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Innovation in energy
How can startups help the “green” transformation?

“Green” transformation is a topic that has been at the top of the agenda of both Polish and European discussions for several years. The energy crisis caused by Russia’s war has highlighted that we still have a lot to do. Could start-ups be the answer to the challenges in energy?
– Energy transition is an area where bold, innovative and flexible solutions are needed. This is definitely the domain of startups, therefore their presence in this industry is beneficial for all its participants, and above all for us, i.e. the consumers,” says Tomasz Snażyk, president of Startup Poland, a foundation which, in cooperation with PGNiG Ventures and Microsoft, has just released a report on technology in the energy industry and the role of startups in the ‘green’ transformation.

Startups to help the energy industry

The largest group of start-ups in the energy sector is focused on photovoltaic and wind projects, but ideas for solutions in hitherto less developed areas, such as hydrogen technology or biogas, are also increasingly emerging.

– Time will tell whether startups will find their way into the biogas area, but there is already a lot of potential in solutions to support, for example, the process of disposing of household organic waste. “Green”, zero-emission hydrogen, widely regarded as the true fuel of the future, also holds great promise – both for innovative players looking for their niche in the energy sector and for potential investors. The chances of scaling this business should only increase over time, comments Tomasz Snażyk.

One of the most important aspects of the energy transition – closely linked to the development of RES – is the issue of energy storage. An important feature of renewable energy sources is their potential instability; therefore, in addition to stabilising alternatives, it is important to be able to store surplus energy produced. Although energy storage facilities are rare in Poland for the time being, this is slowly beginning to change.

– The potential of start-ups in the field of energy storage seems to be still largely untapped. Perhaps only the construction of more energy storage facilities by energy corporations will trigger demand for the services of smaller entities supporting these technologies, concludes Tomasz Snażyk.

The green transition affects everyone

So when it comes to the energy market – production, transmission and distribution infrastructure – we are in for a huge change. The revolution will not bypass business in the broadest sense either, and is contained in three terms: “Environmental”, “Social” and “Corporate Governance”, or ESG. The European Commission has published a draft of the CSRD (Corporate Sustainable Reporting Directive), which is due to come into force in 2024. The document imposes a number of new reporting obligations on companies’ ESG activities – business will have to take into account environmental, social and corporate governance factors.
– Sustainability has become an important element of corporate governance in recent years. Energy startups will play a significant role in this context, using cloud technology, artificial intelligence or the Internet of Things to create innovative low-carbon solutions. The key to the ‘twin transformation’ of the European Green Deal using technology is therefore the collaboration of large energy producers with smaller but innovative companies. Additional opportunities for the energy sector will be opened up by the emerging Polish region of Microsoft Azure, said Krzysztof Malesa, board member and director of security strategy at Microsoft Poland. – However, changes in the energy sector cannot be discussed in isolation from the issue of security. The tools and technologies offered by Microsoft, from which innovative solutions for the sector grow, are equipped with the highest quality security features and effectively protect everyone – individual users, large organisations or even states, the expert added.
In conclusion, also in the area of support for SMEs, space is being created for innovative start-ups offering cutting-edge technologies that will make it easier to meet low-carbon or energy-saving requirements, while also helping to reduce the ongoing costs of doing business.

Where to get the money for this

The role of startups in the energy transition seems crucial. However, in order to support the energy industry and business and develop innovative projects, they themselves must first have access to funding.
– Scaling up a technology solution in the energy industry requires a lot of money, so access to funding in this sector is particularly important. PGNiG Ventures is one of the few funds in Poland specialising in energy investments, which invests in revenue-generating entities with projects in prospective areas. We are convinced that the key element to achieve the goals of the energy transition is the integration of the energy and new technology industries. That is why it is so important to provide young companies with the opportunity to test their ideas in cooperation with large companies from the energy industry and to finance further expansion,” says Arkadiusz Sekściński, Vice President of the Management Board for Development at PGNiG S.A.
The fact that support for startups wishing to develop in the energy sector is provided primarily by state institutions should not come as a surprise. A well-functioning energy industry and its possibly painless transformation are in the strategic interest of the state. However, corporations such as Microsoft also offer their support. Of course, support from EU funds should not be forgotten either.
– What is missing is more private capital in this area. Although this, too, seems to be changing – VC funds or industry investors already see the potential for startups in the broader energy sector, adds Tomasz Snażyk.

More about technologies in the energy sector, as well as examples of Polish innovative solutions in this segment in the latest Startup Poland report: https://startuppoland.org/en/report/technology-for-energy/