TAURON Polska Energia S.A. (TPE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to our conference when we present the results of TAURON Financial Group for the first half of the year. A warm welcome to everyone joining us live here in person and online. My name is Olga Kostrzewska-Cichon. I'm Head of Media Relations of TAURON Group, and I'm going to be the interlocutor of this meeting. Let's welcome Grzegorz Lot, President of the Management Board of TAURON Energia; Krzysztof Surma, Vice President of the Management Board for Finance; Michal Orlowski, Vice President of the Management Board of Asset Management and Development; and Pawel Jablonski, Executive Director of Portfolio Management. We have also presented a speech by Krzysztof Zawadzki, Vice President of the Management Board for Trade. Our meeting is going to be divided into 2 parts. Firstly, we are going to present our results. And then, of course, you are welcome to asking the questions. And in the second part. So this will be a Q&A session. Mr. Lot, the floor is yours.

Ladies and gentlemen, I'd be brief First half year has been very dynamic. You might notice it already by looking at us. And we are proud of what we've been doing because we have made a commitment when we announced our strategy, our hashtag is we deliver, and this is crucial. And this is visible in our company. We've been delivering. We will get into details afterwards. Distribution has been carrying out its projects, and we've been converting quite a lot of processes right now. And we have a focus on local content in it. So the AMI readers procurement, we are choosing the contractor by the price, but also based on the local contract. Is it easy? Well, it's doable. It's challenging but doable. So we've been implementing these elements in a systemic way. And we are extremely proud of one thing in distribution. And this is apart from our everyday work, it's the customer's clients. In our strategy, we want to grow the distribution and the dynamic we CapEx and projects, but the customers matter. 75% of our connection requests have been done online. And this is something that makes us stand out. This is what we offer to customers and it's a great value I think. I could talk quite a lot about customers, but let's leave it for Q&A. One very important thing for us is the renewables, 1 giga of connected capacity, Mesa Gorka has been speeding up. It was planned for autumn. But in June already, it was executed and new units will be launched soon. This affects our results, but also shows that we are very determined to make it operational. And there is one very important and sensitive thing for us. This is energy warehouses. We know that the first one to come to this market will be the winner. We can see one important challenge here. This is the cost the price of electricity will be going down, but the cost of the profile is something we in to handle. Energy storage is crucial here. It's important for the stabilization of the grid. Now heat. [indiscernible] Tanaka here. So his at your disposal, we one, the cogeneration auction over PLN 3 billion for projects that are underway and tenders that are in the pipeline for the new [indiscernible] it's going to be electricity and heat combined block, a very modern one with a reasonable price. It's already underway. And it's also in line with the strategy. Our customers, clients, again, I'm very enthusiastic about it. So a few years ago, we made the bid, and it's 3 years into this already TAURON new energy, a 9-year price guarantee. We are now reaching 400,000 customer 385,000 customers contracted energy for 9 years. So if someone asks for the price per household, well, it's unpredictable totally. But in our company, it's clear for our customers, almost 400,000 customers. Heat pumps, et cetera, are perfect solutions for larger consumers. Someone might ask, and if the price falls down, well, every consumer in Poland can leave the contract to the fixed-term contract without penalties and choose any other product. We are convinced here, we are not afraid. We don't want to corner our customers. To the contrary. We want to compete when security and quality, 400,000 dynamic tariffs are also an important interesting thing, ninefold growth. The total amount is so small compared to the total base of the customers, but this is the future for us. The interest has been growing. We have launched a new product. This is the dynamic traffic of a tariff with a price cap because we can see that customers have their concerns. The price of electricity might go down PLN 495 and for some, it's even PLN 300. So we have a cap. So we communicated that you can save a lot of money if you change your habits. And this will be a gain for you and also one very important thing for us. Over 40,000 new customers, a huge growth with the cheap hours, it's an upgrade of the dynamic tariff. If you don't want to be directly involved, we provide a solution of very specific prices in very specific hours of the day of the year. So customers -- it's very clear for them when they can make savings and achieve weekends, and this has attracted many new customers. Over 51% of TAURON customers are already outside of the tariffs and in the products. This is hard work to work together with the customers to convinced them to join this transition. For us, it's money. For customers, it's security and price stability. It's very important for what we want to do, which is switching from the classical model to the model based on dynamic tariffs, renewables and energy storage customer engagement we want to lower the cost of the profile, and you can only achieve it through shared engagement. And this is what guarantees lower prices. Also, digitization is our continued project, over 50% here. It's a small font here, so you can see it better in the chart. So this is the number of customers who already are serviced online. Invoices, contact point, some people are very willing to do it, and we've had a strong focus on developing the digital channel, the Internet and smartphones. Last but not least, profitable transition and just transition 2 years ago, when we talked about it, we talked about what it would be like. Now we know that we won the capacity action for the previous year, and it was a very good decision. It was very profitable for us and also very good for the system stabilization. Now a huge capacity auction, which also was won for all the units apart from the backup ones. I'm not going to get into these as now. It's huge money and work for the next year. This is also a message to local communities that the units will be operational in the next year. We have embarked on huge transition projects. I would like to invite you to [indiscernible] on the first of October, the Energy days roundtable. We will show you not the dreams. We'll show you the specific plans for the transition of besides which are now conventional. So [indiscernible] I'm not going to mention all of them. So there is a specific plan for every site for a GT and conventional solutions. I don't want to spoil it. But it's everything is planned and measured. It will be announced there. This shows our approach to transition. That's why 2, 3 years ago, we undertook to guarantee business continuity because we want the business to continue to be profitable so that our shareholders remain an interest in the project. and this is how we deliver on it. I'm very proud for our team. This is largely an achievement by my colleagues, an applause, we -- the tender has been announced. It was difficult to buy the gas turbines a lot of publicity, but it's a close topic now. We have contracted 2 turbines instead of 1, [indiscernible] of on, it's an ongoing project that will be delivered as planned. So much for me and later on I will be at your disposal during the Q&A.

Now we are going to see the Krzysztof speech address to us.

Good morning, ladies and gentlemen. Let me begin with the energy market. and the key factors shaping current market conditions. We continue to see wider intraday price ranges in both the spot and blasting markets. To give you an example, the highest hourly price recorded since the first of January this year was PLN 2,560 per megawatt hour while the lowest was minus INR 1,309 per megawatt hour. The widest price spread within a single day during the first half of this year was PLN 2,490 per megawatt hour. These figures illustrate a shift in the way the market operates short-term fluctuations renewable generations are playing an increasingly important role. They also create price risk, which means we need to actively manage our portfolio hedges and trading position. We can also observe the further growth in PV capacity. According to PE, it's reached 27.6% at the end of the first half, up to -- up from 23.7%, an increase of around 16%. The scale of these new connections is increasingly the influence of solar generation on electricity prices, particularly in the afternoon. And this widens the gap between daytime and evening prices and makes balancing the national power system more challenging. We are also observing a decline in the number of hours of negative prices, 237 hours last year compared with 253 in the first half of this year. We expect the full year total to be between 250 to 300 hours. The numbers of hours of negative prices fell by 19% year-on-year, but negative prices remain. An important feature of the electricity market. problem of product generation surpluses have not disappeared, although they were less pronounced in the first half of 2025. We are also observing higher clean dark spreads. So coal costs have fallen and electricity prices have risen while the cost of CO2 emission allowances has increased. This means that hard coal-fired generation was more competitive relative to gas-fired generation in the first half of this year. Higher electricity output compared with the half of last year supports the assessment. Overall, the economies of [indiscernible] improved significantly year-on-year. Average temperatures during the heating season were lower. So this translated into higher heat sales and better utilization of our hearing continuation assets. Conditions for wind generation, however, were considerably less favorable. In fact, wind conditions were the worst in 10 years. Capacity factor fell from 24.2% year-on-year and generation was down 14.6%. This adversely affected the result of the urea segment and reduced the share of low emission generation in the national electricity mix. Hydropower generation increased slightly from 31.2% to 31.9%. However, July and August demonstrated how difficult hydrological conditions in Poland have become -- so taking those months into account, we expect full year generation to be broadly in line with last year. The full year outlook, the form is modest. As I mentioned, weak output in July and August caused by difficult hydrologic conditions limit the scope for generation growth in the second half. Overall, renewable generation fell by 0.9%. And in absolute terms. This reflects a significant improvement in renewable output in the second quarter following a clear decline -- quite clear decline of 1.1% in the first quarter. However, when we take the increase in installed capacity into account, outer per megawatt of capacity was down by around 10%. It means the benefits of additional capacity were therefore largely offset by less favorable generation conditions, particularly for wind. Electricity generation from post use fuels increased by 7.4%, driven by our output from gas and hard coal. This helped compensate for weaker renewable generation and meet growing domestic electricity demand. Hard coal fired generation increased by around 10%, and making up for lower renewable output. And this confirms that conventional generation continues to play a key role in balancing the national power system when renewable availability is lower. And domestic electricity consumption increased by 4.6% year-on-year. And over the same period, GDP growth averaged around 3.65%. At the same time, PMI and the detector of economic conditions was down by around 1.4 points. Manufacturing PMI remained below 50% throughout the first half, averaging around 48.1% in the first half of 2026, therefore, not keeping pace with the broader economy. Another important development concerns cross-border electricity flows. At about 1 terrawatt hour year-on-year, written newly 2 terrawatt hours for the first half as a whole. So exports exceeded imports in every month except February. This balance reflects price differences between Poland and neighbor markets particularly Germany. It also reflects renewable generation across the region. -- the availability of domestic generating units and the cost of fuel and CO2 commission allowances. So the conclusion is that these cross-border flows reflect the growing competitiveness of domestic generation and high capacity utilization. The scale of dispatching in Poland is also increasing. Compensation paid by the operator renewable orders does not cover all the revenue that we lost by the affected installation. It is calculated using balancing market prices rather the price under the commercial contracts. In the first half of this year, we dispatching reached almost 1.2 that hours which is an increase of 42% year-on-year. This is a substantial increase. It reflects the growing challenges of [indiscernible] into the national power system. Contributing factors may include local great constraints in efficient management of surplus generation and transmission limitations. For electricity trading, the main implication is a greater risk of differences between plant and actual generation. An interesting example is that the amount of the electricity would be enough to cover the yearly consumption. So to put that volume into perspective, it will be enough to cover a full year of electricity construction by Polestar for example, Pacapaor 6-months of electricity consumption by all residents of [indiscernible] policy. Now let me turn to our generation portfolio. Our electricity generation increased by 24% year-on-year. Conventional units were the main driver with output up 87% of our total net generation. Renewable generation increased only slightly by 0.3% year-on-year. However, we should remember that on 30 June last year, we installed renewable capacity, and it stood at 874 gigawatts and reached 1,210 gigawatts by the end of the second half of this year, which is an increase of 39% and output per unit of installed capacity, however, fell by around 27%. The first half shows a wiring gap between growth in renewable capacity and the actual growth in generation. And this underlines the need to expand good infrastruction above all the bit energy storage facility that would allow us to store surplus electricity when generation is higher and make use of the late. At the same time, improved competitiveness is to increase output from conventional units by 28%. This again demonstrates the importance of TAURON Group's diversified generation portfolio. Heat generation increased by 8%, supported by lower temperatures during this year's heating season, as I mentioned earlier. CO2 emissions rose by around 24% as a result of higher conventional generation. We also recorded an increase of around 7% in the average cost per unit of CO2 emitted. Together to a 4% increase in emissions and 7% increase in average emissions costs mean that those costs have a greater impact on the Generation segment's result. Coal consumption also increased by 25%, reflecting higher output from our coal-fired plants. At the same time, the average unit cost of coal consumed fell year-on-year. It was this reduction to help improve the competitiveness of our core assets. Renewables accounted for 30% of net generation, down 3.1 percentage points compared with the first half of last year. As in the wider market, unfavorable weather conditions reduced output from our renewable assets relative to their installed capacity. And this limited unable generation despite the increase in capacity. Renewable generation curtailment increased by 31% to almost 62 gigawatts hours. The ratio of cortile generation to net generation also increased from 3.9% in the first half of last year to 7.1% in the first half of this year. The volume of dispatching affecting our renewable units rose particularly sharply to more than 5x its previous level. This is also reflected in the compensation due to us. Estimated compensation reserve for patching in the first half of this year have already reached 80% of the estimated total for the whole 2025 and that gives a clear indication of the scale of this issue. Turning to the availability of our generating units. Our [indiscernible] plants maintain a high availability with only a slight decline year-on-year. Our wind farms improve their availability and continue to maintain however, of technical availability. Our solar plant recorded a slight decline, but availability remained high. Coal-fired plants, particular those at TAURON increased the availability compared with last year, demonstrating a high level of operational readiness. coal-fired power plants. However, availability fell by 15.1% compared with last year. This mainly reflected outages caused by equipment failures or plant shutdowns. Almost every unit experienced an outage of this kind during the first half. Average generating unit availability across the national power system remains higher than in our own portfolio. Let me now turn to our sales portfolio. So electricity sales volumes increased strongly by 8.2% year-on-year, with the largest increases in the Household segment at almost 9% the business segment at more than 16%. In the household segment, the number of measuring points increased by more than 52,000 in the business and CME segments grow was driven mainly by higher sales volumes the growth rate of TAURON Group's electricity sales was almost twice the rate of growth in domestic electricity consumption, which is, as I mentioned, 4.6%. This supports our position as a leading electricity supplier. And in fact, in my view, the strengths are following for both household and business customers. Turning to the renewable share of our electricity sales rerecorded a slight decline of 1.6% purchases of renewable electricity, the numerator in this calculation grew more slowly than the sales volumes. To reach a share of 100%, we would need to document renewable origin of all the electricity purchase for sale. But decline, therefore, reflected slower growth in renewable electricity for transition in overall sales. As a result, the renewable share of the pricy we sold was noticeably lower. We also recorded substantial growth in customers under the Novan Energia program. The number of metering points increased by almost 170,000 compared with the first half of last year. Of these 80% household 327,000. And then small and mid-sized enterprises accounted for 50% and large businesses for around 1%. This growth confirms increasing demand for electricity backed by growing certificates and more broadly for renewable electricity. And the household segment is the main driver, accounting for 80% of the total increase in the customer base. The pattern of growth shows the [indiscernible] near program is currently being driven primarily by house customers and the SME segment. There is also further growth potential in the business. segment. Turning to electricity effect into the group by prosumers, we recorded a slight decline of 1.3%. In the first quarter, the volume fell by around 25% year-on-year. And this was due to higher consumption probably because of the colder winter. In the second quarter, electricity [indiscernible] into the group increased by 7.3%. And this growth came mainly from customers using net billing, primarily those with new installations. I will not repeat the point on heat sales so that increase supported by higher demand on lower and lower average temperatures. Our [indiscernible] tariff continues to attract customers. At the end of last year, it had 25,000 customers by the end of the half of this year the name has exceeded 40,000 an increase of almost 62%. And this suggests growing interest in an offering that helps customers use electricity more efficiently. It also -- so we can say that this interest is really, really growing. And we need to prepare those offers and use electricity more efficiently. And it also demonstrates the effectiveness of our sales and promotional activities to tell them that they can use and their portfolio. And we are helping this way customers to understand that they can actively manage when they use electricity and but they're aligned with consumption needs. Let me close with a few words about our efforts to raise customer awareness of electricity use. So we are currently running an educational campaign called Tower, that's of your choice. It encourages customers to save electricity and make informed use of time of use tariffs, it also promotes our online energy adviser, the [indiscernible] and [indiscernible] offers and, of course, dynamic prices. And the most visible effect of our campaign is this traffic on our website. So among the main results, we have seen also an increase of around 11% in interest in these tariffs on our website compared with the corresponding period. And interest in our online advisory service has also increased. So we do hope that this incentives will encourage customers to just harvest and better match their consumption patterns and, of course, help them reduce their electricity bills. And that concludes my presentation. Thank you so much.

Just a comment. Mr. Sebaski is with us emotionally over his absence today. He has talked quite a lot about coal, but I want to pass clear message, the long-term strategy of TAURON has a focus, clear focus on renewables, storage customers, supported OCGT and all the things I've talked about. And now we are pleasing market opportunity. These units are essential to stabilize the system and have a very specific tangible value. So operational discussion is one thing and then there is a strategic point of view and I don't have to repeat myself.

Now Vice President for Finance, Mr. Surman.

Good morning, ladies and gentlemen. The results of H1 2026 are a bit lower than in 2025. But let's remember that there is the underlying effect. 25 was the record are the best ever in the group. Hence, the differences year-to-year. They are negative, but still we think that the results for the H1 are sound. Now revenue, it's over PLN 17 billion. comparable year-to-year. Two factors, juxtapose factors, so price of energy for cell. And the volume and distribution had a significant increase. Energy sold heat -- so [indiscernible] Sisto has already talked about it. I'm not going to repeat it, but these were the 2 juxtaposed factors. EBITDA I will later get into the detail, but the level is PLN 3.7 billion, and that's a 12% worth year-to-year. But let's have a look at the comparable EBITDA, 26. We think there were no one-offs that would have affected the comparable EBITDA and in '25, would it have some one-offs, mainly the tariff question, which I already discussed. But in 2024, to remind you, the regulator adopted a tariff for 18 months, which was extraordinary. It was not favorable in 2024. It didn't cover the cost fully because the price of energy went up. And in 2025 in 3 quarters. this was current. This lower tariff was turned. So it's not comparable. That's why we have an additional effect of around PLN 200 million on EBITDA. Therefore, if we take this away and compare EBITDA year-to-year, the difference is around [indiscernible] -- now net revenue, it's over PLN 1.5 billion. Yes, it's also lower year-to-year and mainly due to the drop in EBITDA and the additional things that affect this figure is the deferred tax, which is higher and the current tax is lower. And the net income is better because of the interest rate costs at derivative instruments. This comes partially from the securities accounting which we implemented last year in October. Now investment outlays CapEx has gone up a bit. And nominally distribution has had the largest effect, but Michal talk in detail about it later on. Now net debt to EBITDA a very good level 1.2. This affected mostly by the decrease in debt. Now let's split it into segments. No changes here. Distribution remains the most important segment, 64% of share in EBITDA and H1 EBITDA nears PLN 2.4 billion. So its position is stable and then followed by other segments. So number two, this year is generation because of the favorable conditions for conventional generation, EBITDA, PLN 464 million, H1. Now there has been a change, sales is not ranked second anymore, but 1/3 now, I will tell you why later on. And EBITDA here is PLN 272 million, and the next new segment is renewables, [indiscernible] and heat, which has been catching up admiring renewables through PLN 235 million in H1. And now the specific reasons behind the weaker EBITDA year-to-year. Well, as you can see, most of the segments have lower results but the reasons are mostly out of company's control. So distribution first, the balance of the regulatory account, the position of it is crucial. This is the difference between the actual volume and the volume set in the tariff, and it will be cleared in the year and plus 2. And last year, the account was positive. And this year, actually, it's negative over PLN 170 million for the whole year of clearing the volume of 2024. Because of that already in H1, the result year-to-year was negative minus PLN 122 million on this account. And this is actually what largely determines the results of distribution. There were 2 more factors which are also very important. The regulator assets grew in value 2 billion difference, and this improved the result, but those WACC went down by 1.4 points. So this has had an adverse effect. But both factors offset each other, plus there was a negative effect on the balance thing difference. Overall, the effect on distribution was negative, but also there is good news. That's important for our strategy. As you know, we believe that the electricity consumption will grow in the country. And this year, for the first time, we can see it in the distribution, 3% growth in the volume of electricity distributed. Now renewables. So on the one hand, the market prices have fallen, as Krzysztof has mentioned, and this has had a bad effect on our results this year. Good news, while we have launched new units. This brings up EBITDA, this brings up volume and consequently EBITDA but also some negative events, wind conditions have been worse year-to-year. So we have launched new units, which unfortunately has been offset by less wins, and this has had a worse effect on the whole segment. Now heat. This is the only one that actually grows year-to-year. Two factors here. First, volume growth lower temperatures during the heat season. And this is the first factor. And the second one is the increase in the tariff and it has been a positive effect in the segment. And also, there has been a higher margin on electricity. Costs fell generation costs. As a result, year-on-year, the results have been better. So this is the segment that is positive and stands out because of that last year in H2, there were no write-downs, regulators issues, the allowances to loans. So all of these will be reversed in the next quarter. Now supply and wholesale trading. I think that it's the worst performing segment. A few factors at play here. The first one-off is the G tariff in 2025 performed exceptionally well. And on the other hand, the cost of G tariff went down and near the line of profitability. Therefore, it's not possible to get a positive margin in this segment. Also the lower unit margin on supply to business operators and SMEs. Now good news, the structure of supply has been evolving. Customers prefer increasingly listed products and not affect price and this lowers the risk for the company. So 65% of our business customers already prefer the listed price stock exchange. So this mitigates the risk. So good news, while the growth of volume for the first time in a longer period. So supply has gone up. And for many years, there had been drops. So it's an increase. It's a positive development. And now the last segment, we have a small loss year-to-year. It's generation. But we consider that the results are good anyway. There is a fall in price here on the air because of that EBITDA is slightly lower. But volume is better, both of sales and production and the balancing capacity revenue has gone up. And year-on-year, we've had -- last year, we had some compensation which hasn't been the case this year, but the segment looks good, really despite a slight drop in the first half of the year. Now we can talk about debt. Debit our ratio that we have seen we saw before. So the one reporting to the bank, the difference is about PLN 2 billion year-on-year. And I would like to show you also the economy net. And this net debt is on a very similar level to previous year. Why? And the main issue here is the way when the date of CO2 strike down -- write down when it was redeemed. So now we can redeem the certificates for our CO2 emission a little bit later. And in 2025, some of the transactions that were for transactions, which were adjusted to the previous redeeming period. And right now, we adjusted them to our liquidation to our cash flow, and we delayed this date. So we adjust forward transaction to CO2 redemption. So about PLN 2 billion of right down, which means loss PLN 2 million billion, we are going to spend a little bit later for the certificates. Those certificates were bought at the turn of August and September, and this is the main difference year-on-year, while we have this net debt a little bit different. Another factor, which is also quite vital for the future, for future financing costs, it's on RRP. So in 2026, we included PLN 1.5 billion of preferential funding in the areas. And therefore, of the preferential funds and the grants are now included in our reporting. But of course, influences the debt. And now when you look at that, so you can see that we have exchanged the most expensive debt in our balance, which we had the most expensive debt in previous year. And now we exchanged it. And both that right now, both financing was decrease our debt. So I would like to also pay attention to our leasing. There we can see an increase -- but our leasing is not a typical financing leasing. Mostly these are mortgages and lease. So lease for the property is for the land, and they are going to increase the value of our debt on increase on lease. And the last information in this slide you can see that our group is in a very good position -- financing position. We have 6.42 secured. And I believe this is enough of a 12-year gap to finance it. And so we have also 14.2% available financing under the NRRP project and it's going to be started commissioned after the execution of the contract. So first we need to commission the investment and then will be financed by those funds. And now let's talk a little bit more about NRRP financing. So we are not going to stop. We deliver our strategy -- we obtained more than PLN 400 billion from those projects, mostly on renewables and lighting. On the distribution and the charges for electric vehicles. As you can see on the 30th of July, we had EUR 8.4 million billion funds of preparation financing. So we are just step ahead from the strategy to reach it. And remember, it's just 2 years since we announced the strategy. So we have -- so we have a lot of grants and prevail loans that we apply here. And we are still searching the cheapest possible financing. So in my part, that's probably all now I would like me how to talk about the investment part. Krzysztof talked about losses, and there are a few of them, but still you know the results, I believe, are really great. So there is a lot of optimism. You need to remember that besides those negative information, the results are really optimistic, and we all received dividends and we always fight for those results. But there, let's say, pretty interesting.

Ladies and gentlemen, now we are going to talk about CapEx. So the increase you on year by 6% EUR 2.8 billion is the average CapEx. So now we are going to talk about distribution. We invested in PLN 1.7 billion and then we are going to talk about the structure that you can see in the year in the slide and investment. But it doesn't really reflect our perspective because the last quarters where we're intensive and years of intensive securing preferential funding, grants for best cogeneration auctions. But then, of course, I'm going to refer to them. So when we talk about the investments we are in the procurement process, and we want to start also some construction site. So therefore, maybe this CapEx scale is pretty low. And of course, later, I'm going to talk about them in more detail in particular slides. Now if you look at the distribution only, so construction of new grid connections is PLN 811 million and renewables, so construction, it's about 7.8 gigawatts in our capacity. And also, we speeded up with modernization in practice is about 1.5 kilometers of the grid of the network, modernized, of course, right now. So we'll create a great scale program of distribution, which is supposed to increase the ratios and indicators. Then when you're talking about this Intellect smart meters, so it's about 3 million -- more than 3 million smart meters at our end users. And then when we talk about wind farms, so actually, construction of free wind farms was the biggest challenge and the biggest investment for us for us as well as modernization of hydroelectric power plant in [indiscernible] Then if we talk about heat domain source, -- the main sources where we spend our money was kind sector, the carbonization project and also connection of new facilities to the district heating networks. And in other segments, -- so this is about EUR 74 million in Lightning and light fiber, but it, of course, was also financed by the National Recovery Plan. Talking about generation. So we don't have CapEx from [indiscernible] but we are expecting them to come in the next quarters at large scale. So [indiscernible] Bohn, it's now 910 megawatts. And it's also, of course, undergoing the modernization process. And there are a lot of systems that are going to be replaced because historically, they cost a lot of problems. And I believe that in the next quarters, those problems are going to be solved and the disposition dispatching will be higher. Now moving on to the wind farm in [indiscernible] first electricity was manufacturers and already? Or does this still start phase, but we are testing the turbines and commissioning them one by one. And we are now in the process of final operational approvals for line through the power line. Importantly, the project is already generating energy and it's going to be visible. So it was about PLN 8 million of income in August. And once mortars have been launched [indiscernible] production [indiscernible] and next year, we expect in Q2, the project to be fully operational. Importantly, we received dedicated financing from the European Investment Bank for this project, which is quite favorable compared to commercial terms, and we have 18 years to pay it -- to repay the loan. So again, this is a project that enjoys very attractive financing terms. Now the outlies and spending. This is an interesting thing here. The expenditure was PLN 75 million in June. This is the expenditure, the spending of PLN 11 billion. This is because the turbines were prepaid and the outlays do not reflect fully the progress of the project. And also between '26, '27, we will recognize the costs as outliers expenditure, which will increase this item in the balance sheet significantly. Now going to the storage. And the first H1, we were preparing the centers. Now we are choosing the right contractors in total for the energy storage and renewables, 492 megawatts are covered by the tenders and this will help us start the execution that the physical construction of the project. Other projects are under construction and are to be hand over this year. [indiscernible] we are on the final stage of fitting and construction. So soon they will be -- will join our pool of storage batteries. Now PV and wind projects. We have already mentioned Miesja Gorka, but there are also other projects we launched which are PVs or hybrid facilities. Let me focus on 2 examples here because I think that they are a good example of our philosophy in this segment. As we know, PV is under significant pressure. We have discussed the prices of energy on the market, the price is under pressure. And our projects in practice are projects are value-added. So take [indiscernible] 55 megawatts, huge sky. It was a former landfill. So it was very difficult to repurpose the land for other users. It was also a burden from the point of view of real estate tax. So we got financing from the National Recovery Plan, 90% in loans minus 20 points as the underlying rate. This has solved the problem and also it's a potential for the future because the farm is located next to there is a possibility to directly hook up new assets, including an electrolyzer. So on the one half, we have preferential loan. We have repurposed and post the industrial side, which was our and which has been now incorporated into the fleet, the hybrid facility in [indiscernible] is also an interesting project. It's our own development developed internally. This is a strategic promise we made in our strategy. We will build a PV facility here, 65 megawatts of capacity and storage 55 megawatts. PV also enjoys funding from the National Recovery Plan. And the batteries got a grant from the National Environmental Protection Fund. So this is also an interesting solution. Our own resources have been used or double preferential financing. So I think this shows very well what our philosophy is of creating the best value for our shareholders with the best possible and available support. Now moving on to the OCGT unit. Many questions, many doubts were involved whether we will be able to contract these turbines to meet the capacity contract we made. And we have succeeded. We are very happy with the conditions of this contract. Why we succeeded? Well, first of all, technological flexibility. We have 1 turbine solution, Class H turbine here, but also there's a 2 turbine solution to Class F turbines and this 2-turbine solution turned out to be more feasible in this specific setting, and also the model of investor deliveries. We split the turbines from the construction contracting and this made more companies interested in the supplies and that will help us also to boost the number of companies interested in the construction contract, EUR 293 million and out of that, EUR 193 million goes for the turbine supply. The installed capacity ability will be higher than planned because now with 2 turbines is going to be 630 megawatts electricity megawatts. So if you compare that to the situation in the Polish market, it's around 30%, 25% cheaper than some recent contracts made on the market. So our contract is 25% cheaper. So this is an interesting contract. The turbine can be built outdoor with containers. So this means that prefabricated modules can be brought to the site, which will shorten the construction process and reduce the spending on the construction works. Now we need to get the approvals. This is crucial and the environmental decision and the construction permit. We also need to prepare the specs. We need to hire the contractor, the engineer for the site and the tender is ongoing. We want to finalize the design in the beginning of the next year. So the construction part and the turbine part will be split, and this means that there will be more companies interested which will impose the competitiveness and also local content for construction parts. Now the carbonization of heat the unit in Wages is the key project for us, PLN 1.2 billion. This is the largest budget plus over PLN 2 billion of funds from the cogeneration auction, which will be paid between 2031 and '45. This is our crucial asset in there of Silesia and provides power to provide energy to most of our heat system over there, and it stabilizes heat deliveries for most part of Silesia. Now the tender for turbines and supplies is underway, 2 turbines are planned, and we expect to get the bits in September and choose the contracts are based on that. Yavorgna heater is an important project for us as well. So first, it's important because it will provide heat to the city of aorta, but also it will provide energy to the unit stimulant in the [indiscernible] And once it's commissioned, we will be able to put out of service, some coal units in the power plant, we have gnat which now generate loss. So we will have a significant result on our results. The CHP auction was won in June and we will launch earlier this in 2029, but the gas boilers will be launched earlier in [indiscernible] use storage and electrode boilers. 30 megawatts in ages the electrode boilers. So the idea is that outside of the peak heat season, we want to use negative prices for hot water for households. So we do have huge projects, but also we have won many CHP auctions, [indiscernible] These are smaller locations, not as meaningful, but this means additional revenue and profitability and profitable decarbonization of smaller sites. Thank you.

Ladies and gentlemen, now I would like to welcome you to Q&A sessions. So the first question here.

I have 3 questions actually. First, refers to the Slide #4. When you're talking about the generation portfolio, you inform us that year-on-year, the consumption of coal rose about 35%. Of course, it's very difficult to foresee what's going to happen in the Q3 and Q4. However, it's a fact that since August, we are facing a little bit different reality, especially at capacity larger than we were in June of course, for clear reasons. So therefore, I would like to ask if the consumption of coal is going to rise in Q3 and Q4, bearing in mind the geopolitical situation. Day before yesterday, the coal mine Congress, it was said that almost -- there was nothing, no coal in the warehouses, in the storage sites. So are you going to buy some extra additional coal supplies. And if yes, where from? The warehouse storage sites are empty. And second question, it's a very interesting information that in your renewables portfolio, there are batteries storage -- energy storage batteries. So do you have previous experience, do you think it can be a game changer -- based on the second quarter and of course, I would like to ask about free sites, Wagisha, [indiscernible] in the context of the capacity market. Do you believe that what's happening, I mean like every year, some kind of black scenario is going to happen starting from COVID. So is there any chance that the 3 sites are going to operate in your portfolio after 2028? Thank you so much.

I would like to answer the first question. So if it goes about coal in our group and coal supplies in our group, so we can see that it's increasing and it's a kind of a consequence of our strategy. So we try to secure the supplies, but we also like are open to some new solutions. And you can see that what we can see in the first quarter is a consequence of procurement processes and offers on the market. Of course, we bore in mind the availability of coal. So what can happen in the second half of the year? The dynamic is pretty high. It's dependent on geopolitical situation, on the weather conditions and, of course, availability of our units. So what we have already said, [indiscernible] is an outage right now. In October, we are also -- there will be an outage in rich -- so we -- so the demand for coal is going to be a little bit different in the second half of the year. And of course, we are talking about hedging contracts. So yes, coal is coal supplies are secured. Now I would like to refer to this battery storages to the warehouses. So I believe it's just the beginning of a very fast way that we are going to accomplish soon. The results are better than we assumed. So actually, what I would like to say is that our portfolio is secured of 600 megawatts in our warehouses, both on the capacity market and also with grants from the environmental fund, we have received the most of all capacities financed by state.So we were the second company financed by environment and fund. So what do we expect actually only the question is do you -- if we think that it will support our financial result in the second half of the year? Yes, I believe it will. So the warehouses and, should eliminate this value. It can be, of course, spend on the margin or on lowering the costs, on improving our competitiveness and increasing the volume. Yes. And as Michal said, it's 700 of megawatt, mega it's another warehouse. So yes, we can see a great potential without such warehouses on such a scale, also dispersed one, this transition will be very difficult. And it will be very difficult to deliver the price, which is now present in the European Union. So that's the question.

And now the third question is a difficult one. So we are getting back a little bit to the history that happened 3 years ago. And now the question refers also to 2028. So it's a kind of capacity market in 2028, 2025. In 2025, we won, it was a good decision. With this unit, we could provide stable system. So regardless of this transition that you are undergoing right now, I think we are able to face it. So we also won a contract for 20 in the capacity auction. And I think we need to win the auction for 2028. So and then we'll be able to discuss this year. So there are projects undergoing but duality will verify everything. Practitism is crucial. Our position here is that as long as we don't commission the units -- gas units, renewable units, we need to have kind of backup because we need to provide our customers with energy 24/7. There is an option and we are like now under -- it's right now under discussion. So we are ready. We have a strategy that we are presenting right now, 0 mission opening the world of new energy. And I believe that we can compete with these units. We have a precise specific offer. We can work longer, even in 2029, 2030, when you look at the legislation in the European Union, there are several regulation that talk about kilowatt kilograms per migrate and then you can run your business activity. It means that those units can work on a particular number of days throughout the year. So it means that they are also needed. So of course, it requires special gelatinization legislation and decisions. The system of work on these units, which somehow makes them work different than they were designed, doesn't have at all. So on one hand, capital expenditure that needs to be done and on the other hand, the supplementary system of support. It is possible. We believe in it. On those units can operate. But of course, there needs to be demand for it and it can need also a proper business plan and business case.

I would like to ask another question. So let's keep the floor.

A quick question about the profitability of more investments like offshore because TAURON used to communicate post now, there are many geopolitical issues. And I can see that it's not as profitable as before. What's its effect on the long-term plan? And also energy prices because [indiscernible] Group and again gave the specific cost of energy from coal and gas. And the conclusion is now that coal production is more profitable right now with [indiscernible] loss of difference? And what's your data on it?

The first question first. Well, our strategy is clear when it comes to the renewables, wind farms will continue to be the default. We have a share in one joint project with PGE offshore, and this is not a project which has been undergoing an intense phase of preparation. So there are no plans to boost the scale of offshore planning. And if you think about profitability of renewables. Now commercial PV without storage is a difficult business case. That's why we are looking for preferential funding options or any additional advantages from projects, also with hybrid formula with storage and wind onshore, here, the supply is quite low. The general master plans in Poland are now coming into effect. So this blocked new project for some time. So now you can either buy existing projects or buy projects we have a long and difficult history. Now if you have a good and well configured project with good wind conditions is and will be profitable, but there are a few projects that meet these conditions, but this situation is going to change. Two years ago, there was a legislation amendment. So once the master plans have been approved. This is expected to happen this year already. There will be more projects available. And we think that they might be attractive economically speaking. Talking about the prices, it's of course, most profitable to benefit from wind and from sun from the sunlight, which means that coal is to be eliminated. Of course, we are talking about the long-term plan. And with the high prices of gas, a lot of countries like load their battery storages. So it's more profitable now to use gas hold them from gas. That's the reality. Getting back to the first question, actually, if there is a lower demand for supply of coal, and there's going to be a demand. So again, the market is going to react. So somehow we don't know what the situation is going to be like? I mean the supply versus demand. And we don't know what's going on between gas and coal, what's going to happen there. So I feel quite humble to talk precisely what's going to happen in a few months. I don't want to predict anything like for sure. And answering your question, yes, we have some data, but we don't share them in a really transparent way. As President, Mr. President said, we can see that our profitability has risen, especially the production from coal, and we just applied it in the first half of our year. And we can see an increase in production an increase in supply on the market, especially in the situation with higher prices. We'll try to take benefit of this situation, and we try to build on the margin on the commercial use.

And another question is coming.

I would like to ask you about the G tariff price. From your perspective, with your contracts, is it possible to have the same level of the tariff also bearing in mind that there is going to be election in Poland and depression is going to be high. And the second question is that I have seen EBITDA and volume. But can you show us the number of customers, the number of customers in small and medium enterprises and business. Is this number growing or falling?

And so second answer is growing. We are going to find this number soon. So there is an increase in small and medium enterprises and of course, households as well. So this is the trend that we somehow changed. It was challenging. And right now on this competitive market, small and medium enterprise the most competitive market. So we've managed to change the strength. They are coming back to us. So this increase is really positive. We have more and more customers. And the first part of the question was some kind of, I think, A, intellectual Hakon me. So of course, I'm not going to talk about the detariff for the next year. But I would like to say one thing. I think that we spent too much time on tariffs. I can tell you the price of energy for the next year and even for the next 10 years. We don't need to wait for this curve actually because the price of energy which is PLN 495 can be the same for the next 4 or 5 years or 9. And when it goes about the tariff. I understand your idea why you ask such a question. Actually, it's ahead of us. There was a resolution that has just been into in fact, so it means that we are going to do -- subscription fees are going to be changed and moved or split into 2 in the permanent ones and right now, we are applying to the regulatory office. And then we are going to apply for the next year. 9 years -- yes, 9 years plus this per moment charge, and there was also a kind of guarantee for that. So there's a kind of guarantee for the customer that the product is going to leave our company, and we run such company with Polish insurance company, Paso. And that's a particular value and 50% of our customers have already had products with such guarantees. I mean, dynamic products with TAURON gene. And this is the direction that we believe the most interesting one. So in each tariff group, we have had an increase in households in businesses and in large businesses was the highest. Actually, in every tariff group, there has been an increase, half year on half year. it's about 8% on average. But in large business, it was even, I believe, 10%. But somehow, I have a feeling that I didn't address the question straightforward. As you understand, it's a really sensitive element of our work.

Another question?

[indiscernible] Boinas. The first question is, when are you expecting to award the job of the contract engineer for [indiscernible] . And going back to the capacity action except for New Yaron. So what capacity of coal units will be outside of the capacity market as the big 2027, what will be the role? Will there be a backup for the contract units or will they have a different function? Thirdly, as to your expert knowledge and side information, what are the chances for the exchange traded bonds listed bonds for electricity to come back, is it likely to come back? Thank you.

So let me begin with the issue of the contract engineer that the procedure is ongoing. And in Q4, it should end and we will select the engineer depending on the questions in the procedures, et cetera, it might be October or later, but this is the expected deadline and now the capacity auction. With every auction, the strategy and the situation is different. Now 200 units are a backup for other units. This is how we joined the capacity market. We won the capacity market for all the units and the 200 units are now operating in [indiscernible] So yes, everywhere. This is because of [indiscernible] They function based on the terms of the capacity market or as a backup and let me not reveal the secret of what and where because next year, we are also going to take part in the auction. And it's different than last year. Probably next year, it's also going to be different. Unfortunately, it's off mic. I don't know. We always adapt to the regulatory situation. So the fewer the changes the better for us. Speaking about the bonds, we were clear in our communication about our position, and this hasn't changed, but whether this will come back, well, we have no idea. And also, there are many things now ongoing. The financing, huge investment projects, the capacity auction issues, the transition of the industry -- so there are many variables here. We need to take into consideration.