Can you please provide some context on your history in Poland and how it is connected to your original corporate Power Purchase Agreement (PPA) that secured the first-ever corporate PPA in Poland?

Absolutely. In 2016, the renewable energy sector in Poland was facing a crisis. Despite having a pipeline of 600 MW of renewable energy projects, it was clear that bringing them to life successfully under the new legislation would be challenging. Therefore, we decided to restructure and optimize our existing portfolio, specifically focusing on our operating wind farms portfolio and O&M (Operations and Maintenance) and TCM (Technical and Commercial Management) projects portfolio. We have a successful track record of providing TCM services to 300 MW of projects, including the Tauron portfolio of wind parks in Poland. In 2017, we also started active trading with energy on a daily basis from our operating assets, which proved to be a success. This led us to explore the possibility of selling energy directly to industrial clients from our wind parks, and in 2018, we identified the opportunity for corporate PPAs, especially considering the favorable electricity prices at that time. We participated in a tender procedure for green electricity delivery to Mercedes Benz Manufacturing Poland sp. z o.o., which we won after one year of negotiations. This marked the beginning of the corporate PPA market in Poland.

What were the pivotal elements that you credit for the success of this transaction?

One crucial element was sizing the wind park correctly according to the off-taker’s needs, which required extensive mathematical work. Additionally, it was essential to have a system in place for precise forecasting of production and consumption. To achieve this, we invested in an innovative SCADA (Supervisory Control and Data Acquisition) system that utilizes machine learning, ensuring highly accurate forecasting.

How precise has the forecasting system proven to be?

The forecasting system has proven to be tremendously accurate, allowing us to estimate quantities down to seconds. So far, we have achieved a 92% rate of correct forecasting. Although day-to-day information tends to be very precise, we do lose some accuracy in the monthly average, about 8%. However, our team of engineers continues to work on improving the system to achieve even better results.

Only four PPAs have been concluded in Poland to date – why do you think there have been so few?

We were hopeful that after securing our first corporate PPA, we would see many others in the market. However, two years later, the number of corporate PPAs in Poland remains low, as you have noticed. One of the reasons is that off-takers are not well educated on this topic, and therefore, they may be reluctant to explore this business opportunity. We had to spend a significant amount of time discussing and explaining the corporate PPA model in detail to Mercedes Benz Manufacturing Poland sp. z o.o. to ensure we were on the same page.

There is a perception in the market that PPAs are not very profitable, which has kept some players away from this model. What are your thoughts on this?

I disagree with this perception. Off-takers sometimes have the tendency to believe that PPAs should be below the market level, but this is not necessarily true. The price/cost scheme of a PPA should be acceptable and profitable for both contractual parties. Once all subsidy schemes, including CfD (Contracts for Difference) mechanisms, are phased out, various PPA schemes are the future. Investors will always expect a certain internal rate of return (IRR) for the project to be feasible, typically around 10% over a period of 15 years.