Competitive environment

The below figure presents TAURON Capital Group’s competitive environment based on the available data for the first three quarters of 2022.

According to the data for the first three quarters of 2022, the consolidated energy groups (PGE, TAURON, Enea, Energa) held an approximately 68% market share in the electricity generation sub-sector.

TAURON Capital Group is a fully vertically integrated electric utility that takes advantage of the synergies stemming from the size and scope of the operations conducted thereby. In 2022, TAURON Capital Group controlled the value chain, from the hard coal mining up to the delivery of electricity to the final consumers. In 2022, TAURON Capital Group was conducting its operations in all of the key segments of the energy market (excluding the transmission of electricity), i.e. in the hard coal mining, as well as the electricity and heat generation, distribution, supply and trading. In December 2022, the hard coal mining segment was spun off out of TAURON Group’s structure.

The below figure presents the information on the structure of EBITDA based on the main operating segments.

TAURON Capital Group’s share in the domestic electricity generation market, measured based on the gross electricity production output, stood at approx. 8% in the first three quarters of 2022. TAURON Capital Group is the third largest electricity producer on the Polish market. TAURON Capital Group’s generation assets are concentrated in the south of Poland. The deposits of the hard coal used to fire TAURON Capital Group’s power plants and combined heat, and power plants are also located in that region. The location of the generating assets in the vicinity of the hard coal deposits allows for the optimization of the costs related to the transportation of that raw material.

87% of TAURON Capital Group’s generation assets were, as of the end of 2022, the hard coal fired units, 21% of which were the modern high efficiency generating units. TAURON Capital Group’s total installed capacity stood at almost 5.1 GW as of December 31, 2022, with the renewable energy sources accounting for 0.66 GW of that figure. The wind farms’ installed capacity represents 8%, while the hydroelectric power plants’ installed capacity accounts for 3% and the biomass fired generating units’ installed capacity constitutes 2% of TAURON Capital Group’s total installed capacity.

TAURON Capital Group produced 15.6 TWh of electricity in 2022, with 1.7 TWh coming from the RES.

Energa produced 3.4 TWh of electricity in the first three quarters of 2022, with approx. 1.01 TWh (i.e. 30.5%) coming from the RES.

The below figures present the information on the installed capacity and the electricity generated in the first three quarters of 2022.

Source: Agencja Rynku Energi S.A. (ARE), companies’ information posted on the web sites

TAURON Capital Group is the largest electricity distributor in Poland. TAURON Dystrybucja’s share in the electricity distribution to the final consumers reached approx. 37% in the first three quarters of 2022. TAURON Capital Group's distribution grids cover more than 18% of Poland’s territory. The volume of the electricity delivered to the final consumers came in at approx. 53.68 TWh in 2022. TAURON Capital Group is the largest electricity distributor in Poland, also in terms of the revenue from the distribution operations.

TAURON Capital Group's distribution operations, due to the natural monopoly in the designated area, are a source of a stable and predictable revenue, accounting for a material part of the consolidated revenue of the entire TAURON Capital Group. The electricity distribution’s geographical area on which the Distribution Segment’s and the Supply Segment’s subsidiaries are historically operating is a heavily industrialized and densely populated area and therefore the distribution grid is very well utilized. The number of the Distribution Segment’s customers reached approx. 5.84 million in 2022.

The below figure presents the estimated market shares of the individual energy groups in terms of the electricity distribution based on the data for the first three quarters of 2022.

Source: Agencja Rynku Energi S.A. (ARE), companies’ information posted on the web sites

TAURON Capital Group holds a 22% share in the market of the electricity supply to the final consumers in Poland. The volume of the retail electricity supply of TAURON Capital Group came in at 31.1 TWh in 2022. The number of the customers served by TAURON Capital Group's Supply Segment stands at 5.7 million.

PGE is the largest retail electricity supplier with a 25% market share. The other two groups, Enea and Energa, hold a 16% and a 13% market share, respectively.

In the segment of the electricity supply to the households the individual energy groups are geographically linked, first of all, with the areas in which they are acting as an ex officio electricity supplier. The need to submit household tariffs for an approval to the President of the Energy Regulatory Office (ERO) leads to the limited options for the positioning of the prices in the product offerings, and what follows, it impacts the attractiveness thereof for the customers. Such restrictions do not apply to the business and institutional customers. A broader and more open competition exists in those sectors.

The below figure presents the estimated market shares of the individual energy groups in terms of the electricity supply to the final consumers based on the data for the first three quarters of 2022.

Agencja Rynku Energi S.A. (ARE), companies’ information posted on the web sites

The below table presents the information on the installed capacity and the volume of the electricity generation, distribution and supply in the first three quarters of 2022, as well as the domestic market shares.

Installed capacity, generation, distribution and supply of electricity by energy groups in the first three quarters of 2022

The analysis of the largest energy groups operating on the domestic market points to the various sources of the competitiveness in the selected segments of the energy market, depending on the operations conducted thereby.

The below table presents the main sources of the competitiveness of TAURON Capital Group in the selected Lines of Business (Segments of Operations) in 2022.

Sources of competitiveness of TAURON Capital Group in the selected Lines of Business (Segments of Operations) in 2022