wpd Polska (part of the German wpd AG Group) deals with the implementation of wind energy projects, from the initial stages of investment to financing, construction and operation. The company has been present in Poland for over a decade, and is among the 2018 auction winners - presently they have five wind projects under construction (approximately 110 MW).
Congratulations on being among the RES auction winners - what are your thoughts on the process itself, did you find it easy to navigate?
Relatively so, the hardest part was that we had little clarity on when (or if) the next auction would take place. Take 2018 for example, the auction happened in December and we were only informed one month in advance. To prepare everything in such a small window of time is incredibly difficult, especially since we need to coordinate with banks.
Transparency of the legal and economic environment in our industry would be extremely helpful i.e. generally a clear perspective on how many auctions, their time and size over the next few years. Clear rules for investors in the market contribute to the sustainable development of the sector and the lack of such rules results in great uncertainty also among employees.
If employees do not see the perspectives for the future, they will not feel safe in the industry in which they work and they will leave it. This is precisely what happened during the crisis in 2016 - many people left the industry and decided not to return.
You are still standing strong in this market despite the crises in 2012 and 2016. What kept you going?
Our project portfolio in operation was relatively small between 2011-2014 so the green certificate crisis was not as dramatic for us. The second critical period, that of 2016, arrived at a time when our projects were still in development - we used this period wisely and brought everything to a ready-to-build stage. When we won the auction in 2018 we were fully ready to start the construction. Now we have five projects under construction as we speak, in total 102,5 MW, all coming together nicely.
What do you credit for your success in auctions? In other words, what makes for a winning project in Poland?
Maybe the fact that we did not fully rely on the auction system. It was interesting to participate from a financial perspective, but our strategy was very much geared towards corporate PPAs. I do believe, however, that auctions made a positive impact altogether.
Not long ago the public perception was that green energy is very expensive whereas both auctions showed the contrary. Renewable energy prices are currently lower than black energy prices, and they will surely be even lower in the future.
As an green sector, we have also gained the support of the traditional industry which, at the current high energy prices on the market, is looking for cost optimization opportunities
Some of your peers suggested that prices were lower because developers are keen to move their projects forward, even if the level of profit is not ideal. Are you in agreement?
There is some truth to that. Polish wind projects were developed a long time ago and the connection agreements have a time limit - this matters greatly to developers. If you win the auction the connection agreements is automatically extended so I would not be surprised to learn there are companies that have participated only for this specific purpose.
Do you have more projects in the pipeline, in case a new auction is announced?
Yes, we have two projects based on older technology which we hope to finalize in the coming couple of years. We also have about 200 MW in the greenfield stage but the 10H rule makes it impossible to proceed for now. The plan is to make good use of this time though, build our resources and be fully prepared to act when the law changes.
Public perception of wind energy has been rather negative in Poland, what do you think is a good way to change this?
I see educating society as a crucial aspect as well so whenever we start development in a commune we make sure to engage with adults and children alike and gather their support. It is human nature to be afraid of new things - it is enough to have a few people in the commune that are negative and very active to turn everybody else against you. It does not take too much to make people afraid. Besides, as I mentioned above, the recent auctions have disproved the myth of expensive green wind energy. It opened the eyes of public perception and businesses as well.
In light of the recent COVID-19 outbreak how has your business been affected and what do you expect the longer term repercussions to be?
We are fortunate to be in a position of working in an essential part of the economy and overall I am pleased to say that business has not really been impacted thus far. Our office in Poland remained open, giving people the choice whether to come in or work from home, which is roughly a 50-50 split. Our building phase is continuing as planned (finished by October this year) and we do not expect any real delays due to the virus. As for the energy market at large, we actually have reasons to look on the positive side of things - the share of RES is likely to increase as demand will rise, maybe we will even reach the EU set goal.
PSE is struggling to find the right solution for energy balancing, skewed by production, so they are trying to put together regulations to secure the energy system. The non-market reduction mechanism is the solution they are proposing, by which production reduction by wind farm operators would be met with some form of compensation.
All in all the economy in Poland will likely suffer if this continues, we might even see protests in the streets by the end of the year. We need to keep hope, work safely and hold out the storm. In every crisis we have the ability to focus on the bright side.
You took over the CEO role less than one year ago - what do you want wpd Polska to become under your leadership?
The vision is to build our sources in a more compactly and comprehensive way.We are currently hiring new employees and we are looking for new potential greenfield projects. We are also researching the market because we want to acquire further assets - be they ready-to-build, or just with environmental permits in place etc.
My biggest ambition personally I cannot yet disclose - but I will say this, it will be a true premiere for Poland.
