Electrica will soon have a new medium and long-term strategy, the central element of which is the adaptation of the activity to the complex ecosystem in which we operate, says Alexandru Chiriță, CEO of Electrica. “Compared to our traditional areas of activity, we have a high interest in developing new activities, based on innovative technologies, while continuing to monitor and analyze growth opportunities through mergers and acquisitions. The alignment of the Electrica Group with ESG requirements is to be carried out in four stages, as we will show in the sustainability strategy that we are going to make public soon,” says Alexandru Chiriță, in an exclusive interview for Energynomics.
What are the main pillars of the new development strategy of the Electrica Group? What are the company’s main investments and projects for 2023 and in the medium term?
The Electrica Group strategy for the period 2019 – 2023 was updated last year, the main directions to which the current activities are aligned being adapted to the context in which we operate, one with important differences compared to when it was originally carried out. The new strategy includes aspects such as increasing the company’s market value, expanding into complementary business segments, maximizing performance in the managed infrastructure and also streamlining and digital transformation of the business.
We also maintain our desire to be an integrated leader of energy services and solutions, with a revised market strategy in the dynamic context of the energy sector and capitalizing on the customer portfolio through sales of value-added energy services. We aim to promote a relationship as close as possible with our clients, based on the development of skills, but also on an offer of products and services in line with their increasingly demanding requirements.
Compared to our traditional areas of activity, such as electricity and natural gas supply, electricity distribution and energy services, we have a high interest in developing new activities, based on innovative technologies, while continuing to monitor and analyze growth opportunities through mergers and acquisitions. In this chapter, we really hope that 2023 will be the year with the most projects so far, which will lay the foundations for the company’s development for the next 10-15 years.
For the next period, we intend to continue the process of adapting the activities and the strategy to the market conditions, counting on a sustainable growth of the companies in the Group, so that we can ensure the financial stability and efficiency of all business lines in the portfolio.
Regarding our future plans, we will continue to develop the production segment especially from renewable sources, especially considering the challenges coming from the international level in the supply chain. We are already working on a new medium and long-term strategy, the central element of which is the adaptation of the activity to the complex ecosystem in which we operate.
What are your plans for 2023, on medium and long term in the field of green energy? You were recently saying that you will get to 1 GW, what are the projects that you are currently looking to acquire?
According to the commitment we have assumed at a strategic level towards our stakeholders, we constantly and with great care analyze the opportunities in the market, including those related to the field of green energy. As a listed company, any decisions in this regard are subject to the approval of the competent fora, in accordance with the provisions of the constitutive act, and are made public, in a transparent and non-discriminatory manner, in accordance with the provisions applicable to listed companies.
However, as mentioned before, we have ambitious plans in this area and this year we have every confidence that it will be one with many such announcements. Already in the first half of 2023, we completed the acquisition of two companies whose main activity is the production of energy from photovoltaic sources and which develop the “Vulturu” projects, with an installed capacity of 12 MWp, respectively “Satu Mare 2”, with an installed capacity of 27 MW, both of which are in the “ready to build” phase.
What is the growth rate of prosumers? What are your predictions for this segment, for 2023?
At the level of the distribution operator within the Electrica Group, Distribuție Energie Electrică Romania (DEER), at the moment we have over 16,000 connected prosumers. Depending on the degree of absorption of the funds available through the new session of the Casa Verde Fotovoltaice program, the number of prosumers connected to the DEER network could in the next period exceed 5% of the total number of users, compared to approximately 1% at the moment. The percentage may also vary depending on the evolution of programs with European funding to promote the production of electricity by prosumers from renewable sources and the provisions of the regulatory framework.
In this context, colleagues from Distribuție Energie Electrică Romania have published the interactive guide “How to become a prosumer”, which includes a presentation of the stages that must be completed within this process and numerous useful information for those who wish to become prosumers.
What are the main grid investments needed to meet the new wave of renewables?
For the grid connection of producers from renewable sources, the main investments required are those of increasing the capacity of high voltage networks. Specifically, in the case of high-voltage overhead power lines (110 kV), there is a need to replace the current conductors with ones that have an increased distribution capacity, respectively to install new transformers in the case of 110 kV/MT stations.
Regarding the works required to connect producers who have obtained technical approvals for connection, they can be found in the Development Plan of DEER for the period 2024-2033, which was published for consultation on the company’s website. We intend to carry out these projects with the support of the financing obtained through the Modernization Fund, and in case we do not obtain the necessary financing, they will be carried out in the form of strengthening works, in accordance with the ANRE regulations in force.
How have the SAIDI and SAIFI network quality indicators evolved over the past year?
In the year 2022, we maintained the trend of improving the performance indicators regarding the continuity of the distribution service at the DEER level. Compared to the values achieved in 2021, last year SAIDI (duration of unplanned interruptions) decreased, on average, by approximately 11% – 13% in the North Muntenia area, 7% in the South Transilvania area and 12% in the North Transilvania area. From the perspective of SAIFI (the number of unplanned interruptions), we recorded values decreasing by approximately 13% – 10% in the North Muntenia area, 19% in the South Transilvania area and 9% in the North Transilvania area. Of course, we want to maintain this trend and further improve our results for the two indicators.
What are the main elements and projects of the group’s sustainability strategy (ESG)?
At the level of the Electrica Group, we have already implemented a series of policies in the field of ESG and we consider that the difference from the optimal standard is a small one. In recent years, we have addressed issues related to sustainability and carried out activities aimed at having a positive impact on the environment and the communities in which we operate, such as reducing greenhouse gas emissions, implementing smart grid technologies, promoting energy efficiency programs for consumers and encouraging the adoption of green technologies or developing partnerships with local communities and various organizations to support the transition to a more sustainable energy system. Of course, especially as a listed company, one of the aspects we focused on was ensuring sound corporate governance and transparency in the Group’s decisions and operations.
In addition to the already existing initiatives, we aim to align our strategies, policies and current activity with the paradigm assumed at the level of the European Union, so that we can contribute to the common effort to reduce the effects of climate change and social inequities. The alignment of the Electrica Group with ESG requirements is to be carried out in four stages, as we will show in the sustainability strategy that we are going to make public soon.
It is also important to mention that, for Electrica, sustainability is one of the four values assumed by the Group’s strategy. This means that we constantly strive to integrate the principles of sustainable development in all segments of our activity. Moreover, we have assumed ourselves to be an important actor in the process of sustainable energy transition, for customers, environment and communities.
Complementary to the corporate strategy and assuming the importance of sustainability for the Group’s business, we believe that the development of a sustainability strategy provides the opportunity to review the progress made to date and take a fresh look at the risks and opportunities facing our business. This provides the framework to review, adjust and focus activities in an authentic way that is unique to the company and can differentiate us in a volatile but certainly emerging market.
How do you see, from a personal point of view, the economic evolution of Romania in the next period?
In the coming period, Romania’s economy will continue to be strongly influenced by both internal and external factors. On the one hand, the successful implementation of the National Recovery and Resilience Plan will play an important role in economic recovery and the elimination of regional differences in terms of development and competitiveness. On the other hand, we will continue to have opportunities and challenges generated by the global context, including the evolution of the border conflict, the impact of climate change and the dynamics of international trade relations.
Despite these challenges, I am optimistic about Romania’s economic evolution, relying on the good prospects of our country and the allocation of the necessary resources to take advantage of opportunities and overcome impediments. Romania has significant economic potential, especially due to its skilled workforce and its strategic position in Europe. In this context, each economic actor has an important responsibility to contribute to this collective effort to revitalize the economy and create opportunities for the sustainable development of our society.
As a Romanian company, we are committed to playing an important role in supporting the economy and promoting sustainable and inclusive development. In this regard, we will continue to invest in technology, accelerate the digital transformation of businesses and support the sustainable development of local communities.
We will also continue to collaborate with our partners and collaborators to identify and develop projects that generate added value and respond to the specific needs of the Romanian and regional market. I strongly believe that by working together and addressing issues along the entire value chain, we can help build a more robust and sustainable economy.
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This interview first appeared in the printed edition of Energynomics Magazine, issued in June 2023.
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