Richard Heap interviews Sunly CEO Priit Lepasepp about the company’s plans in the Baltics and Poland.
“Let’s say I dreamed about something – but I didn’t dream about this.”
Three years ago Priit Lepasepp, CEO and founder of Sunly, had just started a year-long non-compete period following the acquisition of Nelja Energia by Eesti Energia. Now he leads a company with over 16GW of renewables in development in Baltic states Estonia, Latvia and Lithuania, as well as Poland.
A Word About Wind spoke to Lepasepp to find out how Sunly has grown so rapidly in the three years since it was set up in 2019; his views on renewables in its core markets; and the potential impact of the war in nearby Ukraine.
Lepasepp started his career at Estonian law firm Sorainen before moving to utility Nelja Energia in 2011, where he became legal counsel.
The utility’s name is translated as the Energy of Four and refers to its core technologies: wind, water, biomass and solar. By 2018, the company had 290MW operational with almost 1.5GW in development. Nelja was then bought by Eesti Energia subsidiary Enefit Green in November 2018.
Lepasepp left Nelja in early 2019 after the deal closed, which enabled him to strike out on his own. But there was a major challenge: Lepasepp and the other ex-Nelja experts he set up Sunly with were not allowed to develop in their first year due to a non-compete clause.
This enabled the team to carry out research into which areas they could develop in their four key markets; and develop software to guide them on which had the best potential. This has helped it grow a large pipeline.
Sunly is headquartered in Estonia’s capital city Tallinn and its biggest office is in the Polish city Krakow. The business employs 110 people and has expanded a portfolio of operational and development projects totalling over 16.4GW. This includes onshore wind, offshore wind, solar and pumped hydro developments.
The company has so far build just 45MW of that and is currently on-site with 184MW. These range from “mega projects” to those with tens of megawatts, and sometimes smaller. He says the biggest projects are in Poland due to its huge power demand. But the company is not solely a developer.
In March 2022, it became an independent power producer too; it has invested in 14 start-ups active across the energy transition, including storage, electric vehicles and nano-materials; and bolstered its portfolio by buying Polish solar developer Alseva.
Lepasepp said the growth of renewables made it possible for companies like Sunly to expand quickly, but he argued it would be difficult to replicate Sunly’s growth. He said: “We are a relatively big developer and, being an IPP, it’s not very plausible that somebody will do something like this again. There is quite fierce competition but, in the next ten years, it’s not possible that there will be so many competitors.”
Lepasepp said Baltic nations are attractive to develop in because they are part of the Nordpool market, but power prices are higher than in other Nordpool countries as the Baltics are “at the end of the line”. This means that the power produced by Sunly’s projects can be competitive.
The Baltic states also need to make a similar transition to low-carbon energy sources as other countries. For example, Estonia cannot rely long-term on exporting shale oil, so it needs to diversify its energy mix.
In addition, Poland is attractive as its government has started to support renewables again and because the country has huge energy needs.
Then there is the macro-economic and geopolitical situation. If Europe is to end its reliance on Russian oil and gas then it needs to develop renewables, including offshore wind in the Baltic Sea. Sunly is getting into this market, and teamed up with K2 Management in March to advise on offshore wind deployments in the area.
“They have a lot of experience in tenders and we need to participate in those tenders. We know how to raise capital, so in that sense it works for both parties,” he said.
As for the war, Lepasepp said Estonia stands with Ukraine because Estonia has been a victim of Russian aggression in the past. In 2007, a cyberattack on the nation by Russian hackers led to two days of rioting in Tallinn.
Estonia is now part of the European Union, so would not find itself on the Russian side of any ‘Iron Curtain’ that may be erected: “People are thinking that now we are on the right side of the Curtain,” he said. Even if a new Iron Curtain is pulled across, it should not block out Sunly.