Could you tell us about the circumstances that led Enefit to expand into the Polish market?

In 2016, Eesti Energia secured a stable position in the energy sales market in Estonia, Lithuania, and Latvia. The company decided to leverage this experience and expand into other countries in the region. As a company from the Baltics, it was natural for Enefit to prioritize the Nordic countries and Poland. While the company later expanded into the Scandinavian markets of Finland and Sweden, they initially chose to enter Poland. Enefit entered the B2B retail market, as B2C markets were less interesting since the energy prices for households were still regulated. Although there are plans to fully liberalize the gas market by 2024, the situation with electricity is more complex. The market had been liberalized in the past, but the state reversed its decision due to concerns about price hikes. At present, it is uncertain if or when the market will return to a liberalized state.

You offer green energy packages to customers. Is there high demand for clean energy from consumers?

Demand for renewable energy is growing, primarily driven by international companies operating in Poland. Polish companies are also showing greater interest in green energy. In the past year, renewable energy has accounted for approximately a third of Enefit’s portfolio, considering guarantees of origin. The Corporate PPA model was implemented in 2018, and there are initiatives from all stakeholders involved, from producers to associations, to fully implement this model. The industrial sector is also keeping a close watch on the development. Enefit welcomes this change, as these agreements will make it easier to finance new production units.

Enefit has developed its own renewable energy production capabilities. What drives the company’s interest in this area?

Enefit has acquired approximately 20 MW in the PV segment through its sister company, Enefit Green. The company is looking to acquire further units. Poland still relies heavily on coal, providing significant room for growth for companies seeking to contribute to CO2 reduction. Renewable energy prices have become competitive with coal, thanks to increasing costs with CO2 allowances. A revolution is underway, and Enefit expects this transition to gain even more momentum going forward.

What do you consider to be the main drivers of this momentum?

The announcement of two auctions for renewable energy – one in December 2019 and another scheduled for 2020 – is a major driver of this momentum. However, there are still challenges to overcome, such as the 10H rule hindering the development of wind power. Although this rule does not apply to projects that obtained their permits before its passage, projects developed this year could be the last ones for a while. If legislation does not change soon, there could be a three to five-year gap until new wind parks are operational.

In the fairly diversified and segmented industry space in which Enefit operates, what are the other main challenges?

The lack of a central body approach is a major challenge. Although there are many initiatives to address this shortcoming, they are individual, and a central data hub is necessary to address taxation, invoicing, and future-oriented businesses. Although the government has an idea to create a central data hub, no real progress has been made yet. For example, the electric vehicle business is not considered a supply of electricity, but simply charging, because there is no system to measure it.