PGE may buy a gas project that lacks money. It's a huge amount

• In January 2025, PGE and ZE PAK signed a non-binding agreement regarding the possible purchase by PGE of shares in PAK CCGT, which is building a 600 MW gas-fired unit in Adamów.
• The current cost of building a gas unit at the Adamów Power Plant is estimated at approximately PLN 2.6 billion, which is PLN 4.6 million per MW.
• If the Adamów project was sold for approximately PLN 1.7 billion, the buyer – PGE – would have to invest nearly PLN 1 billion more in its completion.

In January 2025, PGE and ZE PAK signed a non-binding agreement regarding the possible purchase by PGE of shares in PAK CCGT, which is building a 600 MW gas-fired unit in Adamów , as well as shares in PGE PAK Energia Jądrowa, which plans to build a nuclear power plant in Pątnów.

The agreement gives PGE exclusive rights to conduct negotiations on the purchase of shares until June 30, 2025. This concerns 100% of shares in PAK CCGT.

PGE optimistic about finalizing talks with ZE PAK

- Talks on this matter are ongoing, we are optimistic about this project , that is why I am talking about it - said Dariusz Marzec, president of PGE on April 16, during the results conference.

He previously assured that the possibility of taking over the ongoing project of building a gas-steam unit with a capacity of over 560 MW on the site of the former Adamów coal-fired power plant is in line with the strategic directions of development of the PGE Group.

- The project would allow us to expand our gas investment portfolio , but also to increase our production potential, and most importantly, in a relatively short time it could ensure reliable and stable energy supplies to Polish homes - said Dariusz Marzec.

The project already has a general contractor , selected by a consortium of Siemens Energy Global, Siemens Energy and Mytilineos.

In the capacity market auction, the power plant obtained a 17-year contract with a capacity obligation of 493 MW from 2026.

ZE PAK has difficulties in obtaining financing for the gas project

Analysts from the Pekao Bank Brokerage House in their recommendation for ZE PAK emphasize that the investment in the gas block in Adamów was part of the group’s transformation and its departure from brown coal.

They point out, however, that ZE PAK is having difficulties obtaining debt financing for this project because banks are less favourable to conventional energy projects.

Therefore, in order to solve the financial problems, ZE PAK started negotiations with PGE regarding the sale of the gas project.

- In our opinion, the probability of a successful transaction is high - say BM Pekao analysts.

They indicate that ZE PAK also does not have the internal financing capacity to complete the project without taking on additional debt. Although the company signed a credit agreement with EFG in April 2025 for PLN 600 million, this amount primarily allows for the continuation of construction work without suspending work, but significantly falls short of the total financing requirement.

The buyer will have to spend PLN 1 billion to complete the construction

- ZE PAK has disclosed a base CAPEX for the project of PLN 2.35 billion. Taking into account delays in the project implementation, we forecast total CAPEX at a level close to PLN 2.6 billion (PLN 4.6 million per MW) . At the end of 2024, ZE PAK incurred approximately PLN 350 million of direct capital expenditures and paid approximately PLN 450 million in advances, and the total project completion was 33%. Assuming that ZE PAK invests an additional PLN 800 million in 2025, the total invested capital (including advances) will amount to approximately PLN 1.6 billion. This means that the buyer will still have to invest approximately PLN 1 billion to complete the project - BM Pekao analysts estimate.

In their opinion, the key question is what sales price ZE PAK can realistically achieve .

It is worth noting that the capacity contract from 2021 is subject to annual indexation and the contract value is currently PLN 550 per kW per year.

According to BM Pekao, taking into account the results of other capacity auctions conducted in recent years, this is a very attractive rate , which may be difficult to repeat in subsequent auctions. As a result, it additionally increases the attractiveness of the project from the perspective of the buyer.

The project may be sold for PLN 1.7 billion. That's cheap

- We estimate that the sale price may amount to approximately PLN 1.7 billion - we read in the BM Pekao report.

Analysts assume an average capacity utilization factor of 48 percent over a 15-year horizon.

There is also room for positive surprises: CAPEX benchmarks for the industry have increased significantly.

- Even with our revised project cost assumption of PLN 4.6 million per MW, current market quotes suggest CCGT construction costs in the range of PLN 5.5-6.0 million per MW, mainly due to turbine price inflation. If the Adamów project were contracted today, its construction would probably cost PLN 0.5-0.8 billion more , which suggests that our assumed profit on sale of PLN 0.1 billion may be conservative - the Pekao Bank BM report wrote.

ZE PAK is also preparing to build two gas-fired units of 900 MW each at the Pątnów Power Plant. The Group has announced that at the turn of the first and second quarter of 2026 it intends to shut down its last coal-fired unit - a 474 MW unit at the Pątnów Power Plant.