With the increase in the European Union’s climate goals, the Czech Coal Commission recommended ending coal combustion by 2038. “For these reasons, the market value of Severočeské doly decreased and CEZ Group created a provision for long-term assets of the mining company of CZK 8.7 billion in accordance reflecting the lower expected demand for coal and the earlier cessation of coal mining, “said CEZ spokesman Ladislav Kříž. Adjusted for extraordinary effects, such as provisions, CEZ’s net profit fell by 31 percent to 11.3 billion.
“Apart from the date of the earlier expected end of coal mining, the most significant factor that led to the provision is the fact that in the medium term, the price of electricity is trading almost at the level of the price of emission allowances. This means that the accounting picture to date indicates that a much smaller volume of coal will be taken by pelvic sources over the next ten years, ”said Jan Klaus, CEZ Group’s head of controlling, on Tuesday. Novák stated that the value of Severočeské doly’s assets before the provision was approximately 13 to 14 billion crowns. “This will lead to a relatively large decrease in their value,” he added.
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Novák did not rule out the possibility that mining may end due to the market situation before 2038. According to him, mining brown coal at a time when it could no longer be used in the Czech Republic will not pay off. “It is extremely unlikely because brown coal cannot be transported economically over long distances. It is not a world-traded commodity, it is not black coal. So the ideal way to use brown coal is to burn it at the mining site, that is, in pelvic power plants, “said Novák. “The fact that we have no coal-fired power plants and continue to mine is practically impossible,” he added.
Trade unionists want to negotiate compensation for miners
The trade unionists of Severočeské doly want to negotiate compensation for miners due to the shortening of the deadline for lignite mining. Many of them are over 50 years old, said Vladimír Bergerhof, chairman of the Doly Bílina quarry.
“It’s not pleasant for us. Recently, the limits until 2050 have been broken, and suddenly the year 2038 is ahead of us. We perceive the shortening of the deadline negatively. There are a lot of people who expected to stay in the mine in retirement, “said Bergerhof. “These are people who will have a hard time finding employment in 55 years. We are waiting for the government’s decision on retirement. Because these guys are at risk and working on them has consequences, which also plays a role in finding a new job, ”said Bergerhof.
At the beginning of this year, approximately 2,580 people worked in Severočeské doly. “We do not think that the postponement of the date of termination of coal mining will currently have an impact on employment,” said Lukáš Kopecký, a spokesman for Severočeské doly (SD). Trade unionists now want to conduct a survey among employees. Questionnaires on the given situation have been prepared, and in the autumn a meeting of all SD trade unions with the company’s management is planned on the topic of the future of employees.
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CEZ’s energy from coal has already dropped below 30 percent
According to the latest climate proposals presented in July, the EU wants to increase the share of renewables in energy consumption, among other things, in the fight against global warming. In the first half of the year, CEZ Group’s energy production from emission-free renewable sources increased by nine percent year-on-year and production from nuclear sources by four percent. On the contrary, according to ČEZ, production from coal sources fell by 23 percent, mainly due to the sale of the Počerady power plant and the shutdown of the Prunéřov I power plant. Overall, CEZ’s share of coal production is already below 30 percent.
“We continue to fulfill our accelerated strategy of Clean Energy of Tomorrow, focused on growing the share of emission-free sources and the Czech Republic and Central Europe. CO emission intensity2 CEZ Group’s electricity generation fell by 19 percent year-on-year in the first half of the year, and we completed the sale of Bulgarian assets for 8.6 billion crowns, ”commented CEZ CEO Daniel Beneš on the group’s results.
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According to CEZ, the sale of Bulgarian assets affected the economic results in the first half of the year and will also affect the full-year result. “Overall, CEZ Group is leaving Bulgaria with a positive cash balance in excess of one billion crowns and is continuing international arbitration against the Bulgarian state, where we are claiming potential additional income for CEZ shareholders,” said Martin Novak, CEZ board member and director of finance.
According to ČEZ, sales of energy to end customers in the Czech Republic increased significantly in the first half of the year, by 11 percent for electricity and by 20 percent for gas. Electricity consumption in ČEZ Distribuce’s distribution area increased by nine percent year-on-year. It grew by eight percent for large companies and by two percent for households. Consumption thus reached a higher level than in 2019, ie before the start of the covid-19 pandemic.
Therefore, CEZ Group is raising estimates of this year’s full-year financial results. “We are increasing the full-year EBITDA outlook to the level of 58 to 60 billion crowns and net profit adjusted for extraordinary effects to 18 to 20 billion crowns due to the positive development across all segments. CEZ Group’s net debt fell by 43 billion crowns in the first half of the year, “said Novák. However, according to data on CEZ’s website, electricity production fell by seven percent year-on-year to 27.7 terawatt hours (TWh) in the first half of the year. Compared to last year, the number of employees in the group also decreased, by seven percent to around 30,300 at the end of the first half of the year.
Investments for half a trillion will go to Dukovany or solariums
Novák stated that the group plans to invest 500 to 550 billion crowns by 2030. According to him, the so-called maintenance investments in CEZ’s current resources and assets, about the other half, and the company’s growth expenditures. According to Novák, these are not unrealistic plans, because the company currently invests 40 billion crowns a year, which makes about 400 billion crowns in ten years.
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In addition to expenditures on distribution networks or further development of modern energy services (ESCO), the planned cumulative amount also includes, for example, ČEZ’s expenditures related to the preparation of a new nuclear unit in Dukovany, company acquisitions and expenditures on construction of new renewable sources. In the spring, ČEZ announced that it plans to build renewable sources of six gigawatts by 2030, mainly photovoltaic power plants in the Czech Republic. This is roughly three times the output of the Dukovany Nuclear Power Plant. The group wants to invest up to 90 billion crowns in solariums alone, said Pavel Cyrani, CEZ’s Vice Chairman of the Board of Directors, in May.
According to Novák, ČEZ wants to increase its operating profit by building new renewable sources and acquiring growth in ESCO services. According to him, rising wholesale electricity prices also play an important role, which could cause EBITDA to be even higher compared to long-term plans. “But prices cannot be relied on,” remarked CEZ’s CFO.
