CONCLUSION OF A NEW CONDITIONAL LONG-TERM ENERGY SALES AGREEMENT (PPA) AS PART OF THE PACKAGE OF PPA AND PPA+ AGREEMENTS

The Management Board of the company under the name Polenergia S.A. (“Issuer”), with reference to current report No. 56/2023 of November 29, 2023 on the failure to meet the condition precedent regarding the entry into force of the conditional long-term power sales agreement (PPA) included in the Package of PPA and PPA+ agreements and the commencement of negotiations regarding the conclusion of a new long-term energy sales agreement (PPA), informs that on November 30, 2023 it received confirmation of the conclusion on November 29, 2023 by the Issuer’s subsidiary – Polenergia Obrót S.A. (“POLO”) and McDonald’s Polska sp. z o.o. based in Warsaw (“McDonald’s”) a new conditional package of PPA and PPA+ agreements (“PPA and PPA+ Package”), which is also to be signed by 87 McDonald’s franchisees (“Other Buyers”). The package of PPA and PPA+ agreements concerns the sale of electricity produced by the Szymankowo Wind Farm with an installed capacity of 38 MW (“Szymankowo WF”) and the related guarantees of origin of electricity from renewable energy sources, as well as additional volumes of electricity constituting the total electricity consumption of all buyers.

The package of PPA and PPA+ agreements with McDonald’s was concluded subject to the condition precedent, which is the signing of the package of PPA and PPA+ agreements by POLO, McDonald’s and at least 82 Other Buyers by December 4, 2023. If the condition is not met by December 4, 2023, i.e. the Package of PPA and PPA+ agreements is not signed by at least 82 Other Buyers, the Package of PPA and PPA+ agreements will not enter into force and will not produce legal effects.

Based on the signed Package of PPA and PPA+ agreements between POLO and each buyer, i.e. McDonald’s and each Other Buyer, a separate sales agreement is created.

The period of sale of electricity and guarantees of origin under the Package of PPA and PPA+ agreements starts on January 1, 2024 and lasts until December 31, 2027. In terms of the sale of electricity produced by the Szymankowo WF and related guarantees of origin, the planned volume of energy sales electricity concerns a specific part of the volume that will be produced in this period by the Szymankowo WF, which is a dedicated generation source for McDonald’s and Other Buyers. The estimated total sales volume in the subsequent years of the Package of PPA and PPA+ agreements with McDonald’s and all Other Buyers may amount to approximately 200 GWh for each year. The energy produced by the Szymankowo WF will be sold at a fixed price. The total estimated amount of revenues from the sale of electricity and guarantees of origin based on the Package of PPA and PPA+ agreements with McDonald’s and all Other Buyers may amount to approximately PLN 441 mln. Each buyer has the option of limiting the sales contract for the years 2026 and 2027 only to electricity produced by the Szymankowo WF, along with the guarantees of origin related to this energy.

In the event of early termination of the PPA and PPA+ Agreement Package by POLO or one of the buyers (“Non-Breaching Party”), respectively, due to breaches of the contract by the other party (“Breaching Party”) specified in the contract, the Non-Breaching Party is entitled to a termination fee in the amount specified in the contract, the amount of which is reduced with each year of validity of the PPA and PPA+ Agreement Package. Termination of the Package of PPA and PPA+ Agreements connecting POLO with a given buyer does not result in the expiration of the Package of PPA and PPA+ Agreements between POLO and other buyers.

Signing a multi-year energy sales agreement with customers with a stable financial position is consistent with the long-term strategy of commercialization of generation sources adopted by the Polenergia Group. This model secures the revenue stream generated by the Polenergia Group and makes it independent of possible price fluctuations on the energy market.

Legal basis: art. 17 section 1 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 EU L. of 2014, No. 173, page 1, as amended).