Małgorzata Piasecka (PGNiG Ventures): Dispersed energy will be more and more important for energy security

PGNiG Ventures is a corporate venture capital fund created by PGNiG, which is now a part of the ORLEN Capital Group. This fund focuses on investing in companies that show promise and innovation through their products, expertise, and capable teams. PGNiG Ventures seeks out ventures with potential and provides them with financial support and resources to further develop and succeed.

Małgorzata Piasecka, the President of the Management Board of PGNiG Ventures, shared insights regarding innovations, the current state of the market, and the future of the energy sector. Her expertise and perspective provide valuable information on how PGNiG Ventures is navigating the evolving energy landscape and embracing advancements in the industry.

What is the current market of innovation in the energy sector? What’s Hot?

In the energy sector, alongside ensuring energy security, a top priority is addressing the challenges posed by climate change and minimizing the industry’s negative impact on the environment. Investing in new technologies within the energy sector is crucial for working towards climate neutrality. Solutions that focus on CO2 capture, energy storage, nuclear fusion, data analysis, digitization, enhancing power grid resilience, and expanding hydrogen infrastructure are key to achieving these goals.

While I recognize significant potential in these areas, it’s important to underscore that there’s still much work ahead. The systems needed for establishing hydrogen infrastructure or large-scale storage of solar-generated electricity are in their early stages of development in many respects. Moreover, CO2 sequestration remains a challenge on an industrial scale. The only viable response to the energy sector’s challenges is by investing in the advancement of these critical domains.

What has changed in this area since the outbreak of the war in Ukraine?

the energy mix should have more sustainable energy sources, without a significant dominance of any of them.

The conflict in Ukraine and the resulting energy crisis have placed independence and energy security at the forefront for many nations. The term “diversification” has taken on a new significance. Today, diversification means having various energy sources and obtaining them from different geographical directions.

Energy diversification isn’t just about how we generate energy; it’s also about where we source the raw materials needed for energy production. The idea of energy diversification also encompasses the concept of “production close to consumption.” To ensure energy security, smaller local power generation units, often called distributed energy, play a crucial role. These units are based on technologies like photovoltaics, hydro, and wind power, often initiated by energy cooperatives or clusters. They offer greater flexibility in monitoring and managing current energy production and consumption. This local approach drives investments in modern energy consumption monitoring technologies, efficient lighting management, and the local production of renewable energy.

The conflict in Ukraine has highlighted the necessity of focusing more on the concept of the “energy mix” to ensure a state’s independence and energy security. Relying on just one or two energy sources is inadequate in today’s landscape. In reality, those few sources could be at risk. Consequently, the energy mix should incorporate a variety of sustainable energy sources, preventing any one source from gaining excessive dominance. In Poland’s case, this involves reducing reliance on coal and increasing the share of renewable energy sources (like photovoltaics, onshore and offshore wind farms) or nuclear energy (including power plants and small nuclear reactors).

Given the complexity of economic processes, the notion of energy security must be understood more broadly as “extended energy safety.” This includes not only ensuring energy production but also addressing challenges related to disruptions in energy supply that can lead to the shutdown of entire economic sectors. We’ve seen how gas supply shortages can impact sectors like artificial fertilizer production, thereby affecting food production, and even disrupting the production of essential materials for various industries.

How do Polish innovators present themselves on the international arena? Are we keeping pace with Western countries?

The emergence of startups offering advanced technology solutions (deep tech) in Poland is becoming increasingly prominent. Polish programmers and engineers have gained recognition on the global stage, often ranking among the best. These tech startups provide technologies that have the potential to scale across various markets. Many startups from Poland are quick to target international markets, securing their first clients abroad. This international expansion is a significant measure of a startup’s business development potential and is appealing to foreign investors.

The PFR and Inovo report highlights the trends in transactions within the Polish venture capital (VC) market in 2022. Despite global and regional downward trends, the value of VC transactions in Poland remained relatively stable compared to the previous year. In 2022, the share of transaction values carried out by international funds in Poland decreased compared to 2021 (26% vs. 50%). This shift is attributed to the cautious approach of international capital due to factors like the conflict in Ukraine and limited VC activity during the economic crisis. However, looking forward, Polish startups still hold significant potential for expansion into international markets in the medium and long term.

Is this the moment when, apart from RES, we should invest equally heavily in energy management systems, energy infrastructure development and grid flexibility?

It is important to develop energy storage technologies necessary to compensate for RES discontinuities, which will allow for adjusting energy supplies to demand.

The advancement of clean, renewable energy sources is a crucial aspect of the ongoing energy transformation. However, the practical application of renewables still faces challenges due to their relatively small share in the energy mix. Embracing renewable energy involves a shift from a predictable energy generation model to a less certain one, which brings about various technical and infrastructural obstacles. Managing the daily variations between energy supply and demand is a significant challenge, particularly given the disparities between wind and solar power generation and actual consumption. The unpredictable nature of renewable energy generation is often influenced by changing weather conditions. As more distributed energy sources are integrated into the grid, it can lead to discontinuities and instability.

There is no one-size-fits-all solution to these challenges. However, the overall direction to address them involves flexibility, incorporating a range of solutions and technologies. A key area of focus is the development of energy storage technologies that can mitigate the inconsistencies in renewable energy generation, enabling better alignment with energy demand. In this realm, technological innovations are consistently improving battery quality, performance, and cost-effectiveness.

Addressing energy demand also necessitates investing in new customer services. These services can assist in stabilizing the grid by reducing electricity consumption. This is where smart metering comes into play, utilizing sensor-based systems that help customers monitor energy usage effectively, leveraging data from meters. Coupled with predictive software, these systems can anticipate peak consumption times, allowing energy companies to proactively manage energy loads during periods of high demand.

Local load management is essential. Many municipalities host industrial facilities or prosumers—individuals who both produce and consume energy—and these entities often operate their own energy storage systems. This localized approach alleviates strain on the grid. Prioritizing local solutions benefits network operators and proves cost-effective whenever possible.

Making the power grid smarter through technology is really important, especially when renewable energy sources like solar and wind can be unpredictable. Energy companies are investing in startups that use smart computer systems (AI) to predict how energy moves and make it work better in real time. This helps people who produce their own energy, like from solar panels, to store it when prices are low and use it when prices are high, saving money. For instance, they can charge up their energy storage when it’s cheap and then use that energy later when prices are expensive. This kind of smart system also helps keep the whole energy network steady and reliable by managing energy in a smart way.

Which technologies will play the most important role in the next stages of the energy transformation?

A technology that’s becoming important is affordable green hydrogen. As we aim to use more energy while also taking care of the environment, advanced technologies are being developed to create low-carbon energy. These technologies involve new processes, materials, and methods. For instance, deep tech companies are working on energy-efficient devices called electrolysers that produce eco-friendly hydrogen. Another example is using new types of chemical reactors to make synthetic methane from CO2 found in industrial sites. All these efforts are aimed at getting closer to a net zero economy, where we emit very little carbon into the environment.

Innovations coming from startups combined with the capabilities of corporations is the key to a smoother transition through the energy transformation?

The implementation of pilot projects in corporations is a key method that allows the verification of a given technology, especially if it is at an early stage of development.

According to the “Cleaner Energies” report by Hello Tomorrow and Boston Consulting Group, deep tech is already ahead of traditional industry players, bringing healthy competition to the market for existing energy solutions. However, achieving the goals of reaching zero carbon emissions within a specific timeframe requires collective efforts from the entire energy sector: corporations, startups, private and public investors. This collaboration must happen on an unprecedented scale to develop and implement these new solutions effectively.

As a fund, we recognize the need to change how we work with startups. Previously, our role mainly involved figuring out how a startup could fit with a corporation and its activities. While this remains important, a new trend is emerging where specialized teams within funds are formed to ensure the successful integration of specific technologies within corporations. By demonstrating a clear understanding of the technology and how it can benefit a business, funds can build trust with corporations and speed up the testing and adoption of new technologies. Implementing pilot projects within corporations is a crucial approach for verifying a technology, especially if it’s in its early stages of development. This collaborative effort is vital for driving innovation and achieving our carbon reduction goals.

We’re realizing the need to change how we work with startups as a fund. In the past, our main job was to figure out how a startup could fit into a corporation and its operations. This was a complex and often challenging process that didn’t always produce clear results. While this role still holds importance, a new trend is emerging. Funds are now forming specialized teams with experts whose goal is to effectively introduce a specific technology within a corporation. This approach goes beyond understanding the technology – it’s about demonstrating how it can impact a business. By doing so, we can build trust with corporations and speed up the testing and adoption of new technologies. An essential way to test and prove a technology’s viability is through pilot projects within corporations. This is particularly valuable when the technology is in its early stages of development. Ultimately, this shift in cooperation is essential for driving innovation and helping us reach our goals.

What technologies will you pay attention to in the near future?

Absolutely, all the technologies we discussed earlier in our conversation, such as energy storage, AI-based solutions, and renewable energy sources, are crucial for us. I’d like to highlight the significance and potential of CO2 sequestration, which I believe is often underestimated in the Polish business landscape, but deserves more attention. It has the potential to play a significant role in our efforts to address environmental challenges.

What, apart from interesting technology, should a company have to catch your interest?

Indeed, a critical factor is having a skilled and capable team that holds the potential for ongoing growth. Additionally, having an international team is highly valuable; diversity often enhances effectiveness by bringing in varied viewpoints and broader insights. Naturally, we also focus on evaluating the company’s strategy to determine its feasibility. We assess factors such as financial discipline, scalability in multiple markets, and whether the company’s approach aligns with our perspective. In essence, a combination of a strong team and a strategic approach is key to our investment decisions.