.
- More such information can be found on the main page of Onet.pl
As much as 17.9 million tons of CO2 was emitted by the PGE group in the third quarter – stated in the company’s financial report. Not only is it a historic record, it is also an issue was greater by as much as 22.8 percent. Every year, it follows from our calculations. A year ago, in the third quarter, the PGE group emitted 14.6 million tonnes, and two years ago – 14.4 million tonnes. Compared to the second quarter of this year. the issue increased by 0.9 percent.
The increase in emissions includes a consequence of the commissioning of a new lignite-fired unit in Turów. The installation meets all standards, but lignite-fired power plants emit the most carbon dioxide from all sources used in Poland. The block will send approximately 2.7 million tons of this gas annually into the air.
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This is accompanied by an increase in the prices of emission allowances, which are also breaking records. On Monday, prices approached EUR 70 per tonne and then only slightly decreased. A year ago, the price was just over EUR 27 per ton. At EUR 70, the quarterly cost of the issue may amount to EUR 1.2 billion in the PGE Group. In the third quarter of this year. PGE calculated it at as much as PLN 2.2 billion compared to PLN 1.4 billion a year ago in the same period. For the entire year, the group was awarded only 650,000. tons of free allowances.
And this is not the end, as PGE expects a further increase in emission prices. “Forecasts of the prices of CO2 emission allowances assume a sharp increase in 2023 in relation to 2022, the average annual decrease in 2024-2025 at the level of 6.5%. and the average annual increase in 2026-2029 at the level of 12.7%. For 2030, a slight decrease is expected in relation to 2029, and in the following years a stable increase by approx. 4%. annually until 2040 “- we read in the quarterly report.
This is followed by electricity prices and we cannot count on PGE’s information that they will be lower, or even that they will grow slowly. On Tuesday, the price of a megawatt hour of electricity the next day on the TGE exchange (TGEBase), increased to PLN 745.43 and this is a historic record.
We can still take comfort in the fact that it is more expensive in Europe, because gas prices and weak winds caused the prices to rise by leaps and bounds. But Poland’s advantage over other markets is diminishing. Lower prices are already in Lithuania, Latvia (EUR 135.77 per MWh) and Estonia (EUR 131.75).
Day-ahead energy prices in Europe
PGE’s temporary profits
Despite the rising prices of allowances, the PGE group recorded a profit of PLN 561 million in the third quarter, i.e. by 106%. higher than a year earlier and by 19 percent. higher on a two-year scale. However, this is more an effect of a financial transaction with instruments hedging the CO2 price than of real activity. PGE sold contracts for December delivery, and bought contracts for March next year.
“As a result of these operations, the group generated revenue of PLN 2,778 million arose as a result of the difference between the sale price of contracts with the delivery date in December 2021 and the historical purchase price of these contracts, “we read in the financial statements.
“The PGE Group estimates that the total result of the rollover of hedging transactions and the higher provision for the obligation to redeem EUAs resulted in an increase in the gross result as at September 30, 2021 by the amount of approximately PLN 712 million. This value will be included in the amount of the provision for the obligation to redeem the EUA in the fourth quarter of 2021, thus the EUA rollover transaction will not ultimately have an impact on the result for the entire year 2021“- added.
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In the third quarter net energy production in the PGE group increased by 23 percent. y / y to 17.6 TWh, and on a nine-month scale by 18 percent. The most, by as much as 26 percent. production of lignite-fired power plants increased y / y.
“Higher production in lignite-fired power plants (+ 4.9 TWh) is a consequence higher average load at the Turów Power Plant by 69 MW, i.e. 53 percent. and the Bełchatów Power Plant by 18 MW, i.e. 6 percent. In addition, Turów Power Plant units were under renovation for a shorter period of time by 2,871 hours. In 2021 production from the new unit No. 7 at the Turów Power Plant put into operation on May 14, 2021, amounted to 0.8 TWh“- stated in the report.
There were also shorter downtimes in the coal-fired Power Plant in Rybnik and the Power Plant in Opole. As a result, these power plants generated as much as 42 percent. more energy year on year in the third quarter.
RES power plants generated 0.5 TWh, or 22 percent. more year on year. However, only biomass power plants showed an increase, and it was as much as 200 percent.
“The lower production on wind farms results from worse wind conditions in the three quarters of 2021. The capacity utilization on wind farms in the three quarters of 2021 was on average 5 pp lower than in the corresponding period of the previous year” – comments the company’s management board.
The majority of EBITDA (operating result increased by depreciation) was generated by the PGE group on conventional energy – PLN 754 billion in the third quarter of this year. compared to PLN 484 billion a year ago. The group earned PLN 665 million on energy distribution compared to PLN 611 million a year ago, PLN 316 million on energy trading (PLN 299 million in Q3 2020) and PLN 214 million on renewable energy (PLN 115 million in Q3 2020) .