Enea power wants to commence work on CCGT units in Kozienice in Aug/Sept (CEO interview)

"We have selected the Turkish company Çalık Enerji as the contractor for two CCGT units in Kozienice. Thanks to our success in the July capacity auction, we can now proceed with the implementation," CEO Kinelski told PAP Biznes.

On July 17, the Enea group contracted a total of 2,024 MW of capacity obligation for units belonging to the group in the 2029 capacity market auction, including 1,218 MW for new units under 17-year contracts.

On the same day, Enea's subsidiary, Enea Elkogaz, signed a PLN 6.37 billion (EUR 1.5 bln) net agreement with the Turkish company Çalık Enerji Sanayi ve Ticaret for the turnkey construction of two gas-steam units in Kozienice.

The planned date of commissioning of the units is March 31, 2029, and June 30, 2029, respectively.

"We want the power plant to be commissioned in the first half of 2029," CEO Kinelski told PAP Biznes.

"Preparations for the construction site are underway. I hope that we will be able to give the go-ahead for work to begin at the turn of August and September. We want to start construction as soon as possible," he added.

Enea estimates the total cost of the investment in two CCGT units at over PLN 7 billion (EUR 1.65 bln).

"We estimate the total value of the investment in Kozienice at over PLN 7 billion, including the reconstruction of the network and the addition of connections. We have secured over PLN 5 billion from banks and funds. We also have a [Polish credit insurer - MI ed.] KUKE guarantee for several billion zlotys," Kinelski said.

Enea's CEO pointed out that, according to the assumptions, local content in this project will be around 75 percent.

"The technology will be provided by GE Vernova, a global leader in the gas technology sector, which will ensure that the project is completed on schedule. GE manufactures most of the equipment and boilers in Poland, in Elblag. In this gas project, the share of Polish subcontractors may amount to approximately 75 percent, including the construction part – supplies of steel, concrete, reinforcement, etc. Only the turbine and control technology will come from abroad," the CEO said.

Enea is also considering a gas project in Polaniec.

"We would like to follow the same procedure there, although the issue of technology is still open. We will want the local content, i.e. the participation of Polish subcontractors, to be at a very high level," the CEO stressed, adding that the investment in Polaniec is currently at the stage of deciding on the formula and assumptions for the construction tender.

"It will probably be CCGT units. We assume that the tender procedure will be short, with 3-4 months to prepare a binding offer. We want the investment to be ready for the December auction. So, we need to have a bid in advance to apply for bank financing. The project has been submitted for preliminary certification for the auction," Kinelski said.

The scale of the investment in Polaniec will be influenced by the availability of turbines in 2028, so that the power plant can be launched in 2030.

The CEO of Enea assessed that the availability of contractors will be a challenge for the energy industry when implementing new gas production projects.

"The lack of contractors in the production sector may be a challenge. Such production projects require very large resources. Sometimes, several thousand people are present on the construction site at the same time. If more investments are implemented at the same time, it is obvious that ensuring adequate and coordinated resources may be difficult," Kinelski pointed out.

"We estimate that between seven and nine large gas projects may be implemented in Poland in the coming years, so good coordination is needed to enable Polish construction companies to implement investments efficiently and on time," he added.

In his opinion, the 'first come, first served' principle will probably apply at the beginning, and anyone entering the market later will have to reckon with limited availability of contractors.

The CEO of Enea admitted that the decision to abandon the concept of Poland's National Energy Security Agency (NABE) came as no surprise to the company.

On July 9, Poland's state assets minister Jakub Jaworowski told the press conference on the coal assets spinoff that there is no economic justification for the NABE project, pointing out that additional support mechanisms for coal sources need to be developed at the European Union level.

"In our strategy from last year, we also assume that coal will be needed for at least another 10 years to stabilise the system. Government analyses predict that support mechanisms will be necessary, and last year we already planned a so-called strategic reserve for four 900 MW units," Kinelski told PAP Biznes.

"Our concept assumes the possibility of decommissioning units and calling them back only, when necessary, in critical situations, e.g. for a month or two a year, while the rest of the time the units would be on standby, and their operators would work on other units. Today, we know that there will be no strategic reserve, but there will certainly be another mechanism that will allow coal-fired units, e.g. green ones, to continue operating when the system needs them," he added.

In the CEO's opinion, of the three mechanisms presented, the optimal one for Enea would be a bridging mechanism, enabling support for decommissioned coal-fired units in exchange for investments in low- or zero-emission sources: gas, renewable energy sources, energy storage facilities.

"In my opinion, this is the least costly solution, and it also seems the fairest. It allows not only to maintain capacity, but also to change the structure of production. The support programme must have a horizon of at least five years, and today it is not certain whether the capacity market will be able to be extended by more than 2-3 years," Kinelski assessed.

"Only in a few months we will be able to say how the Enea group could benefit from these proposed mechanisms. The answers will also be provided by the capacity market auctions planned for later this year," he added.

As the CEO pointed out, the four units that the group has allocated to the strategic reserve are the oldest units in Kozienice, dating back to the early 1970s.

Kinelski stressed that Enea does not plan to decommission any units until 2028.

"An exception may be block No. 3 in Kozienice, which requires constant additional maintenance and repair work. However, it could successfully serve as a backup for the capacity market, e.g. for gas-fired power plants," he noted.

"We are preparing for the autumn auction. We have already started our renovation plan so that the units will be ready from January 2026. We want to participate in the auction with all possible units that are not currently secured," the CEO added.

Grzegorz Kinelski pointed out that from the beginning, he considered the argument for building NABE to be misguided due to the lack of financing options for energy groups.

Enea's CEO told PAP Biznes that the group's strategy published in November last year is in line with the announcements made by Poland's Ministry of State Assets (MAP) and does not require any updates.

"If we correct it in the future, it will be for developmental and strategic reasons, in terms of new sources, e.g. offshore," he concluded.

Enea estimates that it will incur total capital expenditure of approximately PLN 107.5 billion (EUR 25.3 bln) to implement the strategy throughout the period 2024-2035.

At the same time, the group assumes that PLN 67.1 billion (EUR 15.8 bln) of the above amount will be invested using Enea's balance sheet, and the remaining PLN 40.4 billion (EUR 9.5 bln) will be financed through strategic partnerships in joint ventures, in a project finance model or using other off-balance sheet forms.

pel/ ao/