WOOD Flash – Polish utilities: Polish capacity auctions to start on 15 November
The first capacity auction for 2021E deliveries is scheduled for 15 November. Poland decided to introduce the scheme, as did more EU members, to incentivise the construction of new units and the modernisation of old ones. The capacity mechanism is expected to stimulate investments in new generation to prevent potential power shortages after 2020E, when a significant part of the generation capacity is planned to be phased out. Approved by the European Commission in February, the law sidesteps the EU emission limits on dirty units participating in the capacity markets from 2025, after which support for eligible capacity providers will be largely limited to CHPs (which are exempt from the CO2 limits) and CCGTs. We expect the results of the auctions to be released three business days after the auction takes place, on 20 November. Currently, the total amount of the capacity support is not known; however, based on the energy minister’s previous comments, we expect the annual funds to reach c.PLN 3.8bn in 2021-23E. Allocated solely by eligible capacity, and assuming a c.PLN 11/MWh drop in baseload prices when payments commence in 2021E, we estimate that Tauron and Enea could have the most to gain on a per share basis, while PGE would become the largest absolute recipient of the capacity payments.ENEA is engaged in production of electricity and heat; trade in electricity; and distribution of electricity.
Energa SA is a Poland-based company engaged in the electric power sector. It produces and distributes the electric power and participates in the electric power market in Northern and Central Poland. It divides its business into seven segments: Electricity Distribution consists of electricity distribution conducted by subsidiaries; Renewable Energy invests in renewable energy sources and produces electricity through hydro, wind and bio-energy plans; Baseload Power Plant consists of manufacturing and investment activities in the area of conventional power plants, service and repair activities related to the generation of electricity; Combined Heat and Power (CHP) includes manufacturing activity of power plants and the heat distribution; Sales is engaged in lighting services, trading of electrical energy and customer service; Services provides accounting, human resources (HR) and payroll services, among others; Other includes hotel and training centers, and transportation services.
PGE Polska Grupa Energetyczna is an electricity company based in Poland. Co. is engaged in the generation and selling of electricity. Co. is a predominant power producer and supplier in Poland and a major heat and power sector company in Central and Eastern Europe. Co. supplies over 5 million households, businesses and institutions through a combination of its own fuel resources (lignite), power generation and final distribution networks. Co.'s activities focus on the following areas: Conventional Power Generation, Renewable Power Generation, Nuclear Power Generation, Wholesale, Distribution and Retail. Co. has 12.2 GW of installed generation capacity.
Tauron Polska Energia is engaged in the generation, transmission, distribution, and sale of electricity and heat in Poland. Co. generates electricity from various conventional and renewable energy sources, including hard coal, lignite, natural gas, biomass, wind, solar, and hydro power. It is also involved in quarrying, crushing, and breaking of limestone; quarrying of stone for the construction industry; mining of hard coal; trading in electricity; and production of technical gases. In addition, Co. engages in the repair and maintenance of machinery and electrical equipment; electrical installations; and construction of power lines.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
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