WOOD Flash – PGE: presents new long-term strategy – surprises on RES growth expansion and cost-cutting targets

Yesterday (19 October), during trading hours, PGE presented its new 2030-50E, long-term strategy. Apart from confirming comments seen in recent months on expanding offshore capacity and spinning off dirty assets, the company gave out more details on its long-term targets, from capex and EBITDA to cost cutting and production mix. The market liked the news, with PGE adding 7% yesterday, after almost two weeks of a continuous decline. We also like the company’s strategy, but note that there are still many obstacles ahead, from the complexity of the dirty assets carve out, to the PGG situation, or PGE’s ability to reach the investment subsidies. PGE assumes that it will spin off the dirty assets next year and sees itself as carbon neutral by 2050E. The company is eyeing more than 50% of its power portfolio coming from RES assets by 2030E, and is proposing more bullish goals in offshore generation capacity after 2030E than before. PGE’s targets are aligned with the EU’s energy strategy, but are also dependent on the EU funds and the ability to spin off the dirty assets. The company expects 25% of the funds for RES growth to come from European money. We note that all the capex and costs targets from PGE exclude the dirty assets that it plans to carve out next year. Both the Treasury and Climate Ministers joined the presentation yesterday, stressing that the transformation of the Polish power segment is inevitable. PGE is expected to lead the way.