According to Prime Minister Donald Tusk commenting on PGE power's cancellation of the Opole power plant project, Poland's government and PGE will look for new optimal solutions in the scope of power investments, which would enhance Poland's energy security without encroaching on interests of listed companies. The daily Parkiet reported that the Ministry of Economy mulls keeping the support in form of green certificates for biomass co-combustion till 2017 for currently existing plants and no support for the new units.
Our view:
The news is positive for PGE. We earlier calculated that cancellation of the green certificates for biomass co-combustion and lowering the ratio for the support would lower the company’s EBITDA by PLN 2.2bn over the next seven years (previous draft of bill of the renewable act assumed final liquidation of the support in 2020). Upholding the support will on one hand provide the company with source of revenues however on the other hand it will keep in our opinion the prices of green certificates low (as the process of granting the green certificates for biomass co-combustion was responsible for its low price). We would expect more comments to come regarding the potential support for new investments in energy in Poland which could come in a form of among others capacity markets (known from some countries of Western Europe or part of regions in US).