29. Future investment commitments

As at December 31, 2019, PGE Group committed to incur capital expenditures on property, plant and equipment of approximately PLN 4,572 million. These amounts relate mainly to construction of new power units, modernisation of Group’s assets and purchase of machinery and equipment.

The most significant future investment commitments concern:

• Conventional Generation:
  • Branch Opole Power Plant – construction of power units no. 5 and 6 – approximately PLN 202 million,
  • Branch Bełchatów Power Plant – upgrade of FGD unit – approximately PLN 299 million,
  • Branch Turów Power Plant – modernisation of power units no. 1-3 – approximately PLN 115 million,
  • Branch Turów Power Plant – construction of new power unit no. 7 – approximately PLN 907 million.
• Distribution – investment commitments related to network distribution assets with the total value of approximately PLN 1,405 million,
• Renewables – investment commitments related to the design and construction of Starza, Rybice and Karnice II wind farms – approximately PLN 176 million,
• Other activity, PGE EJ1 sp. z o.o. – agreement for owners engineer in the investment process related to construction of the first Polish nuclear power plant – approximately PLN 152 million (basic scope). An optional scope includes the amount of approx. PLN 1,120 million.

PGE Group’s entity PGE EJ 1 Sp. z o.o. is directly responsible for preparing the investment process, consisting in conducting environmental and site surveys and obtaining all of the necessary decisions for construction of the first Polish nuclear power plant and for carrying out this investment project. Decisions with regard to the continuation of the Programme will be made based on decisions by the public administration authorities concerning a role of nuclear energy in Polish fuel mix, mode for the procurement of nuclear power plant technology, investment financing model and an updated Programme for Poland’s Nuclear Power. The current scope of the Programme conducted by PGE EJ 1 Sp. z o.o. provides for carrying environmental and site surveys at two potential locations (Lubiatowo-Kopalino and Żarnowiec) and in preparing an Environmental impact assessment report and a Site report. PGE Group intends to continue providing financial support for PGE EJ1 sp. z o.o., as is necessary to continue works under the existing scope of works. A decision on the investment project that consists in constructing a nuclear power plant depends, in particular, on the preparation of the dedicated financing model.

On January 30, 2020, PGE GiEK S.A. concluded an agreement for the construction of two CCGT units in PGE GiEK S.A. Branch Zespół Elektrowni Dolna Odra on a turnkey basis. The value of the agreement for the construction of the units, together with the self-start option, is PLN 3,701 million.