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CEO Letter

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CEO Letter

Dear Stakeholders,

I would like to invite you to browse through Polenergia’s ESG Site – a platform through which we comprehensively communicate our performance and activities in the environmental, social and governance areas.

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The Site is an extension of the Corporate Social Responsibility reports that we have been publishing for 5 years now. I believe that this form of communication will be an even better way of satisfying the needs of our stakeholders in providing complete and current knowledge on Polenergia’s sustainable development. The ESG Site will not be published just once a year; instead it will be updated on an ongoing basis.

Last year was, for many reasons, different from the previous years. The COVID-19 pandemic altered our lives radically, however the Polenergia Group’s business model proved to be highly resilient to such adverse macroeconomic environment. The good financial results for 2020 indicate that the partial freezing of the Polish economy did not have a significant impact on the functioning of the Group’s companies.

Still, adaptation to such extraordinary circumstances required a great deal of effort from our entire team, because in order to keep our employees safe we switched to remote working where possible, using remote communication technologies. Where on-site presence was necessary, which applied mainly to operators of gas-fired power plants and cogeneration plants and to Employees and Subcontractors of the wind farms we operated or were building, we implemented strict health and safety policies minimizing the risk of infection.

As we organized the Group’s activities in the new situation and observed the changes in the external environment, we noted that the whole world became aware how threats that are invisible to the naked eye may have an immense impact on our lives. The climate crisis is exactly like that. The turn of 2019 and 2020 was a period of very intensive work on the Green Deal Strategy – a sustainability action plan for the EU’s economy, which should achieve net zero greenhouse gas emissions by 2050. In 2020 we adopted numerous strategies supporting the fulfillment of this goal through an intermediate commitment to achieve a 55% reduction in emissions by 2030 as compared to 1990. Other notable events included the EU green hydrogen development strategy (July 2020) and the offshore renewable energy strategy (November 2020).

The goal set for all Europeans is ambitious and therefore our full commitment is required to achieve it. The idea of an equitable transition that is inclusive of communities and leads to a carbon neutral economy is close to our approach to doing business. In May 2020 the Polenergia Group announced its Development Strategy for 2020-2024, which is based not only on economic growth but also on our commitment to future generations. Our goal is to transform the energy market towards renewable sources by developing offshore and onshore wind farms and photovoltaic farms, as well as clean hydrogen technologies. Development of our companies running the energy trading, distribution and sales business will allow us to supply our clients with truly green energy and prosumer solutions and promote electromobility.

Development of a vertically-integrated Group towards zero-emission solutions requires multi-layered cooperation between dozens of entities. It is an effort, which will ensure a sustainable and socially responsible supply chain involving our partners and subcontractors as well as our clients. It requires us to implement projects with respect for local communities and the natural environment at the stage of both construction and operation. It means caring for projects at each stage of their development, by meeting ethical requirements that are obvious to the industry and conform to the United Nations Global Compact or the standards set by international financing institutions such as the European Bank for Reconstruction and Development. This is why, as we build an ethical energy supply chain, we focus on active participation in industry partnerships, including those promoting the implementation of the UN Sustainable Development Goals and educating future staff for the energy market. The energy revolution must be led by innovative people who know contemporary trends and are able to explain why it is important for companies to promote pro-environmental efforts. Hence our involvement in the transfer of this knowledge to students of technical universities and cooperation with the academic community or the Energy Academy of the L. Paga Foundation.

We also make sure to educate our clients and consumers who should be as pro-environmental as we are. In order to understand the necessity of the changes driven by commitment to the natural environment and therefore the need for investments in renewable energy, our clients must learn about this technology and know as much as possible about how energy markets function. Consumers should use the opportunity of generating energy as Prosumers, as this will dramatically accelerate the energy transition process.

We feel responsibility for our common future, which in our vision is based on clean energy available to everyone. All changes require energy, green energy.

We wish you pleasant reading,
Michał Michalski PhD., President of the Management Board of Polenergia SA

The Group is working on building four wind farms with a total capacity of 199 MW, which have received support under the auction-based RES support system. In July 2020, we started the construction of the 121 MW Dębsk Wind Farm, which is the largest yet in our portfolio. In September we started the construction of the 27 MW Kostomłoty Wind Farm. In the RES auction carried out in December 2020, we obtained a 15-year support for the Piekło Wind Farm project with an approximate capacity of 13.2 MW. At the same time, we conduct work in order to continue the development of wind farms to achieve the goals envisaged in the Polenergia Group’s Development Strategy.

The company executing the Sulechów I photovoltaic projects (8 MW in total) obtained a license for the production of electricity from 24 January 2020 to 31 December 2030 from the President of the Energy Regulatory Office. Sulechów I projects had been fully commissioned and entered the operating phase in the first quarter of 2020. During the RES auction in December, a 15-year support was obtained for three portfolios of photovoltaic projects: Sulechów II, Sulechów III and Buk I, in which 29 PV installations with the combined capacity of 28 MW are to be built.

We continue development work in the offshore wind farm segment. The Group holds 50% stakes in the MFW Bałtyk I, MFW Bałtyk II and MFW Bałtyk III offshore wind farm companies, which prepare the construction of three wind farms on the Baltic Sea with the total capacity up to 3000 MW. For projects in advanced development phase (MFW Bałtyk II and MFW Bałtyk III), an application has been filed to grant the right to cover the negative balance within the first phase of projects envisaged in the Act on the Promotion of Electricity Generation in Offshore Wind Farms.

Development work is also conducted in the gas and clean fuels segment. On 29 June 2020, the Group signed a letter of intent with Siemens Gas and Power GmbH & Co. KG and Siemens Energy sp. z o.o. on potential cooperation in the development of gas-fired cogeneration projects and hydrogen technologies.

The Group pursues a new strategy for the trading and sales segment by establishing new and developing existing business areas. As part of its geographic expansion, it launched operations on the Ukrainian and Hungarian markets; preparations are under way to enter the Romanian market. In 2020, energy sales to large industrial buyers were also continued. The Company entered into agreements for the years 2021-2022 and is acquiring additional Clients. It is also preparing to launch the business of direct energy sales to end users; to this end, it has obtained a sales company license. Starting in June 2020, prop trading was also commenced to a limited extent.

In the distribution segment, it is implementing the approved investment plan for 2019-2022 in the total amount of PLN 51 million. By the end of 2020, Polenergia SA issued 88 grid connection documents under which 44 connection agreements were signed. It performed the connection agreements and notified its readiness to connect 35 projects. It also obtained an extension of licenses for 5 projects and continues the work on 12 more. In January 2021, Polenergia Dystrybucja started the implementation of the 4th investment plan for the years 2021-2026. On 15 January 2021, the company signed an annex to the loan agreement with ING Bank Śląski, under which it was granted PLN 75.3 million for the execution of the 4th investment plan. The plan calls for investments in the design and construction of electric power infrastructure to be used to supply electricity to new facilities and buyers, mainly housing developments. The Company communicates with several dozen investors developing combined housing and commercial projects.

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