PGE Group, Poland’s largest electricity and heat producer, has unveiled its ambitious new strategy for 2035. The strategy outlines an estimated €55 billion in investments aimed at transforming Poland’s energy landscape. It prioritizes energy grids, new flexible gas power plants, renewable energy sources and advanced energy storage systems, all while integrating modern heating solutions. Crucially, the strategy reinforces PGE’s commitment to achieving climate neutrality by 2050, with an interim target of reducing CO2 emissions by 75 percent by 2035, including from existing coal-based units.
In an exclusive interview, Dariusz Marzec, the CEO of PGE, discusses the courage and responsibility required to follow through with a transformative action plan in a turbulent environment.
PGE’s new strategy that lasts for 2035 is entitled: ‘Energy of secure future. Flexibility.’ Why is flexibility so important?
Flexibility is essential.Nowadays, power systems are highly dependent on intermittent renewables. At midday — when the renewable(RES) generation is at the highest level — demand for dispatchable capacity drops substantially, but then in the evening after the sunset we can observe a rapid rise of demand. Flexibility is a tool to match variable demand with variable production. For this reason, we can use storage, power-to-heat solutions and flexible dispatchable gas generation. So, flexibility will allow us both to match demand and reduce price volatility.
What kind of assets do you need for that?
By 2035 we plan to develop 4 GW of offshore wind power plants and another 4 GW onshore. To enable more RES deployment we plan to increase our distribution grid capacity by up to 11 GW. To keep our power system stable we are also investing massively in energy storage. In 2035 we intend to operate energy storage facilities with a capacity of more than 18 GWh. We are building one of the largest lithium-ion energy storage facilities in Europe in Żarnowiec. All this will help us decrease CO2 emissions by 75 percent in just ten years due to rapidly decreasing generation of energy from coal. In some locations these old coal power plants are being replaced by flexible gas power plants. By 2035 we plan to operate 10 GW of them, however, they are not meant to work at full capacity all the time.
How do you plan to finance these investments? How are banks looking at your projects taking into account that you spend €5 billion to €6 billion for the EU Emissions Trading System each year to cover emissions from coal assets?
Yes, indeed, financing would be a challenge, but we have number of options and alternatives on the table.
We can rely on currently available sources of financing for the energy transition, such as the Modernisation Fund, Recovery and Resilience Facility, and resources provided under the current Multiannual Financial Framework. Investments in the energy sector require long-term planning and a stable outlook, while most of the aforementioned funds are set to expire in the coming years. What we need is to ensure continuation of these funds to enable us to meet the 2035 targets. For example, only recently we signed 25-year loan agreements with the Polish Development Bank (BGK) for expanding distribution networks, which amounted to approximately €2.8 billion in March 2025 from the National Recovery and Resilience Fund.
Our first offshore wind farm project, Baltica 2 — backed with a Contract for Difference — will cost around €7 billion. Of this amount, €3.5 billion, PGE’s share, has already been secured from financial institutions such as BGK, the Export and Investment Fund of Denmark, the European Investment Bank, the European Bank for Reconstruction and Development, and a large group of commercial banks. The gearing level achieved is approximately 75 percent, while the remaining equity contribution has been secured with a loan funded from the National Recovery and Resilience Fund.
The key to successfully finance the project lies in the evaluation framework and its ability to generate stable, predictable and secured income — in other words, the project must be bankable. This guarantee is ensured through support mechanisms such as the Contract for Difference for offshore wind farms, the Capacity Market for gas and energy storage, and a dedicated mechanism to support flexibility in both power and heating systems. To better adapt to the local specifics we need a flexible state aid framework that more accurately reflects the actual costs of individual investments below the notification threshold. Moreover, capacity mechanisms should be recognized as an integral part of the energy market, and their implementation should be seen as essential in the volatile power system, serving as a preventive measure to avoid blackouts.
Is this the main reason that you are planning to operate 10 GW of gas-fired capacity?
Speaking about natural gas, we have to make a distinction between power and combined power and heat generation. Natural gas will be needed to decarbonize our district heating systems — here we have no alternatives to deliver heat at the required temperature, which is approximately 130 degrees Celsius. And yet in power system gas-fired capacity is also needed. According to the European Resource Adequacy Assessment, Europe will need an additional 50 GW in gas-fired capacity to ensure its energy security. Yet, here again, the district heating can contribute to the power system – in Poland almost 20 percent of electricity comes from combined heat and power.
Still, you need to plan how to phase out coal, and that will have a negative impact on your balance sheet. How long do you want to keep coal assets?
Today coal-fired power plants work for a much shorter periods of time than years ago, but they are still needed. In 2035 coal power plants will not have to produce anything at all, but they must be available as some kind of insurance policy — the cost of which we must cover for our security. Let me use an example, lignite mining in Belchatow is expected to end in 10-12 years, and in Turow a little later. Analyses are underway on how this 5-GW power gap will be secured after the coal deposits in Belchatow are exhausted. This location has gigantic grid assets and qualified engineering and technical staff to draw on. That’s why I am sure that this region will continue to be involved in energy. We will study the possibility of putting up a nuclear power plant there, while in the case of Turow we are considering putting up both a gas unit and a small modular reactor.
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