ENGIE Zielona Energia is part of ENGIE Poland, and has been operating in the Polish market as a stand-alone entity since end 2016. The company is active in the areas of: operations and development of Renewable Energy Sources (they own and operate ca 140 MW of wind and 6 MW of solar energy, with another 3 MW expected to be up and running in mid 2020); Global Energy Management (ENGIE’s assets portfolio optimization including electricity, renewable technologies, natural gas, environmental products and bulk commodities, and worldwide external commercial franchise development); Marketing & Sales of electricity, gas and related products; and roof-top PV sales and installation, oriented on B2B customers.
ENGIE Zielona Energia supplies energy from both conventional and renewable sources. How do they compare in terms of volumes?
The predominant part comes from RES but because we also operate on the wholesale market, we source and balance our positions on the Polish Power Exchange, OTC and Balancing Market, so we have to assume that part of it comes from traditional energy sources. Based on analysis we do year by year the share of RES in our overall mix has increased to nearly 80%.
Is this something you are doing from a proactive angle or because the customers are demanding it?
The answer is both. We are proactive and determined to implement the strategy set forth by the Group, and orient the business towards zero or low emission solutions. In fact ENGIE used to operate in Poland much bigger energy portfolio, including the coal and biomass fired power plant in Połaniec. Pursuing this new strategy, the Group divested the power plant in 2017, which was combined with the carve-out of all activities oriented on renewables, sales and trading (these were onboarded in ENGIE Zielona Energia).
Consumer wise, I can confirm we are noticing a growing interest for clean energy. Ten years ago discussions about climate or air quality were reserved for a small groups of academia, but nowadays people are paying more and more attention to the topic.
The outcome is that big energy consumers, especially international ones, are in the front row looking for ways to demonstrate their care for the climate. This approach step by step influences local businesses as well, a transformation that we at ENGIE see and are happy to facilitate.
Consumer attitude is key, but prices still carry significant weight in their choices. How does renewable energy fare from this point of view?
There are two perspectives we can consider. From a short term angle it is true that customers are looking at final costs, and only some clients are willing to pay more for green electricity. Surely we did not reach a critical mass yet, but we do receive more and more inquiries about this option.
Looking more long term, 5-10 years, clients turn towards green energy precisely because they believe green energy will be cheaper in the long run, as it will not be affected by CO2 costs.
Just last year ENGIE has developed a Virtual Power Plant in Australia. Can you briefly introduce the concept and explain whether similar plans are in sight for Poland?
The concept of the classical Virtual Power Plant is a set of numerous, decentralized renewable units and controllable consumers which are interconnected through smart solutions. Combined with appropriate market mechanisms these enable the operator to proactively manage the system.
The portfolio that we are building here has many elements which are similar to a Virtual Power Plant, however, given the market design in Poland we are not yet able to put it in place in a full fledged manner. The Polish TSOs has already initiated the discussion with market stakeholders about serious changes in the model of the market, whereby not only big centralized dispatchers actively participate in the balancing market but also smaller, decentralized renewable producers. This is certainly right direction in its substance.
When could this become reality in Poland?
According to agenda shared by PSE, the new model may be implemented at the end of 2020. The scope of the changes is so deep and broad though, I’m afraid that one year is a bit too short, realistically the changes of such importance require more time. Technology trends like storage will also make a contribution on this front.
Within ENGIE we are already promoting and providing solutions based on energy storage, hydrogen chargers and also energy chargers for electric vehicles. But we are ahead of the curve, we see them developing on the small, local level and the moment when these solutions will be used on a big, industrial scale is still the future, but very near one.
Looking at the coming two or three years, what objectives are you pursuing with priority?
For wind we want to protect the value of existing assets and be ready to absorb interesting projects and opportunities to develop them further. We also want to expand the PV business: both U-scale and roof top PVs - here we are open for cooperation with external stakeholders, like developers, banks or financial institutions who want to invest in this type of business with big potential.
For B2B segment our ambition is to further develop sales of electricity and boost gas. Similarly we want to strengthen and diversify our Energy Transition Services portfolio, for instance by adding biogas or offshore wind on top of onshore wind and PV managed today but also by seeking the ways to apply top-notch technologies and market solutions facilitating RES portfolio management.
Finally we will dedicate efforts to put in place long term PPAs, as we see huge potential for developing renewable capacities outside support schemes.
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, for the company and the energy industry at large?
Despite the time that has passed since the outbreak, COVID-19 impact on real economy is still an unchartered territory. Beyond any doubt it will have important impact on the company and the whole sector. How deep and for how long, that we dont’t know yet, but one should expect the U-shaped crisis rather than V-shaped.
The direct implications already visible refer to both P&L and put pressure on the cashflow in the scope of sales & trading. Important decrease of the energy consumption and related cutting of the long positions on the wholesales market undermine the sales margins. We also observe the crush of energy prices is connected with important change of the hourly price shapes, putting under presure some of the structured deals.
The slow-down is also visible in our PV installations business. We also observe growing concerns among RES O&M and EPC providers as regards proper and timely performance of their obligations.
Given all the hardships and obstacles, unlike many of our peers and competitors having limited or suspended their sales & trading activities, ENGIE Zielona Energia stays active in the whole scope of its businesses. We do our best to help our clients and business partners to go through this tough period, as the partnership and long lasting relations are among our utmost values.
