Lignite-fired power plants belonging to the Polish Energy Group (PGE) will cease to be profitable. Depending on the price level of European Emission Allowances (EUA) in the late 2020s, PGE's EBITDA (earnings before interest, taxes, depreciation and amortization) will drop to 1/31 or be negative2, according to the report by the American think tank Institute for Energy Economics and Financial Analysis (IEEFA)3.
Factors affecting the profitability of energy production in Poland:
The world's largest insurers successively quit investments in coal companies and limit insuring mines and coal-fired power plants. It is a part of more pronounced trend among the financial giants, which aims to reduce the risks associated with financing fossil fuels extraction, while interest in investing in renewable energy sources is increasing. This will result in the increase in insurance costs for coal-fired power plants and lignite mines and costs of refinancing the debt of companies such as Polish Energy Group.
1 Assuming an increase in EUA prices to 30 euros per ton in 2030.
2 Assuming an increase in EUA prices to 40 euros per ton in 2030.
3 The report analyzes possible scenarios for the development of PGE and the profitability of further electricity generation based on the fossil fuels or renewable energy sources.