Capacity market approval positive for Polish power generators – Fitch

According to the ratings agency Fitch, the European Commission approval of Polish capacity market will improve local power generators cash flow and boos debt capacity. “In the impact assessment of the Power Market Act, the Ministry of Energy estimated the cost of a mechanism for energy consumers at an average of PLN 3.8 billion annually in 2021-27, which would mean a significant improvement in cash flow for energy producers, giving them an additional and more predictable source of EBITDA profit than energy sales on the market,” Fitch explained. According to Fitch, Poland’s four biggest power utilities, Energa, Enea, PGE, and Tauron will get a much-needed boost in form of capacity payments in auctions in 2018 or in the following years, which will “provide additional debt capacity for the current ratings from 2021,” the agency wrote. “Otherwise, large capex plans of the four utilities will take their leverage close to the maximum level for the ratings. The likely budget of the capacity mechanism, which we expect to be at least partially allocated to the four utilities, is substantial compared with the aggregated EBITDA of the four utilities in generation (close to PLN5 billion in 2018 based on our projections),” the report concluded.