CONCLUSION OF ELECTRICITY SALES AGREEMENTS AND BALANCING SERVICES BY PROJECT COMPANIES IMPLEMENTING OFFSHORE WIND FARM PROJECTS

The Management Board of the company under the name of Polenergia S.A. (the”Issuer”) hereby announces that the project companies MFW Bałtyk II sp. z o.o. and MFW Bałtyk III sp. z o.o. (collectively the “Project Companies”), in which the Issuer holds a 50% stake, developing – as part of a joint venture between the Issuer and Equinor Wind Power AS (collectively the “Partners”) – projects of two offshore wind farms, i.e. MFW Bałtyk II and MFW Bałtyk III, each with a connection capacity of 720 MW (“Projects”), concluded on 22 November 2024, with the Danish company Danske Commodities A/S (“Danske”) electricity sales agreements (“PPA”).

The subject of the PPA is the sale of the entire volume of electricity generated in the Projects. In connection with the planned delivery of the Projects in stages, the sale of electricity under the PPA will commence after obtaining a concession for the first stage of each of the Projects. In addition, the PPAs cover the provision of commercial balancing services (including during the technological start-up period of subsequent stages of a given Project) and Danske’s role as a supplier of balancing services. The PPAs are agreements on access to the wholesale market and the balancing market (route-to-market agreements). Danske’s tasks will include, among others, acting as the entity responsible for balancing the Projects, including settling imbalances with Polskie Sieci Elektroenergetyczne S.A. (“PSE”), as well as the provider of balancing services and the market operator within the meaning of the PSE Balancing Terms. The PPAs cover the sale of all guarantees of origin of electricity issued for energy generated in the Projects during the term of the agreements.

The electricity sales price will be equal to the settlement price determined in the single day-ahead market coupling process for the Polish market area for a given imbalance settlement period (SDAC). The PPAs also include additional revenues that may result from the provision of balancing services in accordance with the PSE Balancing Conditions, with the actual production and the capabilities and scope of the balancing services provided depending on, among other things, the course of the process of connecting offshore wind farms to the power grid, the certification process for the provision of balancing services and the variability of conditions on the balancing market operated by PSE.

The PPAs are correlated with the method of settling revenues of Projects secured by the right to cover the negative balance in relation to the price set in the decision of the President of the Energy Regulatory Office issued for the Projects, i.e. PLN 319.60/MWh taking into account indexation from 2022 (which the Issuer reported in the current report no. 59/2024 of November 7, 2024).

PPAs typically contain provisions for early termination in the event of a breach and for the terminating party to pay a fee covering actual losses and costs incurred as a result of early termination.

The PPAs were concluded until the day on which 3 years have elapsed since the commencement of commercial operation. The PPAs may be extended if the Project Companies accept a new price offer from Danske for subsequent periods. The entry into force of the PPAs is subject to the fulfilment of the condition precedent – ​​the Partners taking a final investment decision on the implementation of the Projects within a maximum of 18 months from their conclusion, which is planned for the first quarter of 2025.

The Agreement is subject to Polish law.

The conclusion of the PPAs is another milestone in the process of obtaining financing for the Projects.

legal basis: art. 17 sec. 1 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Journal of Laws of the European Union, L. of 2014, No. 173, p. 1, as amended)