Will business start to move out due to electricity prices? CEO of Axpo Polska: In the long term, such a risk exists

Szymon Krawiec, “Wprost”: How did it happen that the Swiss from Axpo, alongside state-owned energy concerns, became the largest seller of electricity in Poland?

Grzegorz Biliński, Managing Director of Axpo Polska: Many competing companies were hit by market instability when many unpredictable market events overlapped in 2021 and when the war in Ukraine broke out in 2022. We did not slow down then. We tried to be close to customers and offer solutions that were needed and necessary at that time. I think that to a large extent this made us reach those customers who simply needed help.

Another thing is that the growth of our revenues is of course also due to the specificity of the goods we trade. In 2014, electricity cost PLN 170 per 1 MWh on the Polish Power Exchange. In 2022, there were days when 1 MWh cost PLN 3.8 thousand.

What do the Swiss say about the Polish market?

Axpo has a decentralized management model. We are in a very privileged position to have a state-owned company behind us. This brings great stability and experience, also from other markets, because the group is present on all European markets, with a smaller or larger commercial contribution.

Poland is an interesting market for Axpo. Mainly because it has to go through an energy transformation.

Today, we can debate whether progress is moving at the right pace or too slowly, but the truth is that transformation is inevitable. This is an opportunity for companies like Axpo, which offer solutions based on renewable energy.

The economic structure of Poland is also interesting. After all, we have a lot of small and medium-sized enterprises on the Vistula. The entire economy is based on them.

What do you have that the competition doesn’t?

We started building our position on the Polish market with stability. We were one of the first companies in the country to offer our customers fixed electricity prices for 5 years in advance. For example, we had customers who joined us in 2018 and went through the entire crisis period of 2021-2022 with the same price, below PLN 300 per megawatt-hour. We were also the first company that, of its own free will, decided to sell only energy covered by guarantees of origin or other certificates confirming its production from renewable sources. We entered Poland with the mission of being an inspiration for the energy transformation.

Today, 35,000 small and medium-sized businesses use your services.

And every month, nearly a thousand new customers are added. On the other hand, 35 thousand customers is not such a large part of the SME sector. We have several million entrepreneurs in Poland. Although the vast majority of them are sole proprietorships, there are already a considerable number of limited liability companies, around 500 thousand. So there is potential for further development and designing an even better tailored offer.

Are you tempting them with this fixed price? How are you attracting them?

Today, customer expectations are slightly different than they were a few years ago. There are companies that want to have a market price – buy energy at a rate that reflects current stock exchange prices and do not want a fixed, identical price for the next 5 years.

There are also clients who stay with us because of the stability and reliability. They have secured a price with us for several years, they have gone through the recent turbulence with a low rate, but they have heard that other energy companies have terminated contracts because they were unfavourable to them or not sufficiently secured. We did not operate that way.

Is Polish business tempted by green energy to buy it from you?

There are more and more such companies. Some customers come because they have heard that Axpo sells only green energy to small and medium-sized enterprises, and this is a requirement from their contractors. They often have such needs themselves – they want to be able to tell their customers that they are part of the energy transformation.

We introduced renewable energy to our offer more out of a sense of mission. After a few years, we see that customers appreciate that it is our standard.

Not long ago, the Energy Regulatory Office reported that over the past 17 years, a million Poles have changed their electricity supplier. Three-quarters of that million are ordinary consumers, and about 238,000 are businesses. The scale is tiny. Why is it so hard for companies to change suppliers?

Changing electricity suppliers is still not as easy as changing internet providers or car insurance companies. These industries have their own price comparison sites, and the formalities are completed quickly. What’s more, consumers have already tested for themselves that nothing bad will happen if they stop insuring their car with a company they have been associated with for years and choose another instead. They feel safe with the decision they have made. The energy market is not at that stage yet, although online price comparison sites are already operating. When someone thinks about changing energy suppliers, they immediately wonder if it will really be cheaper, if their electricity will be cut off, if it is safe, if it is complicated, how long it takes.

We strive to make joining Axpo very easy and possible in literally two clicks of the mouse, as when concluding a contract for the delivery of other services. Of course, it takes some time to achieve this situation.

And how do you find your way in the Polish energy market dominated by state giants? How do you compete in the shadow of PGE, Energa, Tauron, Enea?

It depends on which segment. Our offer is complementary, and in some areas we even have common interests, for example in the wholesale market. In the case of energy from renewable sources, Axpo currently serves almost 23 percent of the domestic wind energy market and almost 10 percent of solar energy. State Treasury companies do not usually have the collection of electricity from renewable sources on their agenda. Competition only begins in the case of serving industrial customers, but here we have a certain advantage over Polish entities with a state treasury share.

What is the advantage?

Polish energy companies have not decided to expand internationally. International customers are looking for energy suppliers who have branches in different countries and for individual markets they want to have the same guarantees, the same conditions, the same energy prices. Axpo’s offer in Poland has been chosen by many international entities that know our company from other markets.

What kind of clients do you have in Poland?

We can’t mention all of them. I can definitely mention Nestlé, Danone, Geberit, Ursa, Heidelberg Materials (Górażdże Cement), R.Power.

In an interview for “Wprost” Michał Sołowow said that high electricity prices are killing Polish companies. What should these companies do? Grit their teeth and wait until electricity becomes cheaper?

It is not a matter of waiting. The answer here is the energy transformation, which is not optional. It is rather a question of how quickly and efficiently it will happen. Fossil sources are more expensive and penalized by the European Union because they emit large amounts of CO2. They are a stable source of energy, but due to their costs and age, and therefore the need for modernization, they are not something that our country will be able to maintain. On the other hand, we have renewable sources – low-emission and low-cost, which are able to address the level of price levels to some extent. They can be supplemented by nuclear power plants, which – like coal-fired plants – are characterized by stable production. When and how efficiently they will be built is already in the hands of the government.

One thing is certain – the sooner the energy transformation takes place, including investments in low-emission energy sources, the better for the competitiveness of the Polish economy.

Here I can only listen to what Michał Sołowow says. As an entrepreneur who has his own companies and quite a large consumption, he certainly accurately assesses the situation of doing business in Poland. Lower electricity prices in other European countries obviously affect the competitiveness of our economy, but it is difficult to predict the future of Polish entrepreneurs solely on this basis.

Could the delayed energy transformation in the long term cause companies to leave Poland and move to markets that generate lower costs? Yes, such a risk exists.

Is there anything that most hinders doing business in Poland?

We are doing well on the Polish market and our results confirm this. However, there is always something that can be improved. Regulatory stability is key, as it allows investors to operate efficiently. I understand that it is impossible to predict situations such as a global pandemic, a combination of many failures and bad weather conditions in 2021 throughout Europe or the outbreak of war in Ukraine, but it is certainly possible to work on regulatory stability in Poland and on its accuracy. We provide our substantive input to draft changes to regulations by working in economic organizations related to the energy market, such as TOE or Lewiatan.

We have another extension of government shields intended to protect Poles from energy price increases. Is this a good move or harmful?

The government tried to protect citizens and small and medium-sized businesses, which are a very important part of the economy, from an unpredictable energy crisis over which they had no influence and which the whole of Europe went through.

I think this is a noble action, although of course costly for energy trading companies like ours, because the mechanisms introduced do not fully compensate for the difference between the cost incurred and the compensation received.

Despite everything, I understand the introduction of such support because I have seen the scale of the increases in energy prices over the last few years and the extent to which entrepreneurs have been protected by the aid mechanisms applied.

What else would Switzerland like to achieve on the energy market in Poland?

We want to be an inspiration for the energy transformation. We have extensive experience in this field and we can help in this not only in Poland but also in many other countries. In addition, we simply want to be close to customers and inspire them to use green solutions. We try to constantly adapt our offer to the needs resulting from the market situation, and this will also be followed by the organic development of Axpo Polska.