Welcome, everybody, very cordially to the earnings conference for media, investors and analysts on the earnings of TAURON Capital Group for first half of 2022. Let me first introduce the host of today's meeting, Mr. President of the Management Board of TAURON Polska Energia, Mr. Paweł Szczeszek. Good morning. Mr. Krzysztof Surma, responsible for the financial part. My name is Łukasz Zimnoch. I'm the press spokesman of TPE, and I will be conducting today's conference. The presentation is conducted in Polish and is simultaneously interpreted into English. Besides the broadcast, you can listen to today's meeting via the conference call, teleconference mode. I'd like to invite you to ask questions using the form available on the broadcast site, on the website. That's the only option that you can use to ask questions now. Of course, our conference is made up of two parts.
We will start with the presentation, and then we will answer your questions. That's all as far as the introductory remarks are concerned. Mr. President, I'd like to hand over the floor to you.
Thank you very much. Let me once again say good morning to you, ladies and gentlemen. It's a pleasure for me to welcome you to the conference call on the earnings of TAURON Group for the first half of 2022 and the Q2, second quarter of 2022. In my part of the presentation, I will describe, discuss the general situation of, financial situation of the group, the highlights that took place since our last meeting in May and the investment activities. On the other hand, Vice President Krzysztof Surma will present the macroeconomic and market situation and, in particular, financial results broken down into individual lines of business.
On the first slide, we are presenting the financial results and the operating data achieved by TAURON Group in the first six months of 2022. The sales revenue went up by more than 50% versus the same period of last year, and it topped PLN 18 billion. This growth was fueled mainly by the higher electricity sales price, coal sales price and gas sales price that are the derivative of the market situation. The higher revenue was also seen in the 60%, 70% increase of the net profit. A lower EBITDA is due to the fact that there was a provision set up. There was a release for PLN 936 million for the onerous contracts in the generation segment. The CapEx in the first half of 2022 was 15% higher than last year.
The biggest increase of CapEx we observed in the renewables segment, which is the result of the implementation of the Green Turn of TAURON strategy. The net debt to EBITDA ratio went up during this year, and at the end of June it is 2.9. In terms of your operating data, we didn't observe major changes. You can only note the drop in volume of heat produced, which is the consequence of higher outdoor temperatures during the heating season versus the previous year. On the next slide, we are presenting the key data for the second quarter of this year. Similar as in the case of the first half data, you can see a strong growth of sales revenue, while the EBITDA and the net profit is burdened by the impact of the provision that was set up.
In case of the operating data, you can note the 14% increase of electricity production using the hard coal-fired units, which is a consequence of the market situation. On the next slide, we are presenting the highlights that took place until the day of publishing the H1 results. Since the majority of them were already discussed, presented by me in May when I was presenting the earnings for first quarter, let me now draw your attention to the last event listed here. Undoubtedly, the most important highlight of first half of the year was the adoption of a new strategy of TAURON Group for the 2020-2030 timeframe, with an outlook until 2050. Its title is The Green Turn of TAURON. The energy all around gives a good testimony to our priorities.
First of all, we are definitely speeding up the growth of renewables, at the same time reducing the CO2 emissions. We assume the six time increase of the capacity installed in renewables. According to our assumption, in 2025, we will have 1.6 GW of installed capacity in wind farms, photovoltaic farms, and hydroelectric power plants. In 2030, it will be 3,700 MW , 3.7 GW , which will represent about 70% of the total generation mix of our group. It will allow us to reduce our emissions by almost 70%. This is the highest reduction pace of reducing the emissions in Polish power sector. We've also been expanding the capability with respect to management of dispersed generation options.
The next goal is the strengthening of our leadership position in the distribution area, ensuring stable electricity supply to more than 6 million customers through investments aimed at installing new grid connections and upgrading the grid infrastructure. For this purpose, we are planning to spend half of the total CapEx by 2030. This is more than PLN 23 billion . We are assuming that the implementation of our strategic plans will allow us to generate the group's EBITDA in the region of PLN 4.5 billion in 2025 and more than PLN 6 billion in 2030. All the time, we are taking more further steps in order to implement our strategy. We already started working on building another photovoltaic farm by our group, which will be built on the reclaimed landfill site in Mysłowice.
The first electricity should be generated by this PV farm in the middle of next year. Ultimately, it should achieve 100 MW in capacity. It's worth emphasizing, I think that currently none of the PV farms in Poland has a bigger capacity. In June, we acquired a special purpose vehicle that has the rights to the wind farm construction project in Mierzęcin, which should be completed by the end of 2024. It'll increase our green capacity by another 60 MW . The Green Turn of TAURON and the renewables investments require us to incur large CapEx. This will be ensured, thanks to our consortium syndicated loan of PLN 4 billion. In the middle of July, we signed an agreement, a contract with eight both domestic and foreign banks, which is a proof of a trust that these financial institutions have in us.
The loan proceeds will also strengthen the financial stability of TAURON Group. Let me hand over to President Krzysztof Surma, who will describe the macroeconomic and market situation. He will present in detail the results of TAURON Group individual lines of business.
Thank you very much. In terms of the macroeconomic situation, the situation in the first half of the year was quite good. Yet, we were still dealing with a GDP growth rate being positive. However, the forward-looking PMI indices began to fall down, and they moved below the 50 points, which is a magical barrier, which we saw also in subsequent months were dropping successively, which means the forward-looking indicators indicate a significant slowdown, economic slowdown in Poland in the second half of the year.
In terms of electricity consumption, it was still growing at a small growth rate slightly more than 1% if we compare the first half of last year to the first half of this year. However, the production of electricity itself, it's worth noting, accelerated substantially, and its allocation has significantly changed. We have seen a strong growth of a production using the renewables, and it's worth emphasizing the photovoltaic sources here. We have, period versus year-over-year, we have a more than 100% growth of, PV installed capacity. In addition, the production from lignite went up, but the production from gas went down significantly, which is a result of a very high market prices and a bit lower production of electricity from, hard coal.
Here also, probably partly the availability of hard coal embargo on the Russian imports of coal, also the prices, market prices had also an impact on that. If we now move on to the financial data of our group, here we were dealing with a significant increase of revenue. As the CEO mentioned at the beginning, the sales revenue went up by more than 50% year-over-year. The main reasons being the market factors and increase of electricity sales price mainly and also the increase of the prices of gas and hard coal. Net profit, if you look at net profit, it also went up year-over-year. Here we are looking at more than PLN 600 million in profit, net profit for the first half of this year.
However, let us remember that both last year as well as this year, the net profit is heavily burdened with one-off events. Last year, we were dealing with impairment charges for the carrying amount of assets. This year, we are dealing with a provision that we set up at the end of the first half of this year. In terms of EBITDA itself, the reported EBITDA, let's call it, is PLN 2.5 billion. However, the adjusted EBITDA by taking out the one-off events due to both of the CO2 transactions that we are describing, discussing in the first quarter of this year, both in first quarter of 2021 and in 2022 as well. This adjusts the EBITDA, the reported EBITDA, and we arrive at the comparable EBITDA.
The comparable EBITDA is also increased here by the provision that we set up at the end of first half of this year. I will elaborate on this provision further on during the presentation. If we talk about the data for Q2 alone, here the factors that I discussed earlier are very similar. Of course, in Q2, we are not dealing anymore with the CO2 transaction, the carbon credit transaction. These transactions took place both in first quarter of last year as well as first quarter of this year. However, here we can see a clear burdening of a net profit with one-off events. Moving on now to individual segments, financial results. Invariably, the distribution segment is the key segment, more than PLN 700 million in EBITDA for first half of the year.
Here, there's no surprise, probably. The distribution, again, more than 70% of EBITDA of the entire group was generated by the distribution segment. We are dealing with a stable result in the renewables, growing significantly year-over-year. This is another segment. It's worth noting that both segments, distribution and the renewables, these are the segments that are priorities in our new strategy. Here, a bit of a surprise, a very significant increase of EBITDA in the mining segment. Such a strong result in this segment we haven't observed for a long time now. However, weaker result generated in the generation segment, mainly caused by the one-off provision that we set up. I will elaborate on that further on in the presentation. In the supply segment, the total result for the first half of the year is positive.
Nevertheless, still the result is much lower than in the previous years. I will elaborate on the details of the situation further on in the presentation. If we look now at the Q2 individual segments results, we can especially see the generation line of business and the impact of the provision that was set up in this line of business for the amount of PLN 936 million. The other segments generated a positive contribution to the total, the group's total EBITDA. Here we can also see the rebound in the supply segment. The supply segment almost PLN 150 million in EBITDA. This is the EBITDA, which is, I would say, is comparable to the EBITDA generated by this segment in the previous years.
If we move on now to the graphical representation, what substantial impacts took place on the earnings year-over-year? As we can see, the key positive impact came from the distribution and renewable segments, as I mentioned before, as well as the mining segment. Here, the biggest positive impact year-over-year. Whereas the negative impact came from the supply segment and from the generation segment. Here, it's also worth noting that the generation segment last year was under the positive impact of the cost plus contract between TAURON and Nowe Jaworzno Grupa TAURON subsidiary. This increased the result of the segment, while it decreased the result generated by the supply segment. One may say that a surprisingly weak result by the supply segment in terms of year-over-year comparison. Here, we can see.
You could see this on the earlier slides, the supply segment has a better result in terms of Q2 alone, and it joined all the other segments that are making positive contributions to the group's total EBITDA. Only the generation segment is the segment that makes the reported EBITDA year-over-year for first half of the year is accordingly lower. Now moving on to the details and discussing, walking you through individual segments. Distribution segment, a very good result. A growth year-over-year, almost PLN 200 million in terms of EBITDA, and this growth was fueled mainly by the volume. Here, the volume went up by almost 3% in terms of the distributed electricity.
Additionally, the average rate went up of a fee for the distributed electricity and probably the most difficult to forecast part, namely the balancing difference issue. Here, due to the cost of upward adjustment, we have a positive effect year-over-year. Everything, all of those factors meant that the distribution segment generated very good results in the first half of this year. In terms of the quarterly results, Q2 alone in the distribution segment, here the main factor continues to be the rate, the rate for the distribution of electricity. As you can see, the volume is having a significantly lesser contribution to the increase of EBITDA quarter-over-quarter. As a matter of fact, the volume in the second quarter of this year went up by less than 2%.
One can say that we are beginning to see a decline in the electricity distributed. This could be coinciding with the macroeconomic factor that I mentioned before. A gradual cooling down of the Polish economy. Practically, we don't see any more here a significant impact coming from the balancing difference. If we now walk you through the key parameters, basically one may say that all the parameters, all the metrics set by the regulator were in the distribution segment met. As a result, we should have no negative impact on the tariff in the subsequent years due to the potential non-meeting of metrics set by the regulator. That's at least the situation as of the end of the first half of this year.
If we now move on to the renewables segment, here we are dealing with a slightly better volume of electricity produced. Much better results in terms of production output of the wind farms. We remember that last year Q1 was not very windy, and the first quarter of this year was significantly better in this respect. Definitely, the hydroelectric power plants had a much weaker performance. Overall volume year-over-year went up a bit. This had an impact upon the increase of EBITDA in this line of business, but the main factor was a much higher electricity price on the market and a higher price of property rights. We are dealing in terms of water levels in the rivers meant that the production output in this line of business is lower.
This, of course, has an impact upon the revenue and the EBITDA of the renewables segment. However, we are still dealing with an increase of electricity prices, and this meant that the electricity margin was positive quarter-over-quarter, and it contributed positively to the EBITDA result in this segment. Now, I think the key segment for the earnings, the generation segment. As a matter of fact, we are dealing with two developments here. The first development is, as I mentioned at the very beginning, last year, the generation segment, especially the Nowe Jaworzno subsidiary, was taking advantage of a favorable agreement, cost plus agreement, cost plus contract. This agreement was due to the Polish Development Fund participation as a minority shareholder in our subsidiary.
This, as a matter of fact, led to an increase of the generation segment at the cost of a supply segment results. If we were to eliminate those earnings, then one may say that the result on the electricity margin would have been similar to zero, close to zero, even slightly below zero, but not as negative as this graph shows when you look at the year-over-year comparison. However, the key for this segment is, or the results of this segment, is the provision set up as of the end of this first half of this year, and this provision, PLN 946 million, is due to both of booking the carbon credits CO2 emission allowance. We are applying the FIFO method according to the international standards of accounting.
This means that in the beginning, we book the emission allowances that were purchased earlier, and later on, we are booking the allowances that we purchased later. However, when we looked at the trends last year, we were dealing with a very significant growth of the prices of the CO2 emission allowances. The price went up from around EUR 30 to almost EUR 90, which meant that in the beginning we were buying the cheaper carbon credits, and later we were buying more expensive. This year, there is no symmetrical distribution of those carbon credits as far as the allocation to the cost is concerned. Whereas the contracts on electricity, we are implementing systematically according to the prices concluded in the contracts. In addition, the margin on electricity is impacted additionally by the coal prices.
Here we are applying the weighted average price in terms of our results, while on the market we are dealing with the purchases at higher coal prices. There was a surge of coal prices on the market this year. Therefore, the weighted average price effect means that our average price is getting higher and higher, which on the other hand means that in the first half of the year, if we had not set up that provision, the result would not have been commensurate with the result of the second half of the year. Therefore, the provision should equalize the average earnings in the generation segment over the entire year. One should also note here that this provision is applicable only to 2022.
We do not expect a similar development in 2023 due to the CfDs that are available on the power market, electricity markets. Therefore, we are not expecting to set up an identical provision as of the end of the 2022. If we now move on to the quarterly result, Q2 alone earnings, here we can fully see the impact of this provision. Just a few more words, because this provision on the previous slide, it was shown in the amount of PLN 600 million. PLN 600 million, as a matter of fact, is the difference between PLN 943 million of the provision set up for the onerous contracts due to the hard coal prices and the booking of CO2 emission allowances.
This is partly reduced by the reversal of the provision that was set up as of the end of 2021, and that provision was set up due to the foreseen shutdown of a 900 MW unit in Jaworzno. In Q2, as I mentioned, similar factors were in play. However, we do not have this reversal, but we also have a small piece of a reversal of the provision related to the Nowe Jaworzno subsidiary. You can see the full effect of the provision set up as of the end of first half of the year. If we now move on to the supply segment. Here, this segment was heavily burdened with several events. First of all, we are dealing with the significant increase of the gas prices on the market.
A significant portion of this price increase cannot be passed on into, onto this product that we sell. In addition, we are dealing with the margin not being fully covered by the G tariff. That's another important factor. The third important factor, which had an impact upon the earnings in this segment, is the cost of the profile. Major divergence in terms of prices between the cost of purchasing electricity for the individual hours of the day and the difference between the cost of a base load product and the peak product. This effectively means that in first quarter we incurred a loss. In the second quarter, luckily, we didn't have a loss anymore. We managed by taking certain actions to make this result positive.
However, the entire result for the segment, if you look at the EBITDA, the entire positive result of a supply segment effectively is due to EBITDA of a much smaller company. As a matter of fact, this is a result of positive EBITDA by TAURON Nowe Technologie and the positive EBITDA of our supply subsidiary located in the Czech Republic. In terms of the Q2 alone earnings, as I mentioned, it's positive. It getting closer and closer to the historically recurring results of this segment. However, let us remember that here comparisons to the quarters of last year is not adequate.
As I mentioned, this quarter last year was distorted by the cost plus agreement that was allocated to the supply segment, and only after we acquired the shares in Nowe Jaworzno subsidiary from PFR, Polish Development Fund, and the dissolving of the agreement between Nowe Jaworzno and TAURON Polska Energia. This segment is adjusted, doesn't carry, doesn't include those results. Therefore, the growth quarter-over-quarter is not fully comparable. I'm talking, I'm saying that the adjusted earnings quarter-over-quarter, we still are dealing with a decline in this segment. If we now move on to the mining segment, here I think that a positive surprise for everyone. We have a significant increase in EBITDA, a very positive second largest EBITDA in terms of the first half of the year in our segments. This is due to two factors.
The first factor is a very substantial, significant increase over market prices, and the second factor is a much higher volume, sales volume. It should be noted sales volume, because the production is very similar level year-over-year. In terms of sales volume itself, we are dealing with a significant, very significant increase. It is due, as a matter of fact, to the fact that last year some of the production was placed in inventory, in stock. This year, probably we are out of inventory next to the coal mines. We have a very strong demand on the market, demand for coal, and therefore we have no problem selling it. In terms of quarterly result, Q2 alone, here, practically the entire effect is related to the price.
It, as a matter of fact, this result in Q2 is even better, is even higher than the Q1 earnings. However, what's worth noting is the fact that in this quarter, in Q2, our production was very similar to last year's production, whereas in Q3 of this year, we have major retoolings at our coal mines, especially in the Sobieski coal mines. Therefore, probably Q3 will not be as impressive as the first two quarters of this year. However, of course, the price trends on the coal market continues to be an upward trend, and therefore results once there is production in place, then the results of the segment should be good.
If we now move on to the debt and the net debt to EBITDA ratio and the financing itself, we are dealing with an increase of net debt to EBITDA ratio, about 2.9, we recorded as of the end of the first half of the year. This was impacted from the net debt point of view, was first of all caused by the acquisition of the shares from the PFR in the first quarter of this year. We have PLN 700 million of gross debt year over year. As I mentioned, the main reason being the acquisition of those shares. From the EBITDA point of view, the main factor is the setting up of a provision in the generation segment that I already discussed of the amount of PLN 943 million.
This led to a significant increase of ratio of the leverage ratio. As far as the positive information is concerned, the company practically eliminated the risk of refinancing of a program that matures in December this year. The program, let us recall, the loan credit program worth almost PLN 6 billion, by signing first the agreement with EIB for PLN 2.8 billion, and then the PLN 500 million, and finally, on July 15th this year, PLN 4 billion syndicated loan program that the CEO mentioned, the program on the domestic market, a five-year program with an option to extend by two years with a mutual agreement of both parties. Therefore, our risk of refinancing in Q4, where the questions were related to quite often, where the company was indicated before, this risk has been practically eliminated in full.
That's all in terms of debt. Now let's move on to the capital expenditures. Let me hand over the floor again to the CEO.
Thank you very much. Ladies and gentlemen, in the first half of this year, the capital expenditure came in at almost PLN 1.5 billion, which means that it was 15% higher than last year. It went up in almost all segments. The only exception was the distribution. It doesn't change the fact that this segment that gets the biggest capital spending. In the first half of this year to install new grid connections, we spent more than PLN 450 million, and another PLN 280 million we invested in the upgrade and replacement of the grid assets.
Let me emphasize that the strongest growth was observed in the renewables CapEx, which is related to the implementation of a green plan of TAURON in line with the assumptions of our strategy. The capital expenditures in the renewable segment went up almost four times, more than four times. The majority was spent on the purchase of Mierzęcin wind farm construction project and the construction of Piotrków and Majewo wind farms. The generation segment's CapEx was comparable year-over-year, roughly a bit more than 100 million PLN. In the mining segment, the biggest CapEx went to the production preparation and the refurbishment and replacement tasks implementation. The other spending include among other investments in the IT infrastructure, the customer service segment, and the deployment of a broadband internet part of a operational program, Digital Poland.
That's where we would like to end the presentation, and now we will answer your questions, please. Yes, we have received a lot of questions, ladies and gentlemen. We will try to answer one by one, skipping those questions that repeat themselves. If in one question that is sent includes more questions, I will be reading them one by one. Ladies and gentlemen, one more important thing, a reminder, if you want still to ask more questions, you can do it only using the form available on the broadcast website. The question number one, what were the reasons behind the positive impact upon EBITDA in terms of the cost of grid losses in the distribution segment, despite much higher prices of electricity? What in terms of value had the lower volume and higher purchase price and an increase of the upward adjustment?
Please, give the details of the increase of the value of the upward adjustment. I will try to answer this question. In terms of the grid losses issue, that's true, but in the substantial part, it is impacted by the price of electricity purchased for the needs of covering those losses. Here, it's not a surprise that this price has significantly gone up year-over-year. The second factor, as a matter of fact, is the level of those losses. Here, this fluctuates in terms of comparisons year-over-year. The third key issue in this, the first half of this year and the digital quarters is the matter of an upward adjustment.
Here, as a matter of fact, the upward adjustment issue or the balance of the adjustment in terms of adjustment itself, it's a difference between the last invoice issued, the last measurement of electricity consumption by the customer and the estimate of that consumption until the end of a given period, mostly the end of the month. As a matter of fact, afterwards, we compare this estimate with the estimate that was made for the previous reporting period, and this effectively leads to the balance of the adjustment. Then this volume of electricity is multiplied by the rate, and effectively, we arrive at the result. As of today, it is so that the higher the adjustment and, during that period, the adjustment was positive, so the consumption was higher, the lower is the difference.
In terms of the precise data, very detailed data, I'm not able to give you percentage figures off the top of my head, but definitely the key for the positive result in terms of the difference itself is the balance of the adjustment, which exceeded the higher price level that had to be paid for the balancing difference. Okay. Now there'll be three questions at the same time because they are integrated. They are very interconnected, and it would be strange to try to answer them separately. What's the evaluation of the management board of the future situation about the EBITDA in the distribution segment in 2022, 2023? And what are the factors behind such evaluation, and how will they evolve over this timeframe, mainly the volumes and so on?
What risk factor does the management board see in terms of EBITDA of the distribution segment in 2022, 2023? What is the stage of the tariff model evaluation for the distribution? Well, to continue. Let's start with the outlook for 2023. As of now, we are not dealing with that. As you know, the outlook we usually provide for the subsequent year during the earnings call for the given year. As a matter of fact, talking about the outlook for 2023, we'll be talking about it in March of the following year. In terms of 2022, here we have a relatively stable situation in the distribution segment. Of course, the key will be the volume. The volume is very strongly linked to the economic situation in Poland.
Here, looking at the PMI index, indexes that I mentioned at the very beginning, one can expect that if there's a major slowdown, major cooling down of the Polish economic situation, this somehow will impact the volume in our distribution segment. However, as of now, we have observed good results for the first half of this year. We'll see what the following quarters will bring. In terms of risk, the volume definitely in 2022 is a risk factor. In terms of the model itself, the model. We are working on the model. The works haven't been completed yet. Of course, it'll determine the possible result, level of result in the subsequent years. In 2023, maybe there'll be an attempt to extend the current model to cover also 2023, or maybe the new model will be implemented. It's hard to answer this question now.
It'll definitely have an impact upon the subsequent years. No impact, however, on the current year. Of course, here, for the entire segment as well, but mainly the subsequent years, is impacted by the level of interest rates. It is inverse correlation with the cost of financing. The higher the interest rate on the market, the higher the potential weighted average cost of capital based on which we calculate the return on regulatory asset base, RAB. Of course, we are dealing recently with a significant increase here, so this should have a positive impact on the future earnings of the segment. As I said, it'll, a lot will depend upon this model. The very rate doesn't have an impact upon the earnings in 2022. Next question, Mr. Sawicki from Rzeczpospolita. Were the samples from Jaworzno taken?
The samples, were they the same coal that was used to burn in the beginning of August when the failure took place? Where does the coal come from for Jaworzno? What will be the outcome of today's meeting or tomorrow's meeting with RAFAKO in front of the General Counsel of the Republic of Poland? Of course, General Counsel of the Republic of Poland. Of course, the samples of coal from Jaworzno were taken, were tested. It is the same coal that was used and burned in the boiler in the beginning of August when the failure happened. The samples were taken with due diligence and ensuring the required procedures, all the required procedures. Currently, the coal in our new unit in Jaworzno comes from the Janina coal mine and the Ziemowit coal mine.
At the end of the month, at the end of September, after the coal phase's retooling has been completed, the coal from Sobieski coal mine will also be added. In case of tomorrow's meeting in front of the General Counsel of the Republic of Poland, I think what we expect to generate a new schedule, new timetable, because the current one is unrealistic in terms of the timing. We have to perform some further tests. We need to define what the situation we are in at now, the technical condition of the unit, and accept jointly with RAFAKO the new timetable, the new schedule for completing all the obligations that are up to the contractor to perform. The next question from Mr. Sawicki, we announced reserve on the generation could be higher or smaller.
When will it be accounted for? Well, I referred to this issue during the presentation a bit. The provision cannot be higher or smaller anymore. It's been calculated as of the end of first half of this year. The provision itself will be consumed during the second half of this year. We do not expect as of now to set up this type of provision as of the end of 2022. That's all. Clear. Next question. What are the reasons behind the positive effect on EBITDA in the distribution segments in terms of grid losses despite the much higher electricity prices? What is the impact of lower volume, higher purchase price, and the increase of the upward adjustment? Please give us the details related to the upward adjustment. I practically fully answered this question before.
I think it's a repeat of the earlier question. In terms of a precise percentage breakdown, we didn't give those values. As I mentioned, the amount of the adjustment was the main determining factor, which meant that the value is positive in this respect. Of course, the negative impact came from the higher purchase price of electricity to cover the balance difference. The next question is related to the heat. In the recent strategy, the goal of TAURON in the heat industry is to connect 180 MW to the grid, the network by 2030. How are you planning to do it? Is a new source of heat required to be built, and using what technology? Does that strategy envisage acquisition of other entities in this subsector with available capacity such as Energetyka Cieszyńska?
Our strategy, that's true, assumes the growth of new sources in the heat line of business. We are conducting works aimed at connecting new consumers, especially in the south of Katowice. Ultimately, our strategy, since the heat line of business, the entire heat line of business will remain within the group, it'll be developed, will be expanded. One of growth opportunities to connect new consumers. In terms of additional new thermal energy sources, as of now, we are currently conducting various works. Mainly, we are building the gas-fired boilers. However, as we have seen, we were conducting some works aimed at converting fuel conversions from coal to gas. Probably due to the current market situation, the bids for the Łagiewniki unit were not submitted.
However, it doesn't exclude the possibility that we could go ahead with that unit, with that concept. We are thinking how to prepare the conditions, terms and conditions, terms of reference for this, project, and we might return to the market with this investment project. If we talk about that, I think, the Energetyka Cieszyńska issue is a bit more complicated than an ordinary takeover. Let us remember that due to the past decisions, TAURON did not have full control over that company despite holding the majority's shareholding stake. Didn't have a majority during the general meeting of the shareholders.
Now, this situation, there are negotiations underway with the city, and there's an attempt to restore the full control over the company and to appropriately manage the situation in the company so that there is no shortage of heat for the residents of Cieszyn. However, I wouldn't call it a classical acquisition because, in fact, TAURON is restoring practically the ability to have a full decision-making power in that company. Of course, assuming there are positive decisions made by the city. Next question, up to now, the volume of trading of electricity market went up at the end of August to exceed 40% of electricity consumption earlier, electricity consumption in Poland, and the market is under contracted. So how did the company hedge it or secure its supply?
The group standard is to secure, to hedge the sell position, but not get into details of the trading strategy. One may say that there are some customers who are hedged in this for one to one, especially if we talk about large customers, when we sell electricity to them, this statistically at the same time purchased by us on the wholesale market. We are probably talking about small customers in G tariffs or individual customers where the hedging this is made based on the statistical analysis, where the company, as the time goes by, gradually hedges its position. To conclude, in all those cases where we are dealing with large customers, the contract is immediately fully hedged. While in terms of the statistical analysis of the consumption by the consumers, we apply the gradual hedging strategy on the market. That's just briefly.
In simple terms, the company does not present its trading strategy on the market. Next question, what is the stage of such a process as spinning off hard coal fired assets and the sale transfer to the State Treasury company? Are you expecting still the process of spinning off power plants by the end of 2022? Both processes as of now are on track according to the schedule, both the spinning off of hard coal base generation assets, as well as the sale of TAURON shares to State Treasury. Both processes, we are hoping, we are doing our best to complete them by the end of this year.
Next question, does TAURON sell electricity generated using its in-house renewables and/or conventional assets in the 2023 contracts? TAURON, as a matter of fact, is conducting the sales from its in-house sources, both conventional and renewable, in combination with the sales policy. We are dealing with two different types of sales. As far as conventional sources are concerned, they are covered by the power exchange obligation, and the entire output is sold on the exchange. Whereas the renewables can be sold under bilateral contracts or via the power exchange. This Polish Power Exchange. This contracting is progressing gradually. As I said before, TAURON is not disclosing its detailed trading strategy in terms of contracting and the degree of contracting of its sources production output. Next question, what are the plans regarding the hard coal output in 2022? What is the output of Sobieski coal mine?
Is it below, lower than budgeted, lower than the plan, or in line with the assumptions? What are our plans regarding the output from coal mine Sobieski for the entire year? In terms of all TAURON Wydobycie coal mines, we are noticing a certain negative deviation as far as the output this year is concerned due to the geological problems we are facing. However, in terms of the Sobieski coal mine, we are about to complete the retooling. In September, we are waiting for the technical acceptance of the retooling project and as planned, Sobieski coal mine will start delivering coal, starting from the second half of September until the end of the year. We assume it will be carried out in accordance with the plan. What part of electricity is sold by TAURON on the Polish Power Exchange and what part is sold under bilateral contracts?
How long are these contracts? Quarterly, yearly, several years timeframe? It's a matter of a trading strategy. Let's remember the following facts. In terms of Polish Power Exchange obligation, basically, the entire electricity from the conventional units should be sold under the Polish Power Exchange obligation, with the long-term contracts being the only exclusion. Basically, one may say that in this area, in this respect, TAURON sells majority of its electricity via the Polish Power Exchange. In terms of the contracting, whether this is one-year, two-year, or multi-year contracting, a standard in the Polish power sector is the one-year contracting. Of course, to a minimum degree, there are also two-year contracts, three-year contracts in place. As a matter of fact, about three years, practically, there is no market liquidity, and this liquidity, even on the three-year timeframe, is very low.
The standard is the majority of cases is the one year ahead contracting. This way, ladies and gentlemen, we came to the last question that will be asked during today's conference. 66% of coal consumed by TAURON comes from in-house coal mines. Has TAURON imported or is it importing coal? The difficult situation, the coal market and the distortion between supply and demand, meant that TAURON, besides the coal from in-house coal mines, and besides the coal coming from the Polish coal mines, must use the imports from outside Poland, of course, skipping the Russian Federation, excluding the Russian Federation. Thank you very much. Ladies and gentlemen, this way we have completed today's earnings conference call. Let me invite you today to attend our next meeting directly after we report the earnings for the first three quarters of 2022.
Of course, we'll inform you about the conference call in a traditional way. We wish you a pleasant day. Thank you very much for the meeting and see you next time. Thank you.