NOTIFICATION DECISION OF THE EUROPEAN COMMISSION CONCERNING STATE AID TO H2SILESIA UNDER IPCEI

The Management Board of the company under the name Polenergia S.A. (the “Issuer”) informs that on February 15, 2024, it received information about the issuance by the European Commission (“Commission”) of a notification decision regarding state aid for the H2Silesia project implemented under IPCEI Hydrogen Hy2Infra (Important Projects of Common European Interest) (“Notification Decision”).

The Commission assessed the proposed project based on EU state aid rules, including the criteria arising from the Commission Communication on the criteria for the compatibility with the internal market of state aid to support the implementation of important strategic projects of common European interest (2021/C 528/02).

The Notification Decision approves the maximum ceiling of public aid for the H2Silesia project (“Project”), and it does not mean granting the Issuer’s subsidiary implementing the Project, i.e. Polenergia H2Silesia sp. z o.o. funding for its implementation. The decision to grant funding and the final amount of funding will be made at the national level.

The project is implemented by the Issuer’s special purpose vehicle – Polenergia H2Silesia sp. z o.o. The project involves the construction of a large-scale renewable hydrogen production installation with a capacity of approximately 105 MW for the needs of heavy industry and zero-emission transport, located in Upper Silesia. The planned installation will be able to produce approximately 13,000 tons of hydrogen per year. National pre-notification for H2Silesia under IPCEI was obtained in April 2022.

The total value of eligible costs in the Project is EUR 218.36 million, and the maximum amount of public aid approved by the European Commission may amount to EUR 142.77 mln, which corresponds to the amount of the so-called financial gap in the Project. The eligible costs of the Project are the delivery and installation of electrolysers, cooling system, electrical substation, water treatment station, deoxidation and drying system, compressors, hydrogen storage and its distribution station along with associated auxiliary installations, buildings, and road system, as well as preparatory works, design, and commissioning. The Issuer’s Management Board anticipates that the eligible costs of the Project in excess of the value of public funding will be covered from funds and sources, such as, among others: equity and investment loan.

The final implementation of the Project depends on external criteria, such as concluding contracts securing the terms of hydrogen supply, meeting appropriate economic criteria and the availability of financing for the Project, as well as making the final investment decision based on the above data and obtaining the required corporate approvals. In accordance with the information provided in report No. 4/2024 of February 8, 2024, the Issuer began a review of options for the implementation of the Strategic Goals: in the area of hydrogen strategy and does not exclude making a decision in the future, depending on the results of the review, to withdraw from their further implementation or to change the method or scope of their implementation, about which the Issuer will inform to the extent required by applicable law.

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).