CENSA & ELECTRICIDADE DE MOZAMBIQUE
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INSIGHT
THE ROAD AHEAD FOR ELECTRIC VEHICLES IN THE US
INSIDE THE UK’S LEADING GASSUPPLIER KURT BLIGAARD PEDERSEN, GAZPROM ENERGY’S CEO, SPEAKS EXCLUSIVELY TO ENERGY DIGITAL
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FOREWORD HELLO AND WELCOME to the February edition of Energy Digital magazine. Our first feature is an exclusive interview with Gazprom Energy CEO Kurt Bligaard Pedersen. A subsidiary of the enormous Russian gas giant Gazprom, Gazprom Energy entered the European retail energy market in 2006 and is now firmly cemented in the sector. “What I see as vital is keeping a dialogue going with customers and external stakeholders to understand how the market is changing, what competitors are doing and how they fare in the market,” he tells Leila Hawkins. “I want to ensure that our customer-centric view means we stay in the same position long-term.” Following this is a look at the potential for AI to further impact the energy industry, particularly in the area of smart cities. Another gamechanger to many people’s way of live could be electric vehicles – we assess the state of play in the USA and predict what might lie ahead. From the US to its absence from the Paris Agreement, our next feature explores the implications of President Trump’s decision to withdraw funding, and what this may mean for businesses across numerous industries. Finally, our top 10 profiles the most important CEOs currently operating in the energy sector. We sincerely hope you enjoy the issue, and as always, please tweet your feedback to @EnergyDigital
Enjoy the issue!
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F E AT U R E S
10
INSIDE THE UK’S LEADING GAS SUPPLIER SMART CITIES
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MORE POWER TO THE DATA 4
February 2018
ENERGY 4.0
S U S TA I N A B I L I T Y
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Paris climate talks reveal Trump card for business
T R A N S P O R TAT I O N
THE ROAD AHEAD
ELECTRIC VEHICLES IN THE US
TOP 10
ENERGY SECTOR CEOS
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INTERVIEW
INSIDE THE UK’S LEADING GAS SUPPLIER Energy Digital speaks to Gazprom Energy CEO Kurt Bligaard Pedersen about how the company remains sustainable despite rapid growth Wr it t e n by LE I L A H AW K I N S
INTERVIEW
A SUBSIDIARY OF the enormous Russian gas giant Gazprom, Gazprom Energy is forging a real name for itself as a leading supplier of gas and electricity to industrial and commercial consumers as well as public sector organisations, right across Europe. Gazprom Energy entered the energy retail market in 2006 when the privatised Russian gas company – with the Russian government still 12
February 2018
its major shareholder – acquired the UK’s Pennine Natural Gas, thus creating its first energy retail business (Gazprom Energy) outside of Russia. Gazprom Energy sources its gas wholesale from countries including Norway and Qatar, as well as its parent company Gazprom Marketing & Trading Ltd (GM&T Ltd), which is responsible for a sizeable 13% of gas production worldwide.
“ In addition to the Lean methodology itself, Gazprom Energy’s company structure ensures that managers and team leaders are delegated responsibly so they can make decisions and drive change themselves” – Kurt Bligaard Pedersen, CEO, Gazprom Energy
The company now has over 350 employees in the UK, France and the Netherlands, with a UK headquarters in Manchester. In 2014, Kurt Bligaard Pedersen joined the company as Chief Executive Officer. He explains: “My role is essentially to future-proof Gazprom Energy as a key player in the business gas market.” During his time as CEO, Gazprom Energy has won numerous awards, including Supplier of the Year, Energy Awards and being named the UK’s largest supplier of nondomestic gas by Cornwall Insight, recognitions Pedersen says the company remains extremely proud of. “In terms of maintaining this, what I see as vital is keeping a dialogue going with customers and external stakeholders to understand how the market is changing, what competitors are doing and how they fare in the market. I want to ensure that our customer-centric view means we stay in the same position long-term.” Key projects In 2017 Gazprom Energy signed a contract with British retail group Arcadia, owners of clothing brands Topshop and Miss Selfridge among 13
INTERVIEW
others. The deal will see Gazprom Energy provide gas to 73 of its UK outlets over the next three years. This marks Arcadia’s first use of purchasing flexible gas as part of its revised energy strategy, having previously only using fixed contracts. “We have had a very successful relationship with Arcadia for six years under a fixed price agreement,” Pedersen explains. “This recently changed to a new deal under a flexible purchasing contract, and we’re excited to be part of their evolving energy strategy. As Arcadia is a retail group with many sites across the UK, all with different energy needs, its energy management is really complex. Our close customer relationship, coupled with InSight, will help them adopt and take advantage of a new flexible buying approach.” The InSight platform was developed by GM&T Ltd. The platform gives immediate access to partners and customers for them to manage their energy accounts and monitor the market according to prices and price signals. 14
February 2018
“From speaking to customers, it became increasingly clear that having direct access to the market was a priority,” says Pedersen, “and that they were looking for new approaches to manage energy efficiently. But not only that, we knew that the energy market data that we have access to would greatly benefit our customers, and whereas some businesses would keep it for themselves, we wanted to share it openly with clients. So far it’s a great success.” Another project Pederson names as being particularly successful has been their introduction of robotic process automation (RPA) software, which gives the organisation access to a 24/7 “virtual” workforce. “That can run simple rule-based processes while our people focus on the tasks that benefit from a real human touch,” he explains. “I’m proud of this project because it’s often the case that businesses require external consultants to do this, but instead colleagues took the lead on this and we are carrying it out almost entirely internally. This demonstrates a high level of skills that were enhanced by some effective teamwork.”
“ Businesses should look at how they can use data and technology to give them more information about the real world so they can make wiser decisions, otherwise competitors can easily overtake you” –K urt Bligaard Pedersen, CEO, Gazprom Energy
Gazprom staff Operating sustainably Pedersen is also very happy with the adoption of Lean Six Sigma methodology. This is a strategy that helps organisations improve their performance by reducing the waste often caused by such issues as defects and over-production. “This has seen us transform processes to make them quicker, of a higher quality, and more cost-effective, so this offers a win-win situation for us and our customers,” he explains.
Kurt Bligaard Pedersen This enables Gazprom Energy’s operations to remain sustainable during expansive growth. “In addition to the Lean methodology itself, Gazprom Energy’s company structure ensures that managers and team leaders are delegated responsibly so they can make decisions and drive change themselves. We get support externally from management coaches who review the capabilities of senior employees, and establish how units of the business can be improved.” 15
INTERVIEW
Looking ahead The main trial ahead is keeping on top of new technologies such as AI, and successfully combining these with the physical world. “It’s a real challenge to apply it effectively,” Pedersen says. “Businesses should look at how they can use data and technology to give them more information about the real world so they can make wiser decisions, otherwise competitors can easily overtake you. We’re always looking for new and innovative ways we can serve our customers and the InSight platform is a great example of this. The customer is of course always high on our list of priorities and we want to continue to be flexible to our clients’ needs, delivering a high quality and consistent service.” It is also equally important to pay attention to the views and ideas of Gazprom Energy’s employees. The RPA software, for example, was a concept developed by Gazprom Energy’s own workforce. “We’ll continue to give every employee a voice, regardless of their position,” Pedersen says. “We find this is one of the best 16
February 2018
“ We want to take this further and get fresh ideas from people throughout the organisation, people who have perhaps seen successful implementations elsewhere and think it would benefit Gazprom Energy” – Kurt Bligaard Pedersen, CEO, Gazprom Energy
Gazprom Energy office ways to encourage entrepreneurial spirit and be innovative. “We want to take this further and get fresh ideas from people throughout the organisation, people who have perhaps seen successful implementations elsewhere and think it would benefit Gazprom Energy. Everybody has something to bring to the table, and after all, change will only happen if employees support it and believe in it.” Pedersen says that what sets Gazprom Energy apart from its competitors is not losing sight of customer service despite rapid expansion. “We really do have a genuine entrepreneurial spirit that hasn’t eroded over the years, as well as a strong position in the market thanks to being part of the world’s largest producer of gas,” he says. “It’s a rare combination, as often businesses that have seen so much growth lose sight of the values and ethos that made them so successful. We made a conscious effort not to let this happen. The energy business can be risky, but thanks to the backing we have from Gazprom we’re preparing for the long haul.” 17
SMART CITIES
MORE POWER TO THE DATA
The challenges and demands of market, economy and environment put power under pressure, and this is making artificial intelligence and machine learning very enticing to the industry indeed W r i t t e n b y TA M S I N O X F O R D
SMART CITIES ACCORDING TO A recent report by Infosys entitled ‘More Power to the Energy and Utilities Business, From AI’, the current utility business model is under pressure from customers, prices, competitors, regulators, renewables, and energy storage technologies. Questions around how this can evolve and adapt to address environmental impact while maintaining profitability are prevalent in the boardroom and sector as a whole. How can it address the challenges of competitor and customer, wooing the one from the other with intelligent insight and understanding? And how does the energy sector gain all this insight so that it can be used intelligently? The answers to these questions lie within artificial intelligence (AI) and machine learning, and the ability of these touted technologies to transform industries by providing the toolkits required to translate yesterday into today. Infosys believes that the data-driven model focusing on customised energy management solutions will offer the competitive advantage that the energy industry requires to overcome these challenges and move towards a 20
February 2018
more sustainable future. It is a belief that many in the industry share. “You don’t need artificial intelligence to realise that robots are entering the industry,” says Janette Marx, Global Chief Operating Officer at Airswift. “The sector has a unique blend of need and ability to lead the way in embracing automation and stands to benefit hugely from it.” The Infosys report found that the energy sector leads the global way when it comes to the adoption and application of AI solutions, with 29% of organisations stating that these technologies are already deployed and working as anticipated. The key drivers behind the implementation of these technologies are to automate IT processes (62%), automate business processes (61%), and increase innovation (60%), with boosting productivity (52%), improving decision making (47%) and increasing revenue (46%) also playing a significant role. In addition, improvements in time to market, cost savings and customer experiences are also pushing the AI buttons. “For many, automation is the biggest change to the workplace since the industrial revolution,” adds
“The types of activity that are most susceptible to automation are those that are repeatable and programmable, as well as the tasks that pose a high risk to humans. And this industry has a wealth of roles that tick both boxes� JANETTE MARX GLOBAL COO, AIRSWIFT AI is being widely adopted to drive industrial efficiency
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‘We read and analyse the data every 0.1 seconds and our algorithms can now even begin to predict National Grid frequency to allow for an even faster response. This is integral for keeping the lights on in the UK’ JOE MCDONALD Vice President of Sales at Limejump 22
February 2018
Marx. “The types of activity that are most susceptible to automation are those that are repeatable and programmable, as well as the tasks that pose a high risk to humans. And this industry has a wealth of roles that tick both boxes.” AI and machines can minimise site visits through the use of remote monitoring, diagnostic data feeds, and analytical insight into real time data. This can not only limit the number of human inspectors to sites, but could reduce high risk incidents through preventative monitoring. The impact of both these factors on cost and human engagement are significant. “The industry stands to gain immensely in terms of personnel safety – think about the thousands of high-risk tasks where human intervention can be eliminated,” says Marx. It’s an opinion voiced by the McKinsey Global Institute which has estimated that the growth of global productivity could increase by 0.8% thanks to automation – that’s a significant percentage when compared with the 0.6% gained from IT between 1995 and 2005.
This shift in productivity could allow for the industry to create operational efficiency gains to maintain margins, providing a neat solution to the lean times within which the sector is currently operating. Alongside worker safety and budget friendly savings, AI also slips some of those important green credentials into the energy industry’s pocket. In order to achieve a greener, smarter and more connected energy marketplace, technology is essential. One organisation, Limejump, has already invested into the harnessing of big data and deep learning to re-engineer the energy utility model. “The amount of data already being processed is true Big Data,” says Joe McDonald, Vice President of Sales at Limejump. “We read and analyse the data every 0.1 seconds and our algorithms can now even begin to predict National Grid frequency to allow for an even faster response. This is integral for keeping the lights on in the UK.” Use of data and the Internet of Things (IoT) to create a platform that both generators and consumers can access has created a solution much like the energy equivalent
IoT is already impacting the way power is generated and distributed
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SMART CITIES of Uber or Airbnb. It allows for scalable growth and insight plus the ability to assess every site, improve forecasts over time per site, and offer all energy providers access to a plethora of market opportunities. “The tool has levelled the playing field by removing traditional market constraints through sophisticated algorithms and automated processes,” adds McDonald. “So smaller generators, even those as small as 5kW, now have access to the same market opportunities as the large power plants.” The ability for technology to learn and adapt means that energy providers can turn some machinery off when there is too much demand, or ramp generators down when the grid is over supplied – adapting supply to meet relevant demand in
real time. A capability that has, until now, been something of an industry unicorn: nice to dream about, but near impossible to achieve. In windier climes, where offshore renewable installations turn endlessly in their quest for power, automation and robotics could very well be the answer to an expensive question: maintenance. The cost of maintenance is significant for offshore renewables as they are built in conditions that aren’t easy to endure – vessels and staff sent to these farms have to deal with distance, risk and weather while the businesses carry the costs. Fortunately, work on drones, blade crawlers and autonomous underwater vehicles has already begun. There are even plans to create autonomous boats that can travel to offshore developments
‘The ability for technology to learn and adapt means that energy providers can turn some machinery off when there is too much demand, or ramp generators down when the grid is over supplied – adapting supply to meet relevant demand in real time’ 24
February 2018
Is automation the answer to expensive wind turbine maintenance? with technology designed to specifically service an entire field. This ubiquity can extend beyond just maintenance: AI and machines could take part in the search for new locations by assessing environments, tides and seabed conditions and relaying the data back for instant analysis and implementation. The potential of this technology has already started to show itself, flexing
robotic muscles in reducing the risk to human life, improving productivity, cutting operational costs and finding new investment opportunities. For a sector surrounded by challenges unlikely to disappear any time soon, AI and machines look set to help it transform and grow and take advantage of opportunities that were once thought out of reach.
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Paris climate talks reveal Trump card for business On 12 December 2017, global heads of state, business leaders and major financiers gathered in Paris on the second anniversary of the Paris Agreement for the One Planet Summit. President Trump was not invited. We take a look at the implications for the industry and the ramifications of Trump’s withdrawal of US funding Writ ten by DA N B R IG HTMOR E
S U S TA I N A B I L I T Y
S U S TA I N A B I L I T Y CONVENED BY PRESIDENT Emmanuel Macron of France, United Nations Secretary General Antonio Guterres, and World Bank Group President Jim Yong Kim, the One Planet Summit featured a range of high profile announcements on climate finance issues affecting the energy sector. These came from a variety of stakeholders, including governments, banks, businesses, and investors focused on financing both the global transition away from fossil fuels and the measures required to adapt to changes already underway caused by global warming. Conspicuous by his country’s absence, President Trump’s withdrawal from the Paris Agreement offered a stark reminder of the challenges ahead. Overview of the One Planet Summit Emmanuel Macron warned the One Planet Summit participants: “Think long and hard, if you make a commitment, we will hold you to it.” The pledges made to this year’s commitments represent big actions to be taken in 2018 in three areas: to step up finance for adaption and resilience 28
February 2018
to climate change, accelerate the transition towards a decarbonised economy and anchor climate issues at the centre of the decisions of business. Implications for the planet The Paris Agreement aims to keep temperatures from rising more than two degrees Celsius (3.6 degrees Fahrenheit) by the year 2100 (a level scientists believe will help prevent the worst effects of climate change). However, research from the United Nations Environment Program (UNEP) shows current pledges from countries around the world will only restrict temperature rise to 3.2 degrees Celsius (5.8 degrees Fahrenheit). Implications for the industry The implications for the energy industry were writ large as a coalition of 225 global investors (including the likes of Allianz, HSBC Global Asset Management and Schroders) signed on for Climate Action 100+. The scheme targets the 100 biggest emitting companies seeking engagement on climatemanagement issues. The 100, mostly in the oil and gas, transportation and power sectors, will be urged
THE 12 ONE PLANET SUMMIT COMMITMENTS 01. Responding to extreme events in island states Rebuilding the Caribbean – mobilisation of $3bn in a public-private partnership within an $8bn investment plan to make the Caribbean the first Climate Smart Zone. 02. Protecting land and water against climate change $300mn for the Land Degradation Neutrality Fund to restore deserted land. Launch of the “Tropical Landscape Financing Facility”. A $650mn financing programme for research to help smallholder farmers adapt to climate change. Creation of the 100 Water and Climate Projects for Africa funding platform. 03. Mobilising researchers and young people to work for the climate $15mn for the One Planet Fellowship for young African and European researchers. Launch of the “European Solidarity Corps” for the climate, with €40mn. 04. Public procurement and access for local governments to green financing “Global Urbis”: creation of a common framework for cities to simplify access to climate financing. Alliance of cities and regions for lowcarbon public procurement. Accelerating the transition towards a decarbonised economy. 05. Zero Emissions Target “Towards Carbon Neutrality” coalition: 16 countries and 32 cities commit to reach carbon neutrality by 2050. Launch of the “Paris Collaborative on Green Budgeting”. Creation of a Climate Observatory in Space. 06. Sectoral shift towards a decarbonised economy Powering Past Coal Alliance. Launch of a conversion fund by the European Commission for coal-intensive regions International Solar Alliance.
07. Zero-Pollution transport Eight countries and 10 partners commit to decarbonized transport and clean mobility solutions. 34 countries pledge to reduce maritime transport emissions. Partnership of eight western US states for electric vehicles. 08. Carbon Pricing compatible with Paris agreement Commitments by several countries to a more significant carbon price. Launch of Carbon pricing for the Americas. Announcement by China of the unification of its carbon market. Call by businesses for carbon pricing. Anchoring climate issues at the centre of the decisions of finance and its actors. 09. Actions of central banks and businesses Commitment of 200+ businesses support the Task Force on Climate-related Financial Disclosure (TCFD). 10+ central banks and supervisors launch the network “Greening the Financial System”. 10. International mobilisation of development banks More than 30 public development banks commit to align their financing with the Paris Agreement. 11. Commitment by sovereign funds Creation of the working group One Planet Sovereign Wealth Funds - six of the largest sovereign wealth funds create an ESG framework (environmental, social and governance) to guide their investment decision. 12. Mobilising institutional investors Climate Action 100+ coalition (brings together 225 major institutional investors representing more than $26trn in managed assets to coordinate their actions as regards the 100 highest-emitting public companies). $1bn Energy Breakthrough Coalition: investing in breakthrough technologies. Coalition of 10-plus philanthropists working to improve climate action finance and to develop new investment mechanisms.
S U S TA I N A B I L I T Y to reduce emissions, ramp their climate governance mechanisms and increase their levels of disclosure. Allied to this, a coalition of 237 major companies used the Paris talks as a platform to highlight their climate-related credentials. Their number includes the likes of Shell and Total, along with the global mining firms Glencore, Vale and BHP. In a further bid for effective implementation of the Paris Agreement’s goals, the World Bank announced its pledge to stop financing oil and gas projects after 2019. However, it said consideration would still be given to financing upstream gas in the poorest countries “where there is a clear benefit in terms of energy access for the poor”, and the project fits within the nations’ Paris climate commitments. It also committed to reporting greenhouse gas emissions from the investment projects it finances in key emissions-producing sectors, such as energy, from next year. The World Bank said it will continue to support investments highlighted at the Summit, including accelerating energy efficiency in India and scaling up solar energy in Ethiopia, Pakistan 30
February 2018
‘In a further bid for effective implementation of the Paris Agreement’s goals, the World Bank announced its pledge to stop financing oil and gas projects after 2019’ and Senegal among other countries. Meanwhile, Gallic insurance giant Axa announced plans to divest €2.4bn in coal investments while pledging to quadruple its support of clean energy projects to the tune of €12bn. Other notable EU investment came from BNP Paribas for the Sustainable Finance Facilities programme - a UN environment initiative to develop collaborations between business, NGOs and government departments to raise $10bn for projects tackling renewable energy access, agroforestry, water access and responsible agriculture. BNP Paribas also joined the Breakthrough Energy Coalition, set
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S U S TA I N A B I L I T Y
‘While emerging economies have begun to curb fast-rising emissions and global carbon emissions are levelling off, the genuine fear remains Trump’s rejection of Paris could encourage other uncooperative powers to renege on their pledges’ up by Bill Gates in 2015, to innovate new technologies supporting clean energy and low-carbon with $2bn. Elsewhere, 23 companies (including EDF, BT, Unilever and the Virgin Group) joined the Powering Past Coal 32
February 2018
Alliance, boosting its membership to 58. The alliance, initiated by the UK and Canada at COP23, seeks to promote action by governments and business to phase out coalfired plants which currently account
for 40% of global electricity. Trump’s US withdrawal The Paris Agreement of 2015 included a provision committing developed countries to provide $100bn of annual funding for climate initiatives beginning in 2020. According to the Organization for Economic Cooperation and Development, reaching that target is far off and took a serious dent when the Trump administration withdrew the US government’s $2bn pledge to the Green Climate Fund (an organisation led by developed countries to finance
renewable energy and climate change adaptation projects) in 2016. Speaking last June Trump railed against spending a “vast fortune” on the initiative: “Under the Paris Accord, billions of dollars that ought to be invested right here in America will be sent to the very countries that have taken our factories and our jobs away from us. So think of that!” However, the LSE’s research director Robert Falkner believes the Paris Agreement will survive US withdrawal, arguing that Trump’s announcement actually reinforced 33
S U S TA I N A B I L I T Y international support for the treaty. “Because it is built on a decentralised system of voluntary mitigation pledges the Paris accord is more resilient to political shocks than Kyoto. As long as other major emitters stick to their mitigation, the Paris process of reviewing progress and renewing pledges will carry on as planned. In any case, the earliest that the US would actually leave the treaty is after the next presidential election in 2020, by which time the political climate in the US may have shifted again.” While emerging economies have begun to curb fast-rising emissions and global carbon emissions are levelling off, the genuine fear remains Trump’s rejection of Paris could encourage other uncooperative powers to renege on their pledges. However, Falkner remains confident: “After years of investing in energy efficiency and green energy, corporate boardrooms in the US are unlikely to reverse course and embrace outdated fossil fuel energy solutions. As other major economies are increasingly betting on renewable energy and green technologies, leading US companies will want to avoid falling behind in the global race to build the 34
February 2018
low-carbon economy of the future.” Poland 2018 World leaders are set to re-convene for this year’s talks in the heart of Poland’s coal mining industry. The decision to hold the pivotal 2018 UN climate conference in Katowice has angered some campaigners, but others suggest it offers hope it could symbolise a transition away from fossil fuels. Poland has traditionally been a reluctant participant in the UN
‘Poland has traditionally been a reluctant participant in the UN process, necessitated by its status in the EU negotiating bloc’ process, necessitated by its status in the EU negotiating bloc. Heavily influenced by its powerful domestic coal industry, it also plays host to one of the European mining industry’s biggest trade fairs. It was revealed last year that Poland was part of a concerted effort by eastern European countries to water down EU laws which, under the climate accord, bind Europe to the promise to reduce emissions by 40% by 2030 through the revision of existing climate laws on renewables,
energy efficiency and the flagship Emissions Trading System policy. However, UNFCCC chair Patricia Espinosa has said that governments were expected to reach “key milestones” at the 2018 conference when countries will come together to take stock of their progress towards targets agreed three years ago in Paris. Experts believe those targets were too weak to avert dangerous climate change so the Polish summit will offer an opportunity to upgrade them. With or without Trump. 35
THE ROAD AHEAD
ELECTRIC VEHICLES IN THE US
T R A N S P O R TAT I O N
SALTANAT BERDIKEEVA DISCUSSES WHAT NEEDS TO BE DONE IN THE US TO ENSURE ELECTRIC VEHICLE ADOPTION IS AS SUCCESSFUL AS IT HAS BEEN IN OTHER NATIONS
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T R A N S P O R TAT I O N AGAINST THE BACKDROP of a number of nations committing to phasing out gas and diesel combustion engines and accelerating the development of electric vehicles (EVs), energy industry observers began are debating the path that the US will take. Some energy analysts are optimistic that a mass market adoption of EVs in the US will happen by 2030. However, such an ambition will face its own challenges in the US. At this point, EVs constitute just 1% of total car sales in the US, despite the annual growth in sales. According to think tank RethinkX, the U.S. vehicle fleet will be 95% electric by 2030. A Colorado-based energy research organisation, Rocky Mountain Institute, states that the single major obstacle
to increasing the adoption of EVs in the US is insufficient charging infrastructure. Alistair Pim, Vice President of Innovation and Partnership at the Boston-based Northeast Clean Energy Council, shares the optimism about the future of electric cars in the US: “The economics of EVs are rapidly changing. All major automakers are switching to EV manufacturing. As more EVs enter the market, more American consumers will buy them. A tipping point is approaching faster than we
Ford is planning to release a Hybrid edition of their most popular truck, the F-150 38
February 2018
“As more EVs enter the market, more American consumers will buy them. A tipping point is approaching faster than we expect” ALISTAIR PIM VP of Innovation and Partnership at Clean Energy Council expect,” Pim said in an interview. “EVs definitely appeal to American consumers,” said Cabell Hodge of the National Renewable Energy Laboratory, a renewable energy and energy efficiency R&D arm of the US Department of Energy. “Nearly 25% of surveyed consumers would consider an EV for their next purchase. However, an incremental price of EVs is one of the barriers for many people. As prices of EVs go down and batteries get cheaper, they will become more appealing to consumers.” Government and policy support to lower barriers at the early deployment stage of EVs is crucial. Countries such as Norway and
China are prime examples of how EVs can be scaled with the backing of the government. With 29% of its total market share, Norway ranks as number one in the world in adopting EVs, largely thanks to generous government subsidies and incentives. According to rating agency Fitch, China stands second after Norway in EV subsidies and it sold twice as many EVs as the US in 2016. Driven to cut both heavy pollution levels and growing dependence on foreign oil, China aims to reduce its emissions from cars by pouring political and financial support to mass adoptions of EVs. Now that Norway and China are making the phase-out of gasoline and diesel-engine cars a goal, a mass-market transition to EVs in those countries looks promising. It is hard to say the same about the US. By contrast, President Donald Trump’s administration has made it a priority to stimualte the coal, oil and gas sectors at the expense 39
T R A N S P O R TAT I O N of renewable energy and proenvironmental policies. For example, the current administration is considering rolling back fuel economy targets for the auto industry. In the US, Corporate Average Fuel Economy (CAFE) standards have been in place since 1975 to continually improve the average fuel economy of cars and light trucks. The current CAFE targets, established in 2011, require that 2021 vehicle models must average 41 miles per gallon (mpg), while 2025 models would be required to average nearly 50mpg.
Lowering these standards would further disincentivise consumers from buying more expensive EVs when they can buy regular cars that run on cheap gasoline. It is worth noting that the price of gasoline in the US is one of the lowest in the developed world and as a ratio of average wages, according to Statista. According to the International Energy Agency (IEA), “fuel economy regulations are effective in stimulating the adoption of energy-efficient and low-carbon technologies”. EVs meet fuel economy targets better than
Nissan’s most economical light commercial vehicle. Big on business, small on cost
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February 2018
Ford Transit Connect Hybrid Taxi Prototype
gasoline and diesel-run cars. Strict fuel economy and zero emission standards in some of the European and Asian countries have been key selling points of EVs to consumers. Another important factor for EV market penetration is government driven financial incentives. Although Congress saved current federal tax credits for EVs in a sweeping new tax bill it adopted in December 2017, these credits will phase out once manufacturers sell 200,000 EVs in the US. For the country with over 250mn cars on its roads, it is unclear that selling 200,000, on top of around
600,000 EVs already deployed in the US, will be the threshold for EV market penetration and help bring down costs for consumers that rely on federal tax credits. The amount of currently eligible federal tax credits, which ranges between $2,500 and $7,500, depends on an EV’s size and battery capacity. Granted that most state governments and utility companies offer a range of incentives to encourage new buyers to purchase hybrid cars, EVs and other zeroemission vehicles, many state incentives have various expiration dates and change on a regular 41
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The new Tesla Semi, Electric energy costs are half those of diesel. With fewer systems to maintain, the Tesla Semi provides $200,000+ in fuel savings and a two-year payback period 42
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“Apart from political support, EV market penetration calls for an extensive network of charging infrastructure” CABELL HODGE National Renewable Energy Laboratory basis. There is no federal policy or national target on deployment of zero-emission vehicles and charging stations in the US that would facilitate a mass market transition to EVs. Only 14 states and the District of Columbia (California, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington) currently require stricter emissions standards than the rest of the country. 10 of these states (California, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont) adopted a mandate on deployment of zero-emission vehicles. While zero-emission vehicle mandates at the state level are important, a large-scale adoption of EVs in the U.S. will need a national effort to regulate fuel economy and to promote low-carbon technologies.
Apart from political support, EV market penetration calls for an extensive network of charging infrastructure. “Two biggest technological challenges for EVs are the availability of charging infrastructure and minimising electric costs,” explains Cabell Hodge. “In the US, there are good examples of government and private sector building charging stations across different states. For example, Tesla Superchargers are placed every 67 miles. The Department of Transportation has identified numerous highways as corridors for charging stations. Electrify America, Volkswagen’s $2bn initiative, is aiming to mount EV chargers all over the country.” According the International Energy Agency (IEA), setting targets on deployment of EV chargers helps develop policies to meet them. The only federal program, the Department of Energy’s EV Project designed in 2009 to install over 12,000 charging 43
T R A N S P O R TAT I O N stations across the US, ran out of funding years ago. Although incentive programs to expand deployment of charging stations exist in a number of states, the rate of EV adoption is still slower in the US compared to other countries, partly due to inadequate charging infrastructure. The US currently has little over 45,000 charging outlets and about 16,500 electric stations. By contrast, China’s national grid is leading the effort to expand charging stations in the
country from its current 171,000. Another challenge is preparedness of American utilities to meet the increasing electricity demand for EV charging stations, if the charging behavior is not carefully managed. According to the National Renewable Energy Laboratory (NREL)’s June 2017 Vehicle-Grid Integration report, “both the physical structure of the grid and the strategies employed by utilities to manage electricity flows will be impacted by high and/
Chevy Colorado ZH2: Is this Hybrid Hydrogen-Powered 4X4 Truck the Humvee of the Future?
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or geographically concentrated EV adoption”. To meet the needs of the growing number of EV charging stations, utilities may need to invest in improving many areas of the grid, including substations, distribution lines, and transformers. Rate incentives at off-peak times would be one way of managing charging times, especially to drivers charging their EVs at home, which utilities appear to widely recognise and are developing strategies to
implement them. “For utilities, selling more electricity would be in their interest, so they support EVs,” explains Hodge. “In terms of cost parity between electricity and gasoline, electricity is $1 on a gallon basis, so it is cheaper than gasoline. In addition to cheap electricity, EVs have fewer moving parts compared to gasoline-engine cars: they last a lot longer and require a lot less routine maintenance. Most manufacturers offer up to eight-year battery warranties for EVs or longer.” EVs have gained significant ground in the US. Just two years ago, the US was the largest market for EVs in the world, which has now been surpassed by China. The future of EVs in the US lies in continuous political will to support their market penetration through financial and other incentives, public-private efforts to expand charging infrastructure, and strategies to manage charging times. Incentives at state levels will help build more momentum for EVs in the US. However, a federal effort will be pivotal in the mass market adoption of EVs, as evidenced in Norway and China. 45
T O P 10
We look at the top 10 CEOs in the energy industry in accordance with S&P Global Platts Top 250 global energy company rankings‌ Written by MARK SPENCE
* Rankings compiled in accordance with: www.top250.platts.com
T O P 10
DARREN W. WOODS Title: Chairman and CEO Company: Exxon Mobil Corp
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PATRICK POUYANNÉ Title: Chairman, CEO and President Company: TOTAL SA Pouyanné joined Total back in 2000 when they absorbed petroleum company Elf where he was originally the general secretary for the Angolan subsidiary. In 2002 he became Total’s senior vice president of the exploration production department in charge of the finance, economics and information systems. In May 2015, he was elected as a member of the board of directors of Total. In December Pouyanné was appointed chairman and CEO of Total, combining both roles. 48
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Woods was elected Chairman and CEO by the ExxonMobil Board of Directors effective from 1 January last year. He first joined Exxon Company International in 1992 as a planning analyst and progressed through a number of domestic and international assignments for Exxon Company International, ExxonMobil Chemical Company, and ExxonMobil Refining and Supply Company. In 2016 Woods was elected president of Exxon Mobil Corporation and a member of the board of directors, before taking up his current role.
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SANJIV SINGH Title: Chairman and Managing Director Company: Indian Oil Corp Ltd
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JOSEPH W. GORDER Title: Chairman, CEO and President Company: Valero Energy Corp Joseph Gorder was first elected to Valero’s board back in February 2014, becoming CEO in May of the same year and Chairman that December. Previously he was President and Chief Operating Officer since November 2012, Executive Vice President and Chief Commercial Officer in 2011 and oversaw Valero’s European operation from its London office. Gorder also serves on the board of directors of Anadarko Petroleum Corp.
Sanjiv Singh has been with India Oil for over 35 years, spearheading refinery operations as well as mega greenfield and brownfield projects in refining and petrochemicals. He was appointed Chairman in June 2017 and is also Chairman of Chennai Petroleum Corporation Ltd. (CPCL) and Hindustan Urvarak and Rasayan Ltd. (HURL). In 2016 he was the recipient of the Fellowship Award of the Centre for Excellence in Project Management (CEPM) for conceiving new projects and leading implementation of mega projects across Indian Oil refinery locations.
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HOULIANG DAI Title: Vice Chairman and President Company: China Petroleum and Chemical Corp
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VAGIT YUSUFOVICH ALEKPEROV Title: CEO, President and Executive Director Company: PJSC LUKOIL Azerbaijani and Russian businessman, Vagit Alekperov is reputed to be the eighth richest person in Russia according to Forbes magazine. During the late 1960s Alekperov worked in the oilfields of Azerbaijan and West Siberia before graduating from the Azerbaijan Oil and Chemistry Institute in 1974. Following a raft of professional achievements, he was appointed President of OAO LUKOIL in 1993 and has maintained his position ever since. 50
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Houliang Dai started his career with China Petroleum and Chemical Corp (Sinopec) in December 1997 when he was appointed as Vice President of Sinopec Yangzi Petrochemical Company. Throughout his career with Sinopec he has been variously appointed as Director and Vice President, Vice Chairman and President, Director, Chairman and President and Chairman of Sinopec Yangzi Petrochemical Company. Over the last decade Dai has served as a senior vice president and Chief Financial Officer of the group’s listed arm, Sinopec Corp. www.sinopecgroup.com
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MUKESH DHIRUBHAI AMBANI Title: Chairman and MD Company: Reliance Industries Ltd.
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HWAN-EIK CHO Title: President, CEO and Standing Director Company: Korea Electric Power Corp Hwan-Eik Cho has been President, Chief Executive Officer and Standing Director of KEPCO since December 17, 2012. Prior to his current position, he served as Chair-professor at Hanyang University, President of the Korea Trade-Investment Promotion Agency, CEO of Korea Export Insurance Corporation and Vice Minister of the Ministry of Commerce. Cho received a Ph.D. in Business Administration from Hanyang University. www.kepco.co.kr
Indian business magnate Ambani, is the chairman, MD and largest shareholder of Reliance Industries Limited, a Fortune Global 500 company. According to Forbes the oil and gas giant is worth around $51bn (revenue). A vast list of honours includes being named Economic Times Business Leader of the Year and the only Indian to be featured on Forbes’ Global Game Changers List in 2017.
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swiss-image.ch/Photo Remy Steinegger Š World Economic Forum
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T O P 10 Photo: Christian Schlüter/E.ON
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DR. JOHANNES TEYSSEN Title: Chairman of the Management Board and Chief Executive Officer Company: E.ON SE Johannes Teyssen’s E.ON journey started in 1989 when he joined the electricity generation division of E.ON’s predecessor VEBA in Hanover. From 1998 to 2001, Teyssen managed an associated company of E.ON operating in electricity and gas distribution and sales. From 2001 to 52
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2006, Teyssen became a member of the Board of Management of the E.ON Group’s central management company in Munich. By 2010, Teyssen was appointed to the position of CEO of E.ON SE. Other key roles have included President of Eurelectric (2013-2015), World Energy Council Vice Chair (2006-2012), member of the Presidential Board of the Federation of German Industries (2010-present) and member of the Supervisory Board of Deutsche Bank AG (2008-present).
ALEXEY BORISOVICH MILLER Title: Deputy Chairman and Chief Executive Officer Company: PJSC Gazprom Following his graduation from the Leningrad Institute of Finance and Economics in 1990, Alexey Miller took up a number of notable roles prior to becoming CEO at Gazprom. In 1991-96, Miller served with the Committee for External
Relations of the Saint Petersburg Mayor’s Office under Vladimir Putin. An array of high-profile, senior positions followed. In 2000, he was appointed Deputy Minister of Energy of the Russian Federation, before succeeding Rem Viakhirev as Chairman of the Management Committee of Gazprom (CEO) in 2001. Among a series of professional accolades, Miller was also named Person of the Year by Expert magazine – the influential and respected business title – back in 2005.
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E V E N T S & A S S O C I AT I O N S
Events The biggest and best events and conferences from around the world‌ Writ te n by A N D R E W WOO DS
E V E N T S & A S S O C I AT I O N S
Middle East Electricity 2018 Dubai World Trade Centre, UAE 6-8 March
Middle East Electricity is the largest meeting place for energy industry professionals from over 100 countries worldwide, involved in sourcing, installing or purchasing products/services for the power, lighting, renewable or nuclear sectors. ‘Put your company at the forefront of this rapidly developing market and expose your brand to over 20,000 senior-level decision makers.’ With its carefully focused profile and highly targeted audience, Middle East Electricity allows you to direct your sales and marketing effort accurately and cost-effectively. www.middleeastelectricity.com
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SEPA Utility Conference Rancho Mirage, CA, USA 23-25 April
This isn’t a trade show as such, but an event where ‘utilities go to share with other utilities on how they get things done in a confidential, intimate environment’. From issues like how to speed up your solar interconnection queues or how to best determine the locational value of your DER assets, there’s a utility expert at this conference who has the answer. www.sepapower.org
ASEAN Sustainable Energy Week (ASE BITEC, Bangkok, Thailand 6-9 June
This massive show expects 27,000 visitors, over 1,500 brands and over 80 seminars tackling renewable energy sources and the latest technology in this area. Wind and solar power are among the many systems and programmes featured and discussed along with thermal and waste-to-energy, hydro-powered programs, biomass and other green technology. Renewable energy and energy efficiency clinics staffed by experts are also conducted at the show. www.renewableenergy-asia.com/AbouttheShow
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Intersolar Europe 2018 Messe München, Munich, Germany 20-22 June
Intersolar Europe is the world’s leading exhibition for the solar industry and its partners and takes place annually at the Messe München exhibition center in Munich, Germany. The event’s exhi bition and conference both focus on the areas of photovoltaics, solar thermal technologies, solar plants, as well as grid infrastructure and solutions for the integration of renewable energy. Since being founded 26 years ago, Intersolar has become the most important industry platform for manufacturers, suppliers, distributors, service providers and partners of the solar industry. www.intersolar.de/en/home.html
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Ees North America 2018
Moscone Center, San Francisco, CA, United States 10-12 July Celebrating its 10th anniversary, Ees will welcome hundreds of 530 exhibitors and 15,000-plus trade visitors. The conference features 40 sessions and 25 workshops with more than 200 speakers. With over 20 years of experience, Intersolar brings together members of the solar industry from across the world’s most influential markets. Intersolar exhibitions and conferences are also held in Munich, San Francisco, Mumbai, Beijing and São Paulo. www.ees-northamerica.com
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POWER-GEN & DistribuTECH Africa
Sandton Convention Centre, Johannesburg, South Africa 17-19 July
With 3,000 attendees, 100-plus speakers and 70-plus exhibitors, POWER-GEN is Africa’s premier electricity industry forum that brings together international business leaders and technical experts committed to powering up a continent. www.powergenafrica.com
Intersolar South America 2018 Expo Center Norte, José Bernardo Pinto St, 333, São Paulo, Brazil 28-30 August
With 11,500-plus visitors, 1,500-plus conference attendees and 180 exhibitors, Intersolar has become the most important platform for manufacturers, suppliers, distributors, service providers, investors and partners of the solar industry. Intersolar South America takes place at the Expo Center Norte in São Paulo, Brazil, and has a focus on the areas of photovoltaics, PV production technologies, energy storage and solar thermal technologies. www.intersolar.net.br
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Offshore Wind Executive Summit Norris Conference Centers, Houston, TX, USA 13-14 September
Bringing together decision makers from wind and offshore oil and gas, both from the US and Europe, the Offshore Wind Executive Summit provides the forum to establish new business relationships. Discussion points include project development, important policy issues and supply chain. www.offshorewindsummit.com
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Asia Power Week
ICE, BSD City, Jakarta, Indonesia 18-20 September 2016 saw Asia Power Week take place outside of the ASEAN region, and also for the first time in South Korea, at KINTEX, Gyeonggi-do. For the second year in succession event attendance records were broken, with over 8,300 delegates and visitors attending the three co-located events. The event attendance record was then further broken in 2017 in Thailand, for the ninth staging in Bangkok. This year, for the first time Asia Power Week will take place in Indonesia at ICE, in BSD City, Jakarta. www.asiapowerweek.com
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Intersolar India
Bombay Exhibition Centre, Mumbai 11-15 December With events spanning four continents, Intersolar is the world’s leading exhibition for the solar industry and its partners. ‘Our objective is to increase the share of solar power in the energy supply. By providing first-rate services, our exhibitions and international conferences bring businesses, technologies and people from the most important markets around the globe together. We have 25 years of experiences in opening up markets, providing specialist knowledge and creating links’ www.intersolar.in/en/home.html
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EDM: OFFERING MOZAMBIQUE A SUSTAINABLE ENERGY LIFELINE
WRITTEN BY CATHERINE STURMAN PRODUCED BY GREG CHURCHILL
Electricidade De Mocambique E P’s Chairman and CEO Mateus Magala discusses Mozambique’s growing sustainable energy potential
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he energy sector in Africa remains complex. Escalating costs, ageing infrastructures and growing populations have placed an increased strain on resources. At present, existing electricity tariffs in Mozambique are not cost reflective, severely impacting the country’s ability to invest in sufficient power infrastructure to sustain domestic and industrial demand. In 2017 alone, Mozambique’s peak electricity demand reached 1,850MW, whilst the entirety of Southern Africa is facing increased demands of 38,897MW. Primary energy demand has been historically met by traditional sources such as wood or charcoal (which accounted for 64% of energy production and 77% of final energy consumption back in 2011). The country is now looking at alternative resources to support its growing need for electricity. “The rate of access to electricity among the
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Primary energy demand in Mozambique was traditionally met by sources such as wood or charcoal w w w. e n e rg y d i g i t a l . c o m
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population is still very low with a national average of 27% - 82% for urban areas and 1% for rural areas,” explains Electricidade de Moçambique, E.P. (EDM) Chairman and CEO Mateus Magala. The country is therefore facing an ongoing uphill battle, where two-thirds of their population are without electricity. However, this is all set to change. Africa is unmatched in its renewable and sustainable energy sources (such as solar, hydro, wind and geothermal), and Mozambique aims to take full
EDM’s Cenral Hídrica de Chicamba site
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advantage. Implementing on-grid and off-grid technologies, the country is working to promote greater access to clean energy services through equitable, efficient, sustainable and culturally sensitive sources of new and renewable energies. Africa’s Policy for the Department of New and Renewable Energies 2011-2025 will also support Mozambique’s ambitions to meet rising energy demands. “The Republic of Mozambique has considered the increase in generation
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capacity through the use of renewable energy sources (solar and wind) to be a strategic goal for the country, and the growth of new opportunities will attract foreign investment,” adds Magala. THE STRENGTH OF EDM Brought on board to expand Mozambique’s domestic and regional power grids, Magala will lead the way for the country’s rural electrification and revolutionise its service offerings. “We will work to transform the business into a credible, competitive
EDM was established in 1977
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utility, which will power and light up Mozambique with renewable energy sources, fully positioning the country as a regional hub for the Southern African region,” he says. “Mozambique has untapped energy generation potential, with an installed generation capacity presently reaching approximately 3,000MW. Energy production in Mozambique has also been rising by 6% since 2000.” Through supporting the Paris Climate Change Agreement (also known as COP 21) in 2016, the country will also work to reduce its carbon emissions by 76.5 megatonnes from 2020 to 2030 through upcoming projects. This has also
been noted in its Intended National Determined Contributions (INDC). Making significant headway, EDM’s strength in building strategic, international partnerships has seen a growth of foreign investment, which has enabled the business to counteract any potential deficit in power and develop a number of renewable energy projects. Such is its success, that by looking at new ways to produce and transport power, EDM is exploring the advantages of developing a number of Floating Liquified Natural Gas (FLNG) plants in Mozambique, working closely with Shell, ENI and Yara and others. “Once there is more certainty
“The Republic of Mozambique has considered the increase in generation capacity through the use of renewable energy sources to be a strategic goal for the country” – Chairman and CEO Mateus Magala
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EDM’s strength in building strategic, international partnerships has seen a growth in foreign investment
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regarding gas availability from the Rovuma basin of southern Tanzania and northern Mozambique, a clear generation investment plan will be implemented to sustain the potential energy demand for the centre and northern region as well as exports,” comments Magala. GROWTH OF HYDROPOWER The release of the Renewable Energy Atlas of Mozambique by the Government of Mozambique (GoM) in 2014 highlights how local authorities are supporting the development of renewable projects, particularly around the technical and economic prefeasibility levels of utilising renewable sources. It has also stated that the potential of renewable sources is 10GW for hydropower, 27GW for solar power, 5GW for wind power and 2GW within biomass energy. Hydropower has become an essential resource in the bid to cater towards rapid energy consumption growth across the country. Since 2014, EDM and government owned Hidroeléctrica de Cahora Bassa (HCB) have provided essential
energy through the development of the Cahora Bassa hydro dam, where 500MW will be distributed across Mozambique, with the remaining 1,575MW going to adjacent countries. However, Mozambique’s allocation of hydropower will need to be increased due to the country’s increasing rise in demand. “EDM needs an additional allocation in the order of 250MW from Cahora Bassa to reduce the cost of power acquisition to supply the load in Mozambique,” explains Magala. “Since 2011, the power supply of internal consumption is based either on emergency of supply or from new independent power producers, which is unsustainable.” The Mphanda Nkuwa Hydroelectric Dam project will also provide a number of advantages for EDM and form part of a wider objective to construct additional dams. Located downstream from Cahora Bassa on the Zambezi river, the project will provide 1,500MW of clean and renewable energy for local domestic growth and export to the region “The additional power generation
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and associated transmission infrastructure will ensure the improved security and reliability of supply, and export revenues in foreign currency, among other benefits, such as foreign substantial direct investment and intensive labour demand for the central and northern region,” says Magala. INCREASED INVESTMENT None of EDM’s projects would be possible without the growth
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of strategic partnerships and alliance with stakeholders and international businesses. Stressing the importance of EDM’s relationship with the Japanese International Corporation Authority (JICA), World Bank, African Development Bank, Kingdom of Norway, Sweden and others, Magala explains that both parties mutually benefit, which has led to the subsequent improvement of Mozambique’s energy sector.
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“Japan is a highly credible technology partner, and is secondto-none,” he notes. “In the last five years, the Japanese Government has been a determinant player supporting Mozambique. We expect this to be consolidated and enhanced in the near future. We now have some projects which are close to, or are ready to start construction.” Recently, the European Union’s Emerging Africa Infrastructure Fund’s (EAIF) has also pledged a €4mn investment to further support the growth of renewable energy projects in Mozambique. The Project for Promotion of Auctions for Renewable Energies (PROLER) initiative has led
to the construction of two new solar power plants, set to be completed up to 2021. Whilst one will be situated in Mocuba, Zambézia province, the other, the Metoro solar power plant, will be built in Cabo Delgado Province. “Both the PV Metoro and Mocuba projects will encompass 30MW each,” adds Magala. “Developed by SCATEC, construction on the Mocuba project is expected to begin in December this year. The Metoro project, however, is set to be developed by NEON and is at the end of its development phase and should be in operation by 2019. EDM will have 20% shareholding participation
“Private sector investment will also support the diversification of energy, establish new skills and capital into the country, and enable the benchmarking of performance and pricing” – Chairman and CEO Mateus Magala
ELECTRICIDADE DE MOCAMBIQUE E P
in each of these power plants.” To support EDM further, GoM has submitted an application to the EAIF’s Executive Committee on the company’s behalf to request increased funding surrounding EDM’s need for Technical Assistance (TA). The funding would ramp up the ongoing development of renewable on-grid capacity (solar and wind) through an auction process, and attract increased private investment within renewable energy projects at lower costs. It would also enable a swifter response to market developments. “EDM will also gain essential knowledge and support in the analysis of existing legal frameworks, bidding documents, feasibility studies and standard contracts through TA,” explains Magala. “Such assistance will also enable the creation of a Project Management Unit (PMU), with the Technical Director coming from EDM as an advisory body.” LONG-TERM GOALS In order to reduce the financial burden on local governments, the private
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EDM will also work with neighbouring countries to strenghten regional power connectivity sector will need to play a significant role within energy projects across Africa, and also alleviate EDM’s present borrowing requirements. “It will also enable the introduction of new technologies, which may play a vital role in the future electricity generation and supply options,” adds Magala. “Private sector investment will also support the diversification of energy, establish new skills and capital into the
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country, and enable the benchmarking of performance and pricing.” With increased investment and international, local and private sector support, EDM will work to develop interconnections with neighbouring countries and aim to operate in the international arena long-term, fully driving the reform required to become an exceptional leader in the Mozambique electricity
sector for the foreseeable future. “EDM has a great capacity to adapt and grow, without losing sight of its strategic goals,” concludes Magala. “EDM has a track record of growth and will continue to engage all stakeholders in the pursuit of sustainable, high-quality electricity supplies to its customers, and in support of national development.”
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MAKING SOLAR MAKE SENSE
If a new business is in the right place at the right time, with the right people and in favourable market conditions, it should surely succeed – these criteria aptly apply to Enervest and its energetic Founder and MD Ross Warby Written by John O’Hanlon Produced by Bryan Giles
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he case for renewable energy in Australia would seem to be a nobrainer. It’s a country baked in sun, with a 14,500km coastline and plenty of space in its open, windswept interior. What could possibly prevent it leading the world in generating electricity from these superabundant solar, tidal and geothermal resources? A boom in installations of solar systems on domestic roofs became the victim of its own success. Early investors saw good returns: customers in Queensland who applied for the state’s Solar Bonus Scheme before 10 July 2012 continue to receive a feed-in tariff of 44 cents per kilowatt-hour for excess electricity exported to the grid. But maintaining eligibility can mean sticking with the same energy provider and not moving house. Feed-in tariffs started as high as 56 cents per kilowatt-hour but had been cut to as low as five cents
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ENERVEST
Ross Warby Managing Director, Enervest
Ross Warby’s specialties in Electrical Photovoltaic Systems coupled with his consumer facing, hands on experience sets him apart from others in the energy sector. As the Founder and Managing Director of Enervest, Warby’s core focus is on managing the growth and diversification for the organisation through Business Development and Efficiency Optimisation strategies. He believes that delivering strong economical outcomes for Enervest’s clients is directly associated with key environmental and social benefits. He takes pride in ensuring Enervest deliver this value to its clients, the broader community and collectively our planet - whilst helping evolve one of the industries most critical to our future; energy supply. Beginning his career in the field of Photovoltaics in 2008, Warby’s grounding was in contracting solar installations for retail businesses. He not only witnessed the many potential pitfalls, but also the enormous opportunities that existed in the renewable energy sector. This lead to the inception of Enervest in 2012 and its continual growth to a successful national operation determined by his values of frugality and his attention to detail.
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by the beginning of 2017. At that level, when it is considered that most domestic electricity is consumed at night when panels are not generating power and you’re buying it in at 30 cents, it is hardly worth selling the excess. Also, the solar industry’s name began to be tainted when the market woke up to the poor service and warranties that were a characteristic of the rash of under-capitalised installers. Over 570 of these companies went bust over the last decade, a higher rate than in any other sector. Government policy changes and a failure to get fully behind renewables have also contributed to the problem. “Education and the private sector, including Catholic schools, are ahead of the policy makers,” says Ross Warby, Founder and Managing Director of Enervest. “They (the Government) had two big issues to face last year – same-sex marriage and energy. With the first finally resolved, let’s hope they now get to grips with the second.” The public is catching on because to them it makes financial sense. With ROI between 20% and 30%, solar
energy is a spectacular and very safe investment. There’s also a new and compelling opportunity presented by the growth of battery technology. By storing night time generation, users can cut the amount they take from the grid to as low as 3% of their total requirement. Typically, a battery provides six to 20 kilowatt hours of usable stored power, giving virtually 24-hour renewable power. Ross Warby kicked off 7 Star Solar in 2011, moved to the present office at Cremorne, Victoria, in 2016 and had installed 1,000 solar systems totalling over a megawatt of installed power by 2014, when the name of the company changed to Enervest. A key achievement at that time was accreditation with the Clean Energy Council, the Housing Industries Association and the Master Electricians Association. That year also saw the completion of its first really large project. Mazenod College decided to commit to solar for a number of reasons. As a large Catholic school, it wanted to do the right thing. As its principal Fr Michael Twigg said: “Mazenod College has made an
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“The government had two big issues to face last year – same-sex marriage and energy. With the first finally resolved let’s hope they now get to grips with the second” – Ross Warby, Managing Director, Enervest
investment in solar power because we have a responsibility to reduce our carbon footprint for the benefit of future generations.” Like many other schools, it saw the opportunity to use the move as a teaching aid, encouraging greater awareness of alternative energies, respect for the planet and alternatives to an excessive lifestyle through more sustainable
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living. Cost saving and a $50,000 grant from Sustainability Victoria would have been important too. This was by far the largest solar installation at any school in Australia at the time. It’s still the hardest job he has undertaken, reflects Warby. “The school had grown piecemeal over 50 years. It has eight buildings sharing five different addresses, varied
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construction and odd roof designs. We needed a lot of engineering approvals from the power company before they’d allow it to go onto the network, and where normally you’d have a central switchboard, we were required to put switchboards in at each building at a cost to us of about $10,000 apiece.” Because of the scale and uniqueness of the project, the
power company demanded higher levels of protection than normal, but it was a great learning opportunity and testbed for the education sector, Enervest and the utility company alike. Schools have the potential to export substantial power back into the grid during weekends and school holidays, creating a regular source of income from the electricity provider.
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ENERVEST
Fully off-grid home in Victoria for Coldon Homes - an enviro-conscious area in South Gippsland Victoria
“Any business staying in its own premises for two or three years is foolish if it is not tackling its energy outgoings” – Ross Warby, Managing Director, Enervest The 269-kilowatt project involved installing over a thousand Virtus II solar panels supplied by the Chinese manufacturer ReneSola. The system delivers an average of more than 1,000 kilowatt hours of power daily. In terms of carbon footprint, approximately 350 tonnes will be saved annually,
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reducing the impact on climate change. Enervest has installed many other school systems since this one, and has just signed with another six Catholic schools in the Melbourne area that collectively amount to about six times the size of Mazenod. Enervest has no sales team as such.
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2011
It is, says Warby, in December 2017, heavily partnership the best deal it could Year Founded and referral focused find came in at $78,000 in its key markets. It has each month. “That’s why focused on the education and high energy use companies are agriculture sectors till now, though in turning to renewables: they can more the coming year it plans to return to than halve the cost of grid power. Any the domestic market and establish business staying in its own premises itself as a leader in solar and battery for two or three years is foolish if it is combined systems. The cost of not tackling its energy outgoings.” energy in Australia is fast becoming With solar panels now a commodity, unsustainable, he explains, giving battery technology is growing more the example of a large Victoria food than any other part of the industry. company with a monthly energy spend The biggest name in that industry is of $44,000. When its contract expired undoubtedly Tesla. These days Ross
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ENERVEST
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AUSTRALIA
“Education and the private sector, including Catholic schools, are ahead of the policy makers” – Ross Warby, Managing Director, Enervest
Warby is to be seen driving around Melbourne in the company’s new Tesla car, one way, he says, to show the way to a sustainable future. Tesla is not the only battery on the market but its second-generation Powerwall is probably one of the best value and the best marketed, he says. The image of these products has been given a major boost since the commissioning in December 2017 at a wind farm at Hornsdale, South Australia, of the world’s largest lithium-ion backup battery. Already it has far exceeded expectations, smoothing out at least two major energy outages faster than the coalfired backups that were supposed to provide emergency power. This month the Loy Yang coal fired power station in Victoria suffered a sudden,
unexplained drop in output prompting the Hornsdale battery to respond in under four seconds. “That’s great for the industry,” says Warby, “at a time when the government is touting the unreliability of renewables.” From here on in, Enervest is looking at diversification and geographic expansion. It has invested in two acquisitions that give it capability in the fields of operational maintenance and photovoltaic construction. Warby sees this as a chance to leverage the growth of utility-scale solar and pick up maintenance contracts. A
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standalone subsidiary that can provide labourers and electricians to carry out its own and other contractors’ construction and installation projects will position Enervest advantageously in this burgeoning market. But a project with even greater potential saw Warby in USA recently. The sheer volume of the American market – 330mn population compared with Australia’s 25m – is the main attraction, but he points out the need to understand that market. Regulations and standards vary considerably, as does the technology. Inverters are the key to
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a modern solar system: Enervest’s main inverter partner, the Austrian manufacturer Fronius, commands 50% of the Australian market but only manages 8% in America. This is a technical issue that he thinks can be overcome, creating a real opportunity for his company, which is able to service Fronius products in the field. To gain a foothold he thinks northern California or New England will prove the most receptive in what is, compared to Australia, an immature domestic solar market.
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SERVING NICARAGUA WITH A STABLE POWER SUPPLY
CENSA is now one of Nicaragua’s most trusted power sources and distributors. We find out how the company continues to deliver a secure supply of electricity Written by Mateo Rafael Tablado Produced by Jassen Pintado
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he year 2009 established a “before and after” in CENSA’s operations (Nicaraguan Electricity Corporation), as it became owned by domestic capital in its entirety. CENSA currently supplies 15.47% of Nicaragua’s thermal energy, its main client being DisNorteDisSur (North Distribution - South Distribution, public utility for electric power distribution). Domestic laws demand power generated within the country must be first offered to government-run companies in charge of resources management, such as INE (Nicaragua Institute for Energy) and the Energy and Mining Ministry, among others. CENSA’s power plant is located in Puerto Sandino, Leon, half an hour’s drive from Managua, where CENSA also has an office branch. The Sandino plant is host to three storage tanks. The largest tank can store more than half a million gallons of fuel, and the other two can keep approximately 250,000 gallons, totaling a 1.2mn gallon capacity. The plant also contains three sedimentation tanks (45,000 gallons
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each), and two tanks for daily supply, each able to hold 30,000 gallons. Power at the CENSA plant generates from fuel oil, USGC HSFO (United States Gulf Coast High Sulfure Fuel Oil) specifically. Energy prices are indexed according to changes in the price of oil. “Energy quality and efficiency is essential, as well as our constant investments maintaining an up-to-date facility,” comments Juan Harmsen Seoane, CEO for CENSA. Peru-born Harmsen had the opportunity to attend high school at the Georgetown Preparatory School, in Maryland. He earned a BS degree in Management and Finance from Tulane University (New Orleans), where he also earned a Master’s in Finance. In Nicaragua’s Universidad Americana he also took a postgraduate course on IFRS Standards and is currently attending the Upper Management Program at INCAE Business School (also in Nicaragua). Harmsen joined CENSA as CFO back in 2012, and in May 2016 he was appointed as CEO. He also has previous experience in banking, manufacturing and wind power.
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“I am proud to encourage and practice an internal development culture” – Juan Harmsen, CEO for CENSA
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Never looking back once becoming Nicaraguan property When CENSA became a domestically-owned company it only delivered a 4MW output, even with the cutting-edge machinery that had been deployed, which lacked maintenance and showed signs of damage. But the new ownership decided that regular maintenance procedure for key assets would become subject to strong investments. These efforts resulted in the plant being able to supply power according to its capabilities. Yearly budgets for maintenance and overhaul procedures is between $4mn and $5mn. This also allows for system upgrades in the plant, powered by CAT 3616 and Mak CM32L generators. Total investments are currently more than $50mn. Safety systems have also benefitted from current investments – these include modern fire-extinguishing systems, as well as remote control and monitoring for temperature, which have resulted in more than 620 accident-free days for CENSA. “We have accomplished important efforts in maintaining the plant running with up to date systems,� Harmsen states. Other key investments by CENSA took place recently through the acquisition of
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IBM’s Maximo Asset Managemet EAM. This software is also used for inventory control, payroll, and other fields, which are fully customisable.
government entities to consider CENSA as a reliable energy source. “There will be more renewable energy in Nicaragua, but right now every system demands a guaranteed power delivery with no blackouts or other failures in its distribution,” adds Harmsen.
24/7 availability and reliability CENSA’s high availability and reliability delivered through its automatic control system - in charge of the National Center for Power Dispatch Suppliers guaranteeing continuity - positions CENSA as one of three CENSA must rely on quality fuel to private property power deliver large amounts of plants able to use an power consistently, AGC (Automatic since even slight Generation variations in Control). This contents and Employees at CENSA allows the National factors such Center for Power as viscosity can Dispatch to control the total affect the equipment power delivered by CENSA into the and machinery. For these National Distribution Network. reasons, Puma Energy is the only To offer some context, about 50% authorised company to sell fuel oil of total energy produced in Nicaragua in Nicaragua, from which CENSA is generated from thermal sources, requires 79,000 gallons a day. with the rest being delivered from NIMAC, local distributor for solar and wind power. A problem Caterpillar, provides excellent with renewable energy in the country service for equipment maintenance has been instability, and not being and repairs with timely deliveries, able to deliver the same amount of flexible credit plans and convenient energy day in and day out, taking major maintenance contracts. All
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these perks are highly valued by CENSA, since maintenance planning and overhauls are an important part of reducing costs. Fluid Mechanics is also an important part of CENSA’s supply chain, helping CENSA deliver energy 24/7. “Our suppliers are a key factor for our company to work with the required efficiency,” Harmsen confirms. CENSA Servicios: A new business unit “Throughout the years, we have acquired special equipment and developed skilled, experienced
professionals; the next step forward was obviously to create a business unit of high-quality electro-mechanical service suppliers,” the CEO continues. The technical staff at CENSA are a unique force within the country, working with a transformer oil regeneration machine which allows maintenance service to take place without having to shut down the equipment. The CENSA service unit is already working for several companies in Nicaragua and there’s already a waiting line for other businesses requiring its assistance.
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Skilled personnel with stable work Stability is a very important factor for the 110 workers comprising the payroll at CENSA, covering shifts to provide a 24/7 service of electricians, welders and other qualified workers. Training is one of the most important aspects for CENSA, as the company provides licensed and certified training sessions in skills such as dangerous energy management, fire extinguishing, first aid assistance, oil by-products management, electrical risk, crane operation, occupational health and safety, and risk valuation, among others. Most of the staff averages five to
10 years working for the company, which promotes internally when new positions become open. “The experience degree collected by our working force brings us added confidence,� Harmsen comments. Care for the surrounding environment and community Strict waste management concepts are enforced by CENSA, thus minimising any possible impact on the environment. A wastewater treatment system is part of CENSA’s assets, and fuel waste is handled by
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a specialised company in order to be disposed of properly. Remaining scrap metal, cardboard and plastic is sold to recycling companies. The company’s ties with local universities and institutes holds its doors wide open for graduates to experience internships at CENSA. In other matters, the company is very active among the Puerto Sandino community, since this small village does not offer many employment opportunities. CENSA
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has a number of local hires and also runs collaboration programmes with the local fire department and police. Consistent efficiency serving Nicaragua During the last four years, CENSA has consistently increased its power output by an average of 8.22% each year, surpassing DisNorte-DisSur’s projections by more than 30%. In the short-term, the company’s purpose is to extend its business
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“In corporate finance, a solid margin creation and protection model is essential” – Juan Harmsen, CEO for CENSA
relationship with the government’s distribution entity in order to sustain investments serving Nicaragua with a steady, efficient power supply. Other plans include thrusting the new CENSA Servicios business unit and all it has to offer. “Our main challenge is sustaining the efficiency and stability of our power generation resources, contributing to Nicaragua’s development with a high reliability and availability levels,” Harmsen concludes.
OCP ECUADOR AND ITS FULL COMMITMENT TO THE REGION’S OIL INDUSTRY
After almost 15 years, the OCP Ecuador pipeline prides its business on experience, safety and successful operations Written by Mateo Rafael Tablado Produced by Lucy Verde
OCP ECUADOR
OCP
Ecuador has established a difference in the country’s oil industry since its conveyance operations began in late 2003, after two months’ worth of test runs. The $1.5bn investment became Ecuador’s largest private investment venture, while also creating 600 permanent jobs, 11,000 of them during the pipeline’s construction. The company’s reins are held by Andrés Mendizábal, who became the company’s CEO in 2011, after first joining in 2002 in the operations area. Mendizábal’s commitment with the sector has taken him to the presidency of CIP (Production Industry Chamber of Ecuador). “From our point of view, contribution toward a better development of the country is a very important concern,” the executive says. The impact OCP has in Ecuador’s oil industry has unleashed the country’s potential from previous limitations such as insufficient conveyance. Since OCP’s opening, production increased in 30% which has resulted in $42bn of revenue for the country.
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The Hydrocarbon Regional Integration OCP Ecuador’s contribution to the oil industry goes beyond benefitting its own country – it has also been overseeing production from southern Colombia’s Putumayo
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2001 The year OCP Ecuador was founded
region since 2013. Currently, the Hydrocarbon Regional Integration has allowed more than 12mn barrels from Colombia to arrive at OCP’s deposits in Esmeralda. Most of the Colombian crude oil brought to Ecuador via OCP arrives in
tank trucks at Lago Agrio, where the Amazonas station is located. There is also a secondary pipeline interconnection between OCP and OTA (the Transandino pipeline), which operates on emergencies only. Further expansions on the pipeline
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“Contributing towards a better development of the country is one of our main concerns” – Andrés Mendizábal, CEO for OCP Ecuador
may consider the possibility of adding Northern Peru oil production into the route to OCP’s Amazonas station, though such an investment at this point seems unlikely, and still subject to market conditions. “There’s interest from producers in northern Peru to bring their crude oil here, like Colombia does, but there’s no solid project yet,” Mendizábal remarks.
Batching: An accomplished goal During its 14-year run, OCP Ecuador has already accomplished a series of goals with a positive impact for the company, clients and the oil industry. In 2017, the company’s most important accomplishment was met by transporting batched crude oil. Batching guarantees crude oil maintains its qualities after being shipped through the pipeline
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and arriving at OCP’s Esmeralda facilities. Avoiding further mixture for pipeline conveyance is very attractive for oil producers, as they’re guaranteed their product’s value will not decrease when arriving at its final destination. The engineering and operation teams from OCP Ecuador made this feat possible after long research and testing resulted in optimal results for batched oil runs. “This opens our possibilities of attracting new clients, since this has already resulted in a working agreement with a company producing lighter oil,” adds Mendizábal. Lasting business relationships Maintenance is a key factor for a successful pipeline operation as the one executed by OCP Ecuador, which carries important investments in this area year after year. Suppliers in this area adapt quickly to OCP’s standards and work ethics. “Our usually long engagements with suppliers turn into a mutual learning process,” Mendizábal explains. On its suppliers’ behalf, working under OCP’s strict guidelines and safety standards certainly improves their business across different sectors. Multiple CRS projects Along its 300-mile run, the pipeline travels across many communities. OCP Ecuador is in contact
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with these population groups and during its short existence it has already created more than 700 social responsibility projects under health, education and productivity guidelines, investing $41mn in 14 years. The cornerstone of the excellent relationships with these communities was the creation of the First Environmental Fund of Ecuador, along with ENCANA, the Canadian group that also became one of the pipeline’s main partners. This $15mn initial investment was directed toward specific tasks in education and research. One of the most important corporate social responsibility projects is the “Escuela Plus” programme, in partnership with DIRECTV, helped by the satellite TV company’s infrastructure to broadcast educational content to several schools in communities along the pipeline’s path. After the 2016 earthquake in Ecuador, OCP partnered with the Junior Achievement organisation’s Ecuadorian chapter in order to provide the “topo” squad (“mole”)
training to youngsters, adding expertise for survivor detection and rescue during natural disasters. And one of the most recent programmes involves multiple municipalities in the Amazonian region through a tourism project called The Route of Water, which also runs along the pipeline’s stretch from Quito towards East Ecuador. “We’ve witnessed the will of local governments to go out and develop their regions through tourism, we are supporting this excellent project,” Mendizábal says. New collection scheme from 2018 The OCP Ecuador pipeline is currently working under a “ship or pay” modality, which means it charges for hired capacity instead of conveyed volume following the project’s first design, which could guarantee payments of loans taken to build the pipeline. But from 2018, OCP will charge for its services and conveyed volume. This way, sales will cover operational cost, turning OCP into a profitable business.
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“We’ve prepared for years waiting for this to happen, becoming a profitable business” – Andrés Mendizábal, CEO for OCP Ecuador
“This change is a very important event. We’ve prepared for years waiting for this to happen, to become a profitable business,” Mendizábal explains. Another key goal for the short term is decreasing crude oil conveyance through tank trucks, and instead using pipeline interconnection, which provides a safer environment for this activity. OCP Ecuador’s purposes are very
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clear. There are, of course, subjects which do not depend totally upon the company, but rather answer to the market’s behavior, domestic production volumes and other possible roadblocks, which currently include tax issues in the entire industry, for which the company is open to help solve. This could end up benefitting not only the oil and gas industry, but also Ecuador and the country’s wider development.
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600
Employees at OCP Ecuador
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