Growth prospects in the individual operating Segments

Strategic goals and growth prospects in the individual operating Segments

Strategic goals:

The main goal of the Segment is to increase the installed RES capacity to 1.6 GW in 2025 and to 3.7 GW in 2030.

Investments in RES are the basis for the transition of TAURON Group, which assumes:

  1. 0.7 GW of installed wind capacity by 2025 and 1.1 GW by 2030,
  2. 0.7 GW of installed solar capacity by 2025 and 1.4 GW by 2030,
  3. participation in offshore wind development with strategic partners and in-house development of up to 1 GW of installed capacity by 2030; further 1.1 GW of capacity after 2030.

The activities will also focus on improving the efficiency of hydro power, implementing energy storage technologies, including pumped storage power plants.
In addition, TAURON Group will be striving to take advantage of the opportunities within the domestic supply chain in the construction of the offshore wind farms.

Growth prospects:

A strong growth of the RES sources has been observed over the last few years, in particular with respect to the photovoltaics (PV) installations. Poland improved its record investments in the photovoltaic installations previously reported in 2021, thanks to which it remained in the top three largest solar markets in Europe. According to the publicly available sources, 4.9 GW of PV capacity was installed in Poland in 2022 (in 2021: 3.8 GW). As of the end of 2022, Poland’s installed capacity in PV sources stood at 12.2 GW.

The technological changes with respect to wind farms, along with the favorable regulations (the Act on promoting electricity generation in offshore wind farms of 2021, the liberalization of the so-called distance act of 2023) are an opportunity for the growth of the segment.

The aggression of the Russian Federation against Ukraine brought about an energy crisis due to the large increases in the prices of the raw materials, in particular the energy commodities, which translated into very high electricity prices. This forces an acceleration of the development of the low- and zero-emission energy sources.

High electricity prices and the ecological issues will be driving the development of the renewable energy sources. In the coming years, the expansion of the RES line of business at TAURON Group will focus on investments in the solar farms and the onshore wind farms, and in the long term – the offshore wind farms.

Strategic goals:

The main goal for the Distribution Segment is to maintain its leadership position with respect to the reliability of electricity distribution. Thanks to the continuous development and modernization of the grid, the Distribution Segment is to remain an area of stable, regulated revenues for the Group.

In the time frame up to 2030, TAURON Group is planning to implement 100% smart metering of the grid by installing smart meters and will continue to be the largest electricity distributor in Poland in terms of volume and the number of customers.

The activities under way are aimed at:

  1. Ensuring high reliability and quality of the electricity supply,
  2. Investments in the grid infrastructure to enable connecting of the new customers and the renewable sources to the grid,
  3. Implementation of the smart metering of the electricity distribution grid,
  4. Automation and digitization of the grid infrastructure,
  5. Minimizing the level of the electricity balancing difference.
Growth prospects:

The activities aimed at ensuring the reliability of electricity supply and simplifying the procedures related to connecting the new consumers and micro-installations to the grid will be continued. The investment projects carried out will allow for adapting TAURON Capital Group’s distribution assets to the growing volume of electricity generated by the distributed renewable sources, and also for preparing the grid to interoperate with the infrastructure to be used for charging electricity vehicles.

The development of TAURON Group with respect to the smart grids and smart meters will allow for introducing additional functionalities, both on the part of the distributor, as well as the customer. The Distribution Segment's growth will be significantly affected by the ability to obtain aid funds, both with respect to improving the grid security, as well as the research and development (R&D) activities.

The above mentioned challenges will be dealt with on the regulated market that makes the distribution segment's operations dependent on the new elements of the regulatory policy introduced by the President of Energy Regulatory Office.

Strategic goals:

As part of the ongoing transition of TAURON Group towards climate neutrality, the activities conducted in the Generation Segment are focused on the decarbonization and the reduction of emissions to the level of 200 kg CO2/MWh in 2025 and below 160 kg CO2/MWh in 2030

TAURON is implementing the timetable of the NABE Government Concept.

Another equally important goal for the Segment is the transition of the district heating towards the low- and zero-emission sources. TAURON Group is planning new connections of the consumers to the district heating network at the level of approx. 450 MWt by 2030.

Achieving the position of a reliable producer and the largest supplier of heat in the region by 2030 will be possible thanks to:

  1. Replacing coal fired sources with the modern low-emission units,
  2. Ensuring high reliability and quality of the heat supply,
  3. Improving of the technical and economic parameters, including minimizing of the losses in heat transmission,
  4. Development of the district heating market by acquiring the new customers,
  5. Support in eliminating the low emission sources,
  6. Extending the range of the offering with the new products.
Growth prospects:

The future of the coal energy depends on the implementation of the NABE Government Concept. NABE will be the guarantor of a sustainable transition of the sector while ensuring energy security.

The spin-off of the hard coal fired generation assets out of TAURON Group will make it easier to obtain financing for other expansion projects, in particular the ones related to the RES.

Therefore, TAURON Group’s Strategy assumes the spin-off of the assets related to the electricity generation by the coal fired units. No material capital expenditures are planned with respect to these assets until the spin-off.

With respect to the district heating, the replacement of the coal fired generation units with the low-emission sources is an issue of strategic importance. In the case of the large district heating sources, gas is considered to be the transition fuel on the way to achieving climate neutrality. The development of the heat market by expanding the district heating network and connecting the new customers provides the support for the reduction of the low emission sources.

Strategic goals:

The main goal of the Supply Segment is to maintain the status of the leading electricity supplier.

In the time frame up to 2030, TAURON assumes maintaining the position of the largest supplier of electricity in Poland in terms of the number of customers, and will also be striving to maintain the high standards of customer service – FTR (First Time Resolution) at the level of > 90%.

An increase in the customer satisfaction level is assumed, mainly through the implementation of the following activities:

  1. An offering based on a diversified, attractive basket of products and services,
  2. Modern, integrated sales and customer service channels, simplified procedures,
  3. Development of the ecological products and services in response to the demand for the solutions stemming from the „green transition” and the SMART products and services,
  4. Removal of barriers, introduction of facilities that guarantee a high quality of service for the customers with disabilities,
  5. Ensuring a high level of security for the IT systems and the customer data.
Growth prospects:

The growing customer awareness is leading to the increased demands with respect to the products offered and the speed and quality of service delivery. The importance of ecology, the changing attitudes to the way electricity is consumed and the large increase in the number of prosumers are the factors that are ever more strongly influencing customer needs and expectations.

A further growth in the popularity of the digital customer service channels and the multichannel customer services is assumed. This will result in the transfer of the customer service to the digital platforms.

In response to the growing environmental awareness, the basket of the products and services related to the environmental and climate protection will also be changing.

In the long term, TAURON assumes having a broader range of services and products offered, including, among others, the energy efficiency improvement services and the products with a documented neutral or reduced environmental impact.

In the short term, the Supply Segmentu's development depends on the regulations shaping the retail electricity market.

Strategic goals:

TAURON Group assumed the spin-off of the mining assets out of the Group. A letter of intent was signed with the State Treasury in 2021, related to the divesting of the TAURON Mining subsidiary.

On December 31, 2022, 100% of TAURON Mining shares were transferred to the State Treasury.

Growth prospects:

The coal mining industry is facing unfavorable prospects as a result of the European Union's climate policy. The climate regulations lead to the reduction of the competitiveness of the coal energy. The prospect of the lowering of the demand and the further restrictions with respect to the environment protection, solid fuel quality, taxes and local government regulations pose a threat for the sector.

A social contract for the mining industry was signed in 2021, and the implementation of the government’s program for the mining industry will ultimately determine the role of the Polish mining industry.

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