The two companies behind a controversial $1.63 billion, 1GW coal power plant in Poland, the country's last new large coal plant investment, risk facing a legal challenge over the financial risks it poses to shareholders.

Legal risk

Environmental lawyers ClientEarth have put the directors of Energa and Enea on notice of the increasing risk of legal action if they proceed with their Ostroleka C project. Enea’s shareholders are voting on the project today, with the final decision resting with Energa’s and Enea’s directors. If built, activists say the plant is projected to be ‘permanently unprofitable.’ ClientEarth holds shares in Energa and Enea and is being represented pro bono by international litigation firm Boies Schiller Flexner, which has written to the companies, both state-controlled, warning that their ongoing actions ‘risk breaching board members’ fiduciary duties of due diligence and to act in the best interests of the company and its shareholders.’ Environmental groups have raised questions regarding the financing and whether it is necessary for Polish energy security, having previously abandoned by Energa’s management in 2012 following reports suggesting it would be unprofitable. However, it was taken up again in 2016 as a joint venture with Enea.

Contract defended

In July, the contract was awarded to GE Power and Alstom Power to build the unit, projected to have a net efficiency of at least 45%. Poland's energy ministry argues the project is essential for power supply security and to synchronise the Polish grid with the networks of neighboring Baltic states. The contract to build was awarded to GE in July, and Andreas Lusch, ceo of GE’s Steam Power, said ‘Ostroleka C will deliver reliable, affordable power with the lowest possible carbon footprint. Through enhanced load flexibility, this plant will help stabilize the grid and support the growth of renewables,’ and ‘will have the best-in-class technology to respond to today’s changing energy landscape.’ Poland is preparing to host the COP24 global climate conference in December, and Marcin Stoczkiewicz, ClientEarth’s head of central and eastern europe claims ‘Ostroleka C would represent a major setback in the Polish government’s welcome support for increasing renewable energy generation.’