Poland’s leading coal producer, Lubelski Wegiel Bogdanka SA, has announced a substantial $305 million write-offfrom the value of its assets, as the rise of wind and solar energy accelerates the decline of coal in the market. Bogdanka, which is controlled by state-run utility Enea SA, cited “dynamic changes” in the domestic coal market and the increasing capacity of renewable energy sources as the primary reasons for this financial adjustment.
The company’s profits had nearly tripled last year, reaching a record 687 million zloty, largely due to high coal prices. However, analysts predict a significant reduction in profits for 2024, even before accounting for the recent write-off.
While Poland’s new government has been promoting clean energy, it has yet to release a formal energy policy with specific targets for the coming decade. Nonetheless, coal’s share in Poland’s electricity mix has already dropped to 66%last year, down from over 70% the previous year, as investments in photovoltaic and wind farms increase. The pressure on coal is expected to intensify as offshore wind turbines and gas-fired units become operational, and Poland looks towards establishing its first nuclear power plant in the next decade to align with the European Union’s climate neutrality goals.
Bogdanka plans to revise its strategy in response to these new market conditions by the end of 2024. The company’s shares have dropped 27% this year, reducing its market valuation to 846 million zloty, while the WIG20 Index rose by 1.4% during the same period.
