TRMEW Obrot (soon RESPECT ENERGY) specializes in purchase and sale of renewable energy to business and industrial customers. The company has developed robust forecasting capabilities which allows them to predict, with very high accuracy, the output of renewable energy installations in their portfolio.
You aggregate and sell energy from renewable energy producers across Poland. Can you briefly explain your business model and why you opted for this strategy?
It is a niche that remained unexplored by the biggest companies in Poland. In brief, we have offtake agreements in place with renewable energy producers and our supply is limited to their generation capacity. This means we do not deal with wholesale markets, which would only increase our risk.
Our fundamental task is to balance the energy portfolio in a way that allows us to supply end consumers at given prices and at required times. The challenge with renewable energy is that it lacks flexibility in terms of supply, but we set in place a very strong meteorological system to address this.
What forecasting capabilities do you have in place more specifically, and how accurate are they normally?
We have our own meteorological desk and a strong analytical team that forecasts production for each of the power plants we manage. We gather billions of data from all possible sources to create better forecast than anybody else - the idea is to have the smallest imbalances in our portfolio which is what gives us our market advantage.
Accuracy depends on the country and source of electricity. What I can tell you is that we buy all forecasts that are available commercially to benchmark ourselves, and we have higher accuracy than any other provider out there.
For instance, we have the best hydro model across Poland and the Balkans. We have gathered data about production and river flows for each damn in these regions and created power curves. We combine these with forecasts from local meteorological institutes of precipitations and main weather forecast providers, and we are able to forecast hydro production with extremely high accuracy. In Romania for example we can forecast 9-14 days ahead and up to 100 MW - nobody else has such capabilities.
Clean energy generation also adds to your strength, namely you already own a wind farm. Do you have plans to expand your production base?
We started work on a PV project that will amount to 600 MW, the largest of its sort in Poland. It is a joint venture, developed together with four other partners, in which we hold a 20% stake.
So far we have secured the land (over 1000 ha), obtained the connection permit and we are in the final stage of design. We start construction of the first phase next year, and expect it to be operational and producing in 2021.
You have a presence in several European countries such as Germany, Italy, Romania etc., how do these contribute to your business objectives?
We try to have an eagle view perspective on European energy markets because we want to understand macro factors that drive prices. Depending on the country, this has stronger or lesser importance - Poland is typically sensitive to CO2 and coal prices, but because the country is not very interconnected local drivers tend to bear the biggest impact. Even so, if you only consider one country’s chances, you will miss certain elements and your portfolio optimization will not be perfect.
We have seen many examples of companies that are doing sales in Poland and have experience in retail, but not in the philosophy of the energy sector. We are talking about a very dynamic environment, no other commodity is as volatile as electricity - this makes it very exciting but also means one needs to remain cautious.
In terms of energy sales, how much do international markets contribute to your portfolio presently? Do you plan to enter new markets?
Foreign sales represent roughly 30% of our present revenue. But in a year’s time we expect to do most of our business outside of Poland. If we grow as planned, the size of each country in our portfolio should be proportional to the size of its energy market.
Our first goal is to serve all of Europe. The strategy is to first enter the wholesale sector and gather knowledge about the market (we have an entire team of smart people that uses artificial intelligence in this sense). Once we have a good understanding of local circumstances, we plan to open originating activities, source producers for PPAs and identify business and industrial clients to market this energy to.
How do you see the renewable energy sector evolving in the next few years and what are they main technologies you expect will drive growth?
For Poland as for any other country it is going to be a key development driver. Poland holds excellent potential in wind and solar, while other technologies are quite limited. We have some unused potential in hydro which could result in about 1000 -1500 MW but it is a long and costly process to construct dams.
Biogas will also surely grow. It had its ups and downs in the past but now we have a strong system in place to support it. Many companies are developing projects which I trust will take off in just few years.
For us the goal is to grow sustainably but with big geographical diversification. We think this business will grow several times over the next years and we will be replicating the same business model in other countries. Starting with Eastern Europe, as it should have similar dynamic to our market, and then spreading westwards.
Do you have a final message for investors in your field of work that are considering Poland as an option?
There is enough space for newcomers, especially now that the market is maturing and consumers are developing an appetite for clean energy. Whoever considers investing in Poland in the next few years should do so, as they will not be disappointed.
