From January to June 2018 the Wind Energy segment recorded an increase in EBITDA by PLN 8.8 million to PLN 49.3 million, and in the second quarter alone EBITDA increased by PLN 6.1 million to the level of PLN 26.1 million. What contributed to the better results of this segment was higher average prices of green certificates and the lower cost of property tax and technical maintenance, partially offset by lower production volumes. In the second quarter of 2018 the valuation of green certificates continued to grow. Their average price was PLN 71.7/MWh, with green certificates costing PLN 75.2/MWh at the end of June and in July reaching the level of over PLN 90/MWh. The use of modern technologies, very good location of projects and an experienced technical team enable a continuous achievement of higher levels of productivity than the market average. In the first half-year the wind farms generated over 314 GWh of electricity, and their productivity reached 28.6 percent. In addition, as a result of an acquisition of assets of Krzęcin wind farm, the installed capacity of Polenergia’s wind farms has increased since May 2018 by 6 MW to nearly 250 MW.
The EBITDA of the Conventional Energy segment in the first half-year decreased to PLN 31.1 million. The worse result is a consequence of higher prices of natural gas and CO2 emission allowances as well as lower revenues from cogeneration certificates, partially offset by higher revenues from gas compensation. In the period from December 2017 to July 2018 the prices of carbon dioxide emission allowances rose by over 100 percent to a high level of over 16 euros. However, the price of cogeneration certificates dropped from PLN 117/MWh in 2017 to PLN 112/MWh in 2018.
The remaining segments of the Group recorded in the first half-year the following EBITDA results: Distribution PLN 7.1 million, Biomass PLN 0.5 million, Trading PLN -21.6 million. The worse result of the Trading segment was mainly a consequence of a loss on electricity trading due to a sharp increase of electricity prices in the second quarter. In order to limit exposure to risk, the Group has taken steps to close positions that result in a loss and to reduce the scale of trading activity until the situation on the energy market gets stabilized.
As a result of the events described above, the adjusted EBITDA margin, Trading segment excluded, amounted to 28.6 percent and it was lower by 1.8 p.p. than the recognized one in the corresponding period last year. In the second quarter in turn, this index reached 29.1 percent and it was lower by 1.3 p.p. than in the previous year.
In parallel with its current operating activity, the Company continues its works on the development of new projects. The wind farm projects with a total capacity of 185 MW, which already have a construction permit, will join an auction expected in the IV quarter of 2018. Winning the auction will depend on the number of projects participating in it and the level of proposed price in relation to other bidders.
For part of the wind farm portfolio at an earlier stage of development (with a total capacity of 26 MW) a decision was made to implement photovoltaic projects in this place, based on the existing connection conditions and lease contracts. The works on the development of these projects will be continued in 2018 and 2019. The total capacity of all photovoltaic projects prepared by the Group for the auction is 40 MW.
The Company is also preparing a project of construction and operation of a 31-MW biomass power plant connected to the power grid. In the second quarter of 2018 it obtained a decision of the ERO on admission to the auction (prequalification) as well as an Integrated Permit. The Company allows a possibility of getting an investor interested in purchasing this project prior to the auction or after winning it.
A strategic investment presently implemented by the Group is preparation for the construction of two offshore wind farms, Polenergia Bałtyk II and Polenergia Bałtyk III, located in the Baltic Sea, with a total capacity of 1,200 MW. The date of construction depends on an entry into force of a relevant regulatory system. Furthermore, the Group analyses the conditions from the perspective of a resumption of preparatory works related to Polenergia Bałtyk I project with a capacity of 1,500 MW.
