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Coal procurement and supply

 

Coal is purchased mostly under contracts executed in advance to ensure that strategic coal stocks are maintained above the level required by the Regulation of the Minister of Economy. In addition, coal transport services are purchased in accordance with the Public Procurement Law and in good time before the delivery is due. Counterparties’ performance of contracts with the PGNiG Group deteriorated significantly in the third and fourth quarter of 2017, giving rise to a major risk of breach of the required level of emergency stocks of coal at the end of 2017 and in subsequent months of 2018.

Support for cogeneration

 

The system of cogeneration support in the form of certificates of origin will continue only until the end of 2018. In December 2017, after carrying out analyses in consultation with industry organisations, the Ministry of Energy announced that it adopted the key assumptions for the new support system.

If the announced regulations are adopted, after 2018 the support for the existing cogeneration units will be reduced or withdrawn, in particular for the existing coal-fired units if they fail to demonstrate that in their case cogeneration is unprofitable. In the case of cogeneration units with a capacity of more than 300 MWe (gross), meeting the criteria for support will be additionally reviewed by the European Commission, as part of the individual notification procedure. What may partially offset the potential lack of revenue from the support system for high-efficiency cogeneration units is that cogeneration units will be eligible to participate in the capacity market, with first revenue streams from the sale of capacity expected in 2021. However, the launch of the capacity market in Poland is subject to approval by the European Commission.

More stringent gas and dust emission standards

 

In order to meet the emission requirements under the directive on industrial emissions (IED), the generating units of the PGNiG TERMIKA Group have been upgraded in recent years or are currently relying on flexibilities until they are altered or new units are built. However, following the issue of BAT Conclusions for large combustion plants, the PGNiG Group companies are obliged to upgrade their existing generating units to meet the stricter emission requirements that will become applicable to them as of August 17th 2021.