Strategy ENERGA Group for 2016-2025

On 15 November 2016, the Company’s Supervisory Board passed a resolution approving the doc-uments: the Energa Group Strategy for 2016-2025 (the "Strategy") and the Multi-Annual Plan of Strate-gic Investments of the Energa Group for 2016-2025.

Reasons for the revision of the Group’s Strategy

Eroding profitability in the electricity sector in the recent years has pushed leading European and Polish energy companies to revise their strategies. In the medium term, operating under the existing business model could have resulted in lower performance and a decrease in the value of energy com-panies. Continuation of operations based only on the existing assets and without changing the existing business model could have led to a gradual decline of the Energa Group’s profits in the medium and long term. In order to maintain or improve financial performance, companies and business models need to be adjusted to new trends in the electricity sector, such as the focus on the development of distributed generation and renewable energy sources (RES), improvement of energy efficiency and active partici-pation in the new technology market.

In view of the above, it was necessary to adjust the Energa Group business model to new challenges, including a revision of the Group’s strategy, which resulted in the adoption of the Energa Group Strategy for 2016-2025 in November 2016. In the longer term, it would be advisable to include the following considerations in the future revisions of the Strategy: known results of capacity market auctions, in particular for long-term contracts, and the objectives of the Winter Pack-age, and thus the EU Climate and Energy Policy for 2021-2030.

Objectives and strategic programmes

In order to reinforce the position of the Energa Group as an innovative, customer-centric energy group, while providing for a stable business foundation based on predictable regulations, two business devel-opment and value creation areas were defined in the Strategy: the Infrastructure and the Customer, within which the Energa Group’s objectives and strategic programmes were defined, that are now being implemented:

Objective 1. To develop a modern electricity infrastructure

In a manner permitting to have a stable revenue base, relying mostly on the quality of service and not on typical market factors. The infrastruc-ture will anticipate the future requirements of the Polish electricity system, balancing the interests of all Energa Group stakeholders.

  • Program 1

  • Program 2

  • Program 3

  • Program 4

Development of a smart and reliable electricity distribution grid, offering the capacity for storage and local energy management.

Development of the broadband infrastructure.

Using revenue decoupling regulations for the Capacity Market and heat tariffs.

Maintaining a strong position in RES through the implementation of (I) a project for the construction of hydro power plant at the second barrage on the Vistula River and (II) other RES projects.

Objective 2. A Customer-centric business model

Supporting effective customer value management based on a consistent product and service offering.

Programme 5

Implementation of a new, customer-centric business model and development of new business areas – as a result of the programme, approx. 100 new products will be developed, dedicated to three customer segments: individual customers, business customers, as well as local authorities and public administration.