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A discussion with Andrea Pancotti of Slovenské elektrárne, on energy efficiency as a mean towards a sustainable reduction in costs and an increase in competitiveness in a globalized market

For some time now European industry has been complaining about the high cost of electricity paid by consumers in relation to competition, which is now global. In spite of the fact that the “wholesale” price of this commodity has reached its lowest historic level, regulation and distribution taxes push up the final price. Slovenské elektrárne is well aware of the difficult situation affecting the Czech industry and has therefore begun to propose various saving opportunities to companies. The largest Slovak producer of electricity has thus expanded its range of energy services, from audits to complex projects such as the modernization of lighting, heating, refrigeration, air ducts and other customized services. With Andrea Pancotti, manager of the Sales and Energy Services division, we talked about Slovenské elektrárne’s new projects.

As a traditional producer of electricity, what made you decide to offer energy services?

In the last few years, the market price of electricity, also due to large subsidies in favor of renewable sources, has undergone a rapid decline. In 2009 the stock price of a MWh of electricity used to cost about 1,700 crowns, while the current price is around 830 crowns/MWh. Unfortunately, Czech consumers have not benefited from low wholesale prices, because these have not led to a significant reduction in costs for the end-consumer. If on the one hand the cost of the commodity has diminished, on the other, regulatory, transformation and distribution charges have not followed the same trend. As for producers like us, the drop in prices has obliged us to lower our costs. This pushes us towards continuous optimization in all areas of business. If consumers want to save on overall payments for energy, they also have to start optimizing. And we are ready to assist them.

If on the one hand you optimize your costs, on the other you are seeking new profit opportunities, is that correct?

If we wish to continue being a major player in the Central European market, we have to look for ways to improve our competitiveness. The mere reduction of costs does not ensure a sustainable growth. We are looking for new business opportunities and to find the best way to conduct entrepreneurial activities. Energy services are one of the opportunities that we are currently developing.

Energy efficiency is quite a strong issue even at European level.

Yes, it is. Brussels is putting pressure on Member States to take part in a number of initiatives aimed at reducing CO2 emissions, lowering energy consumption, and in general, to achieve a more efficient management of energy. These initiatives are closely related to environmental, economic, political and security aspects. The topic is of great relevance. Let’s take as an example the current situation regarding natural gas supplies in Europe. Energy efficiency is one of the sustainable ways by which the Czech Republic can reduce its dependence on imported fuels and, at the same time, transform its own industry, thus achieving better opportunities within global competition.

Energy services include a relatively wide range of activities. What is Slovenské elektrárne offering?

The initial phase of any type of service includes identifying the main requirements and the relative measures to be taken. That is why we start with audits, or better still with consultancy work. We thus seek opportunities for improvement, from the reduction of energy requirements in buildings, to smart grids, decentralization of energy management, energy storage, efficient use of industrial technologies, heat recovery and the renewal of lighting. Thanks to energy efficiency, consumers can save on energy costs in their entirety. For this purpose we provide a complete energy service, where the customer receives both the commodity as well as the new technology. In this way, we are able to build a long term relationship with our clients. And that means not only helping them to save money, but also providing them with a long-term and stable supply of electricity.

What is it that motivates the Czech industry towards energy efficiency?

Together with salaries and materials, energy costs represent one of the main burdens for companies. No wonder then if companies are looking for opportunities to reduce these costs. We should be aware though that Czech companies still have a number of gaps in the way they use all forms of energy efficiently. And that is where we come in. We support companies to identify the problems and propose solutions.

In which areas do Czech Companies show to have major deficiencies, when we talk about energy efficiency?

Many companies underestimate the importance played by management systems and the measurement of energy consumption. To save money, you have to know exactly where and what you are spending too much on. If I have large amounts of wasted heat, why do I continue to use gas to heat my premises? Are my compressors using too much energy, but I continue to have frequent interruptions in the supply of compressed air because of unsuitable pipelines? Do the technicians involved receive regular updates on the conditions of the plants and their consumption? As you can see, there is great scope for improving efficiency in the Czech industrial context.

But can’t the companies rely on lower energy prices?

Even in the short term, it turns out to be a fallacious impression. The international and European markets of energy and commodities are sensitive to the political and security situation of the leading producers. Nowadays, we are witnessing a reduction in gas exports from Russia towards certain countries. Besides rising prices there are also environmental restrictions or even closures of a number of obsolete and inefficient European power plants. Thus, substantial savings will only be attained by those companies that are able to reduce their overall consumption.

by Andrea Sguazzi