11.07.2022 | How Axpo is strengthening its leading position in the Polish energy market
Twenty years ago, Axpo opened its office in Warsaw. Since then, the Polish subsidiary has become a major player in the country’s energy market. With its innovative, customer-centric approach, Axpo Polska ranks among the leading marketers of renewable energy in Poland, supplying green electricity to industrial customers and SMEs. In the first of four interviews with its senior management to mark Axpo Polska’s 20th anniversary, we spoke to Managing Director Grzegorz Bilinski. Here, he looks back over the past two decades and ahead to a promising future.
Greg, twenty years ago Axpo entered the Polish energy market. What has happened since then? What did Axpo bring to the country during those years?
Grzegorz Bilinski: When energy markets across Europe were liberalised at the turn of the millennium, Poland, like most countries, attracted the attention of international energy companies. It’s a significant country comparable to Spain in terms of size as well as population. Axpo was one of the first international market players to enter Poland, although it adopted a cautious approach in the beginning. At that time, our Warsaw’s office purpose was to understand the emerging market architecture, acquire relevant market licences, meet market participants and be on a look-out for profitable business opportunities and ways to add value for customers.
What was the next step?
These opportunities finally emerged ten years later with publication of a regulatory framework supporting the transition to renewable energies that encouraged construction of the first commercial wind farms in Poland. Axpo was at the forefront by providing bankable long-term structured PPAs to developers. This service and expertise continues to distinguish us amongst market participants in Poland and beyond to this day. Since then, our PPAs, combined with the regulatory incentives, investor enthusiasm and bank financing, have helped enable the construction of close to twenty per cent of Polish wind power capacity.
What is your business model besides PPAs?
To effectively offer PPA solutions, which in effect is hedging long-term energy production, we started looking for complementary services that would allow us to continue offering PPAs and at the same time expand our commercial offer. Basically, with a PPA you essentially buy green electricity and need to sell it somewhere. In trading language, you are long on green power. You can sell this power either on the exchange, over the counter (OTC) or to customers. Since liquidity on the Polish Power Exchange is limited to one or two years ahead and PPAs can be for up to fifteen years, we put a lot of effort into identifying suitable potential customers. That’s why in 2013 we decided to simultaneously pursue power sales to the Polish SME sector and the substantial Polish industrial sector.
How did you grow from a small team into quite a large company?
We did it in a very start-up like fashion, a cultural feature that is with us to this day. Starting with five people, we devised plans, investigated sales channels, drew up contracts, chose IT solutions, developed marketing strategies and spoke to customers. We didn’t invest a lot up front; we tested every assumption, made mistakes, went back to the drawing-board and tried again. Year by year, as our portfolio grew, as our numbers proved our capabilities, we expanded organically, but cautiously. Today we can say that we’ve proved our case: Axpo Polska delivers power and gas to more than 40 international industrial clients, has in excess of 20,000 SME customers, and is one of the most active traders on the Polish Power Exchange and OTC. Last but not least, we are probably the largest independent off-taker of renewable energy in Poland.
How important is the SME sector and what is its potential?
There is an impressive SME sector in Poland with almost four million thriving entrepreneurs out of a population of 38 million. We believe that the power sector for SMEs, particularly in terms of simplicity, user friendliness of services and access to renewable energy is still in uncharted territory. And not only in Poland. The situation is similar in other countries. Most people across the EU still don’t understand their power bill, let alone have the confidence to switch suppliers or source green electricity. One of our commercial pillars relates to operational excellence and simplicity, and it is particularly aimed at this sector. We want to make an impression here. We want to make the power sector as approachable to people as banking, telecommunications or insurance have become over the past decade. There are a great many exciting things to be done.
What are the main pillars of Axpo today and what is to come next?
Today we have three established and very robust commercial pillars which underpin our business strategy: Origination, SME, and Trading & Portfolio Management. On the back of these we are working very hard to develop the next three. As I mentioned earlier, the fourth is operational excellence, with the ever elusive goal of achieving simplicity both externally and internally. The fifth pillar is global carbon offsets and supporting our international clients with meaningful carbon offsetting procurement. The sixth pillar is photovoltaics - a new business segment, which we launched in Poland this spring. It involves building the company's first own generation capacity in Poland and offering photovoltaic projects to business customers. What underpins our growth is our desire to be an inspiration behind the energy transition in Poland and beyond. There are a lot of fun things still to do. We have ambitious and exciting plans and lots of room for our talented staff to grow.
How important is the international presence of Axpo in this context?
It is a huge advantage. We have a good number of customers that have been working with Axpo in other countries and then asked to get in touch with us for PPA, power and gas supply or trading purposes in Poland. And it also works the other way round. Over the years a number of our clients wanted to extend our cooperation to other European markets, and we put them in touch with our Axpo colleagues outside Poland. This shows how the decentralised set-up of Axpo, with a local presence in more than 30 countries, clearly pays off, both for us and our customers.
What do customers like about working with Axpo in Poland?
I think our competitive advantage in Poland consists of three elements. First of all we benefit from our Swiss heritage and a strong, stable financial standing. We provide security in the full sense of the word. In a market riddled with regulatory changes, market volatility and entering and exiting market participants, over the years we have stood by our Swiss values. To give you an example, over the years, at least on two occasions, prompted by regulatory changes or market volatility, our competitors changed previously agreed customer contract prices. We didn’t. Instead, we assured our clients that their contracts would be honoured.
So, stability is one. And what’s the other advantages?
The second one is our tailor-made approach and out-of-the-box solutions. We listen to the market and our clients, designing solutions that fit the constantly changing world and individual needs, whether that’s, for example, pricing structures into a ten to fifteen-year horizon or combining international capabilities to deliver a commodity. Lastly, we stay close to our clients and are responsive. While our organisation is by now sizable, we take pride in reacting quickly and efficiently to client queries and needs. When clients get in touch, our response is swift and includes actionable feedback.
How have your services and products changed during all those years?
It’s wonderful to see how our products and services are naturally evolving. We started with PPAs, then added tailor-made power contracts for industrial clients. Then we developed fixed price contracts for our SME customers. Today, responding to increasing demand for green electricity from environmentally conscious companies, we are designing corporate PPAs that combine our PPA expertise with supply contracts. But the evolution is not only on corporate level – our SME offering is also evolving.
In what sense?
Clients are able to join Axpo one hundred per cent online. This is on top of being the only trader in Poland to offer completely green electricity to our SME clients without charging a premium. We want to encourage environmental awareness as well as ease of use and security of supply. And we try to make all of this as user-friendly as possible - digitalising what we can by translating a complex reality into something easily ‘clickable.’
Axpo has been growing massively in Poland over the years. What does the company’s culture look like?
As I said, we started as a very small office twenty years ago. We grew organically through hard work, entrepreneurial spirit and, most importantly, by giving people the space to spread their wings and realise their potential and ideas. Most of the people who joined Axpo in entry-level jobs are now running the show. We maintained a very strong start-up culture and vibe, with an entrepreneurial drive, a flat hierarchy and lots of respect for each other. People do not need to stick to their job description. It’s about getting the job done. And this culture encourages our employees to think out of the box and implement innovative ideas. Most importantly: work together and break silos. This doesn’t mean that we don’t have silos, just that we are actively trying to find ways to dismantle them.
What else is attractive from an employee’s point of view?
We listen and understand our employees, and we encourage an attitude of initiative taking. That is why a.o. we encourage job rotation. People can learn a broad range of tasks should they wish to change what they do every day. Thanks to that, on top of Trading, SME, and Origination, we also became an important near-shoring hub for Axpo Group in recent years – in risk management and mid-office services, for instance. Depending on a person’s talent and potential, over a good few years you can explore various job profiles, as long as you deliver. In this way, an operations intern over a period of five years is heading an international mid-office team, a portfolio analyst is now a risk quant, another operations intern switched from operations and became a very successful originator, and yet another person went from an HR job through SME network development to the PV asset development team. Possibilities are vast but so are our performance expectations. We give a lot of development space but we also demand above-average performance in return.
Axpo Polska also stands out from a diversity point of view.
Absolutely – out of ten people reporting directly to me, eight are women. Many of them joined Axpo Polska when they were at an early stage in their careers and have made quantum jumps ever since. We are close to having a 50/50 men-women split across the organisation. This is certainly a USP of Axpo compared to other energy companies, which are still mainly dominated by men.
Last but not least, how do you relax from your challenging work?
Privately I’m a bit of a book-worm. Recently I have over-indulged in fact-based graphic novels. I’m no stranger to a fun night out with friends, though, and I love recharging by spending quality time with the ones I care about the most. I also have a daughter who is nearly three years old and enjoy spending time with her whenever I can. She makes me laugh a lot and is a perfect balance from the sometimes very challenging daily business.
Axpo has been present in the Polish market for 20 years. Clients in Poland benefit from tailor-made PPAs, as well as power and gas supply solutions based on structured long-term contracts. In the past eight years, Axpo has also expanded its client portfolio to small and medium-sized businesses (SMEs) and now provides services for 15,000 such companies in the country.