Interview of the Executive Board
An interview with the members of EVN’s Executive Board, Franz Mittermayer and Stefan Szyszkowitz
An interview with the members of EVN’s Executive Board, Franz Mittermayer and Stefan Szyszkowitz
Mr. Szyszkowitz and Mr. Mittermayer, this year’s full report is entitled “Lasting Values“ and is meant to signalise stability and continuity. As the new Executive Board team, what is your association with these beliefs?
Szyszkowitz: Continuity has a long tradition at EVN. Ever since its beginnings, our company has been committed to a set of basic values which are a recurring theme in all our major decisions and strategic steps. Of course, they also represent an integral part of our daily operations. This is clearly demonstrated by the advertisements and other documents that were recently collected for an internal exhibit which now forms the basis for the design of this report. They make this stability tangible and emphasise its importance for all our business activities – yesterday, just the same as today and tomorrow. Franz Mittermayer and I, as the new Executive Board team, see it as our mission to lead EVN into a successful future, exactly in the sense of this stability and continuity.
Mittermayer: EVN’s successful positioning in the energy and environmental services business – in Lower Austria as well as in the international arena – is the result of a clear strategy and a focus on values that guide and, at the same time, motivate our employees. With this solid foundation as a starting point, I welcome the opportunity to help shape the future development of EVN in my new role.
Briefly looking back: The 2016/17 financial year was out of the ordinary in many respects.
Szyszkowitz: Absolutely. The most obvious aspect was the unusually cold weather – temperatures were much lower during last winter, both in comparison with the previous year and in relation to the long term average. The summer months were also significantly warmer, above all in South Eastern Europe. That had a positive effect on our energy and network distribution volumes, but also created enormous challenges for the networks and their stability. And also showed just how fragile the European system really is, especially through the sharp rise in the demand for electricity across Europe that was caused by inspections, and the related downtime, in French power plants. But it also means we must be on the right course with our substantial investments in our networks. Despite the sound development of volumes during the past year, there are two points we should not overlook: First, weather-related effects are impossible to plan and, second, the current network volume effects will be offset in the coming years by the reference period comparison that is part of the regulatory calculation.
Key word “network security“: Your thermal power plants have been used to support network stability for years. Will this continue?
Mittermayer: It may sound like a contradiction, but thermal power plants make the system conversion towards renewable energy possible. Because the volatile production from windparks and photovoltaic plans frequently creates a short-term situation where electricity is needed to stabilise the networks and balance out supply and demand. Until electricity from renewable sources can be stored in larger quantities, thermal power plants are an indispensable bridge technology. Our plants were in operation nearly every second day during the past financial year. And, for the first time, our entire thermal capacity in Lower Austria – meaning 1,090 MWh in total – is under contract to southern Germany for the winter half-year 2017/18.
In 2013 EVN launched an investment programme for Lower Austria with a volume of approximately EUR 1bn. This programme has now been completed. What are your investment plans for the future?
Szyszkowitz: Our investment strategy is also based on continuity: We plan to invest approximately EUR 400m in each of the coming financial years, whereby roughly three-fourths of this amount will be directed to strengthening our stable, regulated activities in Lower Austria. The main focal points are, once again, the networks, renewable generation and drinking water.
And what about the expansion of the windpower portfolio?
Mittermayer: We are working continuously on the construction of new plants and, in doing so, underscore our commitment to meet the global targets for the reduction of greenhouse gas emissions. We commissioned the 10 MW windpark in Oberwaltersdorf last October, and the Sommerein windpark with an additional 33 MW is scheduled to be commissioned in spring 2018. Construction here is proceeding as planned. These projects will raise our windpower generation capacity from the current level of 269 MW to more than 300 MW in 2017/18. Over the medium term, we want to expand this capacity beyond the 500 MW threshold through the realisation of further projects in Lower Austria that have already been approved by the municipal authorities. However, this assumes favourable legal framework conditions.
Electricity networks will become intelligent in the 21st century. What does that mean for the network business?
Szyszkowitz: This trend will also bring about changes for EVN, but we see these changes as an opportunity. We want to steadily increase the comfort level for our customers, and intelligent networks will help us do just that. At the same time, the electricity that, for all intents and purposes, comes out of the socket must remain a guaranteed service for our customers. The offering of new digital services and products is dependent not only on intelligent network management, but also on technical network properties like stable voltage and sufficient output that is available at short notice. That is why we are committed to protecting supply security and, in particular, supply quality.
Mittermayer: Quality is, of course, the key principle for the introduction of smart meters. We intend to only install sufficiently tested meters and software systems that meet the strict legal requirements in Austria, above all for data security. And of course, each of our customers can decide on the installation and range of functions for an intelligent smart meter.
What opportunities and risks will e-mobility create for EVN?
Szyszkowitz: Over the medium to longer term, we expect an increase in the number of vehicles with alternative drive forms, in particular e-cars, and are working intensively on the necessary preparations. Solutions for the management of the charging infrastructure are a special focal point of our activities. We set up a basic network of electro-charging stations throughout Lower Austria as a quick first step and are continuously expanding the charging infrastructure in our supply area together with companies, municipalities, regional initiatives and private persons. In addition, the EVN electricity charging card gives our customers access to the largest and most extensive e-mobility charging network in Austria.
What other future issues are on your agenda?
Mittermayer: On the one hand, we are addressing new technology trends in our sector and, on the other hand, we are intensively working to identify the changes in our customers‘ demand profile at an early stage in order to develop the right innovative products and services. The focus, however, is always on the benefits for our customers.
Let me give you a concrete example: At our Prottes transformer station, we are currently working on a research project with a large 2.2 MW storage battery directly next to one of our major windparks. This research project is evaluating alternatives for network stabilisation and investigating ways to improve the feed-in of electricity generated at decentralised locations.
What are your focal points for South Eastern Europe?
Szyszkowitz: Since our market entry in South Eastern Europe slightly more than ten years ago, we have made a sustainable contribution to the long-term improvement of the local supply infrastructure – and also to economic development in Bulgaria and Macedonia – with our investments. Quality and supply security are also important for us in these markets. Our investments were, and still are, concentrated on the reduction of network losses – an unavoidable requirement for positive operating results – as well as the improvement of network efficiency and reliability. The non-organic expansion of the energy business in this region is still not an issue for EVN, in other words, we are not planning any acquisitions or new major projects.
Mr. Mittermayer, water also has opportunities for EVN.
Mittermayer: That is absolutely right and is true for ongoing supplies as well as the international project business. Drinking water supplies in Lower Austria are one of our focal points for the next ten years. Prosperity and comfort requirements as well as demographic and climatic changes are creating numerous challenges in this area, which we can easily master because of our decade-long experience in the supply business. In the interest of supply security, we are concentrating on supra-regional networks where we connect existing wells and well fields with high-performance ring pipelines and also develop new wells. Another investment priority is the continuous improvement of quality through the construction of natural filter plants which reduce the lime content of the water by natural means. We are currently constructing the fourth plant of this type southeast of Vienna.
In the international context, our contribution often begins one level earlier when we use our planning and operating expertise to deliver specially designed solutions for the construction of drinking water supply and wastewater treatment plants in regions with pent-up demand or high population growth.
Mr. Szyszkowitz, two brief questions in conclusion: What makes EVN attractive for investors, and what are your plans for the future?
EVN basically offers its owners the same thing as its customers: long-term reliability – because we are a stable and predictable player on the capital market. This is a result of our sustainable dividend policy as well as our profitability and stable capital structure – which, by the way, also form the basis for dependable supplies and services for our customers. Another important element is the investment strength created by our stable cash flows and healthy balance sheet. The further improvement of our external ratings during the 2016/17 financial year was also well received by the market.
Looking to the future, our focus will remain on continuity and stability – in keeping with the motto of this full report. We are very well positioned and will continue to follow our strategy with its concentration on regulated and stable activities. Our integrated business model helps us to identify and optimally utilise all opportunities along the value chain. Supply security, customer closeness, sustainability, a forward-looking orientation and social responsibility will, as in the past, be our guiding principles. In the future, they will also help us to offer our customers, owners and, not least, our employees what they have appreciated for decades: lasting values.
Thank you for your time.