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Fitch: Unbundling Poland’s coals assets gives RES room to breath

Fitch: Creation of NABE means better prospects for financing Poland’s energy transition.

Rating agency Fitch issued a positive assessment of the progress made in the process of separating coal assets from Polish integrated utilities and transferring them to the National Agency for Energy Security (NABE).

According to Fitch analysts, the government’s creation of NABE will improve financing capacity for energy projects developed as part of the sector’s transformation. As a result, companies such as PGE will have improved access to capital.

“The positive assessment of the carve-out of PGE’s coal assets by a recognized international rating agency is the best review of the impact of a process that is entering its final stage. It shows that the transaction is well perceived by financial institutions – providers of capital for investments. This is good news for Poles,” says Wojciech Dąbrowski, President of the Management Board of PGE Polska Grupa Energetyczna.

The sale of coal assets to NABE will reduce the business risk for Polish energy utilities and increase their ability to borrow funds for unprecedented investments in renewable energy development and distribution. It will also have a positive impact on the ESG profile of the companies, which has become increasingly important in recent years as one of the key elements considered by the financial sector when evaluating energy project financing.

“PGE’s efficient operations will allow the company to fully exploit its potential in the implementation of the energy transition in Poland, the main objective of which is to reduce the cost of electricity to the benefit of households, businesses and the economy as a whole,” adds Wojciech Dąbrowski.

In the report, Fitch announced it would review the ratings of energy companies following further progress in the creation of NABE. The completion of the process of carving out coal assets from the companies is of great importance from the point of view of the expected update of the ratings of the Polish energy groups. The agency notes that by reducing the companies’ carbon footprint, Poland’s largest energy companies will bring their business profiles closer to those of their foreign peers.

The risk resulting from the EU’s decarbonization policy is reflected in significantly higher CO2 emission costs, deteriorating coal plant utilization and profitability due to increased use of renewables, and reduced access to external financing due to restrictions on major investors, including banks.

An entity’s credit rating determines the cost of raising capital from financial institutions – the better the entity is rated, the lower the interest rate it pays. Currently, PGE has a Fitch rating of BBB+/Stable, the highest among Polish energy companies.