Season for strategies and hard realism

The PGE Group has completed a relay of presentations or updates on the operating strategies of Poland’s largest energy companies for the next decade. What are the implications of these?

Just a few years ago, the strategies of Poland’s major energy flagships would have looked very different. Those plans would have been full of impressive projects, investment in innovation, and would probably have included specifics on dividends, which is what shareholders like best.

 At present, due to geopolitical reasons, which have a strong impact on the entire economy, including the energy sector, the action plans of the largest industry companies in Poland are all about realism and mitigating risks. A farewell to coal sources is inevitable. At the same time, safety and stability of the system are being replaced by everything.

 This can be seen very clearly in the PGE Group’s strategy, the presentation of which I attended as a member of the Supervisory Board, together with representatives of the government, company management, employees, experts and journalists.

 ‘The dot over the i’ will be put in the autumn by Polskie Sieci Elektroenergetyczne, which has become a leading centre on the transformation map in Poland. It is to be expected that the system operator’s strategy will further strengthen these directions, so that the energy transition has a solid foundation and our electricity system is as flexible as possible.

Regulatory cooperation and stability

 In my view, the strategies of individual energy companies should not be read in isolation. It is a composite of several chapters, but a unified story about the challenges facing not so much them, but the Polish energy sector. Obviously, the companies are competing with each other for customers and, for the sake of the market, let this battle be as fierce as possible. From the point of view of the entire energy system in Poland, however, these strategies are complementary. They also emphasise other aspects of the transformation.

 The basis is common. It assumes a move away from fossil fuels, investment in renewable energy sources (RES), the development of energy storage and the modernisation of energy networks. All major companies also emphasise another very important point. It is impossible to work effectively on the transformation without close, good cooperation with state and local administrations.

The subjects on which the energy industry depends are today spread out in a ministerial triumvirate: Ministry of Industry, MoE, MAP. Meanwhile, the regulatory changes that are important for the energy transition, such as the development of RES, are not only energy law, but also, for example, infrastructure or agriculture. In this aspect, looking at the strategies and activities of energy companies, I see the need to coordinate the management of the transition in Poland at the government level.

 Related to this is another demand that resonates strongly with companies and investors. A predictable regulatory environment related to the implementation of the EU climate policy in Poland. So far, we are waiting for an update of the Polish Energy Policy until 2040 and the final shape of the National Energy and Climate Plan.

Economy and customer in the midst of transformation

 Without such an energy compass, we are hostage to technology, as can be seen in the strategies of the major energy companies, for example through the role of gas in the transition. This is of course not an accusation, just an emphasis on the responsibility of bridging the “power gap” that PSE talks about and answering the question of what to do in the face of RES dynamics before we build nuclear.

 On the other hand, the energy transition is not art for art’s sake. It is meant to serve the economy and customers. Not only for business, but also for local authorities and households. This can be seen most clearly in the strategy of the Tauron Group, which was the first to present its objectives and approach at the end of last year. The axis of this philosophy is the customer and new products and services that respond to the dynamically changing needs of the market.

This is also highlighted by the operationalisation of the Orlen Group’s strategy, which is being implemented by Pomeranian Energa in the energy layer. The company focuses not only on modern energy products for individual customers. It is strongly developing RES and sees helping business to move to the green side of power as one of its main activities, as well as responding to its other transition challenges.

 We often talk about the war in Ukraine and its impact on energy in Europe. Added to this is the global conflict between Israel and Iran, and before that the energy crisis in the Iberian Peninsula. This latest event completes today’s truth of the times. Increasing the value of energy companies is a very important issue.