EBRD has subscribed for an investment of PLN 240 million in 5-year unsecured bonds (the "Bonds") issued by Tauron Polska Energia S.A. (the "company" or "Tauron") to finance Tauron's energy transition programme and decarbonisation strategy.
The operation will support the implementation of the company's decarbonisation strategy. Proceeds from the Bank's investment will be used to finance the expansion and upgrade of the distribution network, including the rollout of new renewable energy connections and new users connections.
ETI score: 68
The project targets the "Inclusive" TI objective through undertaking steps aimed at mitigating the social costs stemming from the company's ambitious green strategy, including the gradual decommissioning of coal-fired units, and the expansion of generation from renewable energy sources, and the reduction of the CO2 emissions.
The project also targets the "Green" TI objective via new distribution investments meant to reinforce the grid and allow it to absorb a greater volume of intermittent renewable energy generation. Overall, the expected primary energy saving from the Bank's investment are expected to reach 26,404 MWh per annum. Furthermore, the investment is expected to lead to GHG savings of 20,569 tonnes of CO2 emissions per year per the Bank's calculations.
TAURON POLSKA ENERGIA SA
Tauron operates as a vertically integrated utility with operations covering electricity generation, distribution, trading, and customer supply. Tauron is the largest electricity distributor in Poland, covering 18% of Poland's territory by distribution network and 36% in terms of electricity volume.
EBRD Finance Summary
Total Project Cost
EBRD financing is expected to effectively 'close the funding gap' and allows to carry out a successful book-building. Moreover, this is the first time in Poland that a utility issued a bond linked to its energy transition strategy and commit to meeting carbon intensity and renewable targets.
Environmental and Social Summary
Categorised B (2019 ESP). The project is a capital markets transaction and the Bank's due diligence has been limited to a review of publicly available documents by ESD specialists. The level of available information and has allowed for adequate assessment of environmental and social risks of this Project in accordance with the Bank's 2019 ESP. The Bank has previously provided financing to a number of JVs with Tauron in Poland (Tamech JV with Arcelor Mittal and Stalowa Wola CCGT) and has undertaken a high level due diligence of the Company in the past.
EBRD's environmental and social due diligence has confirmed that the company has the institutional capacity to implement the Bank's Performance Requirements and has embarked on a medium to long-term decarbonisation plan, with the aim of closing down a number old coal fired power plants and investing in renewables. No material non-compliance issues have been identified to date. The Company operates coal fired assets and has recently commissioned a state of the art coal fired unit, which will be in operation post 2030.
The reliance on coal for the energy generation will subject this Project to CSO scrutiny. The Bank's use of proceeds will be allocated through conditions in the Framework Agreement to the strengthening the distribution systems, needed for development of renewable Projects. The Company will also acquire and develop new renewable Projects in the future.
Overall, Tauron has good compliance record and is developing corporate EHS management systems. It has a dedicated EHS management team and develops sustainability reports for the group and individually for some subsidiaries. The EBRD proceeds will not be used for any Category A projects and the Company will not invest in any coal fired units in the future. The current ESAP requires that if the Company was to developed projects in sensitive areas or of sensitive nature these would need a full ESIA in line with Bank requirements.
ESAP has been developed on the basis of the findings of the ESDD and it will include requirements relating to, among others, strengthening of non-financial reporting in line with best practices and EU guide on climate related information. The Company will also publish its decarbonisation strategy and update it every 3 years and agree to implement TCFD by 2021 as one of the future companies in Poland. The ESAP has been agreed and forms part of the Framework Agreement to be signed shortly before subscription.
Additional information on the Company and it non-financial reporting can be found on the Company's web site https://raport.tauron.pl/
The Bank will continue monitoring the Company's performance through reviewing annual reports prepared by the Company
Technical Cooperation and Grant Financing
Company Contact Information
+48 32 774 27 06
PSD last updated
03 Nov 2020
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
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