PGE's strategy plan approved

10 February 2012

The supervisory board of Polish utility Polska Grupa Energetyczna (PGE) has approved the construction of two nuclear power plants by 2029 as part of a strategy plan for the period 2012 to 2035 aimed at increasing its installed generating capacity while diversifying its generating technology.

The strategy plan, presented by state-owned PGE's board of management, calls for investments totalling over 330 billion zloty ($103 billion) between 2012 and 2035. This would include average annual capital expenditure of over 9 billion zloty ($2.8 billion) between 2012 and 2020, followed by investments of over 16 billion zloty ($5 billion) annually between 2021 and 2035. Through the plan, PGE aims to raise its generating capacity from the current 13.1 gigawatts (GWe), to 15.8 GWe by 2020 and to 21.3 GWe by 2035.

Currently, PGE generates two-thirds of its power from lignite, with most of the rest coming from hard coal. The company aims to gradually reduce its use of lignite to 55% of its fuel mix by 2020, with coal then accounting for 18%, natural gas 15% and renewable energy providing 11%. However, by 2035, the company aims to generate about 36% of its electricity using nuclear power, with 11% coming from gas, 14% from renewables, 33% generated from lignite and 5% from coal. Correspondingly, PGE's carbon emissions are expected to fall from the current 1.06 tonnes of carbon dioxide (CO2) per megawatt-hour (t/MWh) to around 0.27 t/MWh in 2035.

In addition to investing in new fossil fuel generating capacity and wind farms, PGE's plan call for the construction of two nuclear power plants in Poland, each with a capacity of some 3000 MWe - comprising two or three large reactors each. The first reactor of the initial plant is scheduled to be in commercial operation by 2023, with subsequent units coming on line every two or three years. PGE said that it will hold at least a 51% stake in the plants as part of a consortium with foreign partners, although "desirably" it would hold a 75% stake.

Three potential locations for the first nuclear power plant were named in November 2011. These were Zarnowiec, Choczewo and Gaski, the first two in Pomerania, Gaski in West Pomerania. A final decision on the location will be made in 2013. A tender for the technology supplier of the plant will be announced later this year.

PGE said that it estimated that the levelized cost of generating electricity from nuclear power plants is between €65 and €68 ($86 to $90) per MWh, which "justifies construction of plants under most scenarios."

At the same time, PGE aims to increase slightly its share of Poland's domestic generation market: 46% in 2035 compared with 42% in 2010.

PGE said that by implementing the plan it "will be consequently creating economic value for shareholders within the modern and fuel-diversified generation portfolio, customer focus, improving efficiency and implementing innovations, while maintaining a strong financial position and exploiting potential market opportunities, both at home and abroad." However, the company noted, "Because of the extensive program of national investment, international acquisitions will be carried out provided that the identified projects will ensure a high return and will be low risk."

The Polish cabinet decided early in 2005 that for energy diversification and to reduce carbon and sulfur emissions the country should move immediately to introduce nuclear power, so that an initial plant might be operating soon after 2020. A 2009 report to the Ministry of the Economy identified nuclear as the most cost effective method of CO2 abatement of the major generating options. A resolution by the council of ministers then called for the construction of at least two plants in Poland. In order to deliver the government's objectives, PGE announced in January 2009 plans to build two nuclear power plants.

Researched and written
by World Nuclear News