Dr Paweł Urbański, Director of Warsaw University of Technology Business School: Private capital does not like changes to the rules of the game

Dr Paweł Urbański, Director of Warsaw University of Technology Business School: Private capital does not like changes to the rules of the game

Warsaw University of Technology Business School offers some of the best MBAs in Poland. What is it that actually determines the position of an MBA program and affects the high level of learning?

The high level of MBA programs at Warsaw University of Technology Business School is the result of many factors. We strive to ensure that our studies are firmly rooted in business realities and close to the market and its needs.

At the same time, we focus on practical teaching. We assume that the best way to acquire knowledge is through carefully selected case studies, group projects, workshop work and discussion. We want the classes to be a platform for exchanging experiences and points of view on important business issues between the instructors and the students.

The topics of our programs oscillate around issues related to modern technologies, whose role cannot be ignored in business discourse. The MBA Kaizen Industry 4.0 allows you to understand the 4th Industrial Revolution, the MBA Digital Transformation enables you to master knowledge of information technology and acquire skills to use intelligent solutions, and the MBA Finance & Technology covers knowledge of finance, investments, and global technology trends in the financial industry.

You conduct scientific work and at the same time you are active in business. How important is the commercialization of scientific achievements? Does the Polish system support innovators?

The position of our country in this area does not inspire optimism – the European Innovation Index 2019 data shows that the Polish economy in terms of innovation ranks fourth from last in the ranking of EU countries and seventh from last for all European countries. Our innovation index is 2.5 times lower than in the EU’s most innovative Sweden.

To compete with the best economies, we cannot afford to underestimate the role of science for business development and business for science development. It is an interconnected system, in which science offers knowledge, research and innovation, and the business world – commercialization, development opportunities and their practical use.

A potential obstacle on the way of good cooperation between business and science is the lack of mutual trust. A study carried out by MIT Enterprise Forum Poland shows that investors on a seven-point scale rate the level of mutual trust at 4.4. The level of trust in scientists is 3.3 and the level of trust between scientists and investors is 2.9.

Building trust is a long process, spread over years, if not generations. There is a role of the state in this as an institution neutralizing risk on both sides. It is best to promote cooperation through successful examples and be very understanding of failures.

What future technologies will have the greatest impact on how companies increase product and service innovation?

It’s hard to overlook the potential of robotics, machine learning-based solutions, augmented and virtual reality, or blockchain technology – all of which can become catalysts for transformation in organizations. Progress in their application is exponential.

The data is becoming a great value. Methods of its analysis are becoming more and more perfect. I don’t think access to analytical skills, the ability to build algorithms will become the bottleneck, but rather how to use these algorithms to develop the competitiveness of companies and create value for customers.

So we are coming back to the key role of real business knowledge, management knowledge, the art of searching market niches, inventing new business models, and not the mere fact of availability of technology or programming.

You are the Chairman of the Supervisory Board of Columbus Energy. What are the biggest challenges for the national energy sector – the power shortage, outdated technologies, the EU climate package?

Let me put it a bit provocatively: in these three issues mentioned in the question I see a great opportunity and not a threat for the Polish energy sector. This is not a situation in which we are set a difficult task that requires an effort beyond our capabilities. It is exactly the opposite. We have all the tools in our hands: we have the financing, we have the technologies, we are a part of the European market, so possible shortages can be compensated by import and even earned on it.

The real test will be how to deal with these tasks from the point of view of strategy choice, market organization and regulation. There are several questions here: in what competitive and ownership structure, in what business models will their implementation take place, how will we divide the investment risk between customers, investors and the state, will we manage to build sufficiently reliable regulations at all to make someone want to invest private capital without fear that the government will suddenly change the rules of the game?

What are your answers to these questions?

I do not assume that the government will withdraw from setting general rules for the industry – this is too important an area of state activity not to define such a framework and in a long-term manner. But I do not like the approach in which the government trusts too much to the hints of the so called big state energy. They will be conservative and will discourage rather than encourage the opening of the energy sector to innovation and competition. And this is where the field of progress, value building and freeing the energy of entrepreneurs will be.

My proposal is based on the following logic – let’s divide into two specializations: the first one – the exploitation and development of conventional capacity to guarantee energy security, and the second one – building a new segment of dispersed, innovative, customer-integrated power industry, using the stock market and competing on transparent terms.

With such a division of roles, the government would take on the financing of large and thus risky generation projects, because it can do so at a low cost of capital. But wherever competition is possible, it should be left to the market.

Watching companies like Columbus, I believe the latter segment has a chance to grow spectacularly if we give it plenty of room to innovate and compete.

Columbus is one of the most rapidly growing energy companies, investing in power generation, trading and distribution. How do you finance these ventures?

Access to capital for a rapidly growing company is critical. We have invested a lot in the quality of professional cooperation with the capital market.

We raise capital on market terms, because this guarantees the company’s long-term development and value creation. The key word is long-term, because the condition of such development is permanent trust, which we build between the company and the capital market.

We use loans, bonds, and we are preparing for an IPO on the occasion of the transition from New Connect to the main market. The first issue of green bonds in the energy sector in Poland was successfully completed.

As a rule, the construction of PV farms is implemented through Project Finance. We do not use subsidies on a large scale – although our customers may do so.

Is a nuclear power plant in Poland too great of a risk or a great opportunity for development? What is your opinion on this controversial issue?

Before I answer this question, I would like to point out that I see a great potential for the development of renewable and prosumer energy. Great progress is being made in this area due to cheap renewable technologies, storage and billing. And this is a healthy way to invest – customers take the investment risk and adjust the size of the investment to their needs. It’s ‘fair’ because the investment is at the expense of those who will benefit from the investment.

On the other hand, I believe that the electricity system, meaning large power plants, networks and coordinated management will remain. Such a system guarantees stability and reserve. Its being powered solely by weather-dependent sources is a proposition that does not stand up today.

So the key question is what technology should power the electricity system in the decades ahead as we shut down coal plants. Will green hydrogen produced from surplus renewables prove to be the remedy, as some claim? Perhaps. I wish it would, but we don’t know that. But what if hydrogen turns out to be a dead end for energy applications, e.g., because of its explosiveness, difficulty in storage or transportation?

We don’t have much time to make bets and speculations. So for today, I don’t see proven zero-emission technologies on the horizon other than nuclear power, which could fill the gap in the system after coal capacity is phased out.

Dr Paweł Urbański

For most of his career he has combined business and academic experience. He holds a PhD in Economics from Imperial College London and an MBA from Warsaw University of Technology. He was a lecturer and currently also the Director of the Warsaw University of Technology Business School. He is a co-founder of INVEN Group – a development and investment company operating in the energy sector and Chairman of the Supervisory Board of Columbus Energy, a leading supplier of photovoltaic systems in Poland. In 2006-2008 he was a Member of the Management Board of PSE and the President of PGE. He was also a Partner in a British consulting company CET (Central Europe Trust). Within CET he supervised and co-created many consulting and investment projects for the biggest Polish and international energy companies.

Last Updated on June 23, 2021 by Karolina Ampulska