PGE: Overlooked Polish Powerhouse

PGE Polska Grupa Energetyczna S.A.

Is Poland’s largest power producer, however, historically reliant on coal-based energy. In recent years, PGE has embarked on a significant transformation towards renewable energy, aiming for climate neutrality by 2050.

Investments in renewable energy

• PGE is actively developing offshore wind farms in the Baltic Sea, aiming to achieve 2.5 GW of capacity by 2030. This initiative aligns with Poland’s broader plan to install 5.9 GW of offshore wind capacity by the same year.
• The company plans to add 3 GW in photovoltaic capacity and expand its onshore wind portfolio by at least 1 GW by 2030. These efforts are part of PGE’s strategy to invest over PLN 75 billion in low- and zero-carbon energy sources and grid infrastructure by the end of the decade.

Financial & Market Position

• In 2022, PGE reported revenues of approximately PLN 73.4 billion (€15.7 billion), reinforcing its dominant position in Poland’s energy sector.
• The Polish government’s commitment to decarbonization and energy security provides a favorable environment for PGE’s renewable initiatives, including financial support and streamlined regulatory processes.
• PGE has partnered with Ørsted to develop the Baltica 2 offshore wind farm, marking a significant step in expanding its renewable energy portfolio.
• The company has secured substantial loans from institutions such as the European Investment Bank and the European Bank for Reconstruction and Development to fund its renewable energy projects, underscoring investor confidence in PGE’s strategic direction.

Potential + heavily tied with Politics

While PGE Polska Grupa Energetyczna S.A. is positioned to benefit from Poland’s transition to renewable energy, a significant portion of its growth potential is dependent on the outcome of the presidential election in May 2025. The result could determine the speed and scale of Poland’s green energy transformation, impacting PGE’s stock performance and long-term valuation.

The Polish government owns approximately 61% of PGE

The current Koalicja Obywatelska (KO) government, which won the parliamentary elections in 2023, is strongly pro-renewable energy and has been pushing forward decarbonization efforts. However, Poland’s president holds veto power, meaning that if a candidate aligned with the opposition (Law and Justice - PiS) wins, key reforms and funding programs for renewables could face resistance.

IF KO secures the presidency, it would remove major legislative hurdles for PGE’s planned green investments, fast-tracking regulatory approvals and funding allocations.

Under the current administration, billions of euros in EU funding have been unlocked for Poland’s renewable energy transition. If KO retains power, it is expected that more subsidies, tax incentives, and grants will be directed toward renewable infrastructure, including PGE’s offshore wind, solar, and energy storage projects. A PiS-aligned presidency could slow or complicate these processes, delaying large-scale investments in renewables.

PGE’s long-term strategy includes a gradual exit from coal, but a more conservative government may protect coal industries longer, slowing down the transition. If Poland elects a pro-green president, it could accelerate the sale of PGE’s coal assets and support a cleaner energy mix, which would boost investor confidence and likely lead to a higher valuation for PGE in the long run.

Conclusion

While PGE has strong long-term growth potential, a KO victory in the presidential election would create a more favorable environment for exponential growth. The removal of political roadblocks, faster funding approvals, and a clearer path to decarbonization would make PGE an even more attractive investment. However, if the opposition secures the presidency, delays and political uncertainty could limit the stock’s short-term upside. For investors, the election outcome in May 2025 could be a pivotal moment in determining whether PGE becomes a leader in Poland’s renewable energy market or faces a more uncertain, politically influenced path.