EVN’s supply chain
EVN’s procurement activities can be classified under two main areas: primary energy sources and electricity are purchased by the Energy Trade and Supply Segment, while the other purchasing transactions are coordinated, managed and carried out centrally by the procurement department.
Procurement of products and services
Most of the supplier relationships are not related to energy procurement and involve roughly 5,000 suppliers and service providers at EVN’s main business locations (Austria, Germany, Bulgaria and Macedonia). The majority of these suppliers come from EU countries. Numerous suppliers are also located in Macedonia, EVN’s only major business location outside the EU, and in Switzerland and Turkey for the international project business.
In selecting its suppliers, EVN must comply with the Austrian federal law on public procurement. EVN is the sector contractor under EU public procurement law in many areas and must therefore meet the applicable provisions. EVN also follows the principles governing competition in the EU. New bidders are regularly included in tenders, and a special focus is placed on inviting bids from local companies in tenders for the international project business. The unequal treatment of bidders, e.g. the preferential treatment of local suppliers, is prohibited. The construction of infrastructure, plants and buildings plays an important role in both the energy and environmental services business. In this connection, EVN works with a wide range of companies such as construction firms, trade contractors and planning offices, plant, pipeline and cable line builders as well as suppliers of plastic pipes, transmission/cable lines, electro-technical equipment, meters, hardware and software for the operation of plants and infrastructure and the production of work clothing.
The costs in the international environmental project business consist primarily of externally purchased materials and services (construction, machinery and electro-technical equipment). The project business is characterised by continually changing framework conditions. The successful realisation of these projects therefore demands high flexibility from the procurement department for each project, customer and technology in every branch and country.
- GRI indicator: Proportion of spending on local suppliers at significant locations (EC9)
Electricity and natural gas procurement
Part of the energy distributed by EVN to its customers is not generated by the company’s own plants, but is purchased on the market. There are a number of similarities in the structure of electricity and natural gas suppliers: in addition to concluding medium-term procurement contracts directly with producers, EVN also purchases electricity and natural gas over the wholesale market, i.e. on commodity exchanges and in off-exchange trading over so-called “overthe- counter (OTC) platforms” in bilateral transactions with individual trading partners.
The electricity requirements of Austrian customers are covered internally by EVN’s own plants as well as externally through domestic green-energy allocated in accordance with the Green-Electricity Act and through purchases over the wholesale market and mediumterm purchase contracts. Purchases over the wholesale market are handled centrally for EVN and the other EnergieAllianz partners by e&t Energiehandelsgesellschaft mbH, which utilises the European Energy Exchange (EEX) and bilateral transactions with various trading partners.
EVN’s electricity subsidiaries in Bulgaria and Macedonia are required by law to purchase most of their electricity requirements from stateowned producers, i.e. NEK and ELEM respectively. Since these countries have not yet implemented electricity labelling requirements, EVN cannot determine the origin of this energy. The remainder of the purchased energy comes from the wholesale markets.
Most of the natural gas purchases are handled by EconGas GmbH, in which EVN holds an investment of 16.5%. This company purchases natural gas directly from the producers, through intermediate sales organisations and in national and international OTC trading centres and exchanges, e.g. in Austria (CEGH), Germany (NCG) or the Netherlands (TTF). Notable import volumes – from the European point of view – come from Russia, the North Sea and the Sahara (Algeria, Libya). One of the most important OTC natural gas trading platforms is the Central European Gas Hub, which is used by both EconGas GmbH and EVN for natural gas purchases.
EVN operates two coal-fired power plants. Coal supplies for Dürnrohr are purchased directly by EVN, while the partner company Steag handles supplies for the Duisburg-Walsum plant that was commissioned during the first quarter of 2013/14. The purchases for Duisburg-Walsum are based on a coal supply contract concluded between Steag and Steag-EVN Walsum 10 Kraftwerksgesellschaft mbH, which is responsible for the power plant operation. Consequently, the procurement of coal for the Duisburg-Walsum power plant is not directly within EVN’s sphere of influence.
The coal supply chain for the Dürnrohr power plant has three tiers: purchases are made directly by EVN via coal wholesalers or trading and forwarding agents (Tier 1) which, in turn, buy the coal from processing companies or exclusive exporters (coal wholesalers) (Tier 2). These companies purchase their coal supplies directly from the mining companies (Tier 3). EVN purchased coal supplies for energy generation in the Dürnrohr power plant from two intermediate traders in 2013/14. Approximately 90% of the coal used in 2013/14 came from Europe and Russia, while the remaining 10% came from the USA.
- GRI indicator: Description of the supply chain (G4-12)