Source: Magazine Energetika from 3/2014
The Magazine hosted an interview with SYNECTA a.s., quickly emerging as an international clean energy and renewables developer and turnkey project expert with more than 2.2 GW of added installed capacity over the last six years. We asked key principals of the company about their business philosophy, their view of the energy industry, and their analysis of where the company stands amidst the fierce competition. We interviewed Mr Jozef Fortmeier (JF), Chairman of the Board, and Dr Mihails Kuznecovs (MK), Vice-Chairman of the Board.
SYNECTA a.s. key facts:
- 2.2 GW of clean energy projects established
- 2’202’698 tCO2e/year reduction
- Largest projects scale to 478 MW
- Experts in technical & economic feasibility recommendations, development, plant modernisation, EPC contracts, financing arrangements
- Headquarters in Prague, Czech Republic
- Based on the founding of the metallurgical material company in 1903
- Main partners GE, Siemens, Kuehme, SNC Lavalin, Commerzbank, Rigensis Bank
Can you briefly introduce your company?
MK:We are an international clean energy developer and EPC contractor. Specifically, we offer our services in the three areas of technical & economic feasibility studies, development, and construction works. We have set ourselves a clear commitment to contribute significantly to cleaner, more efficient and ecologically friendlier energy generation. Such commitment efforts have already resulted in establishment of 2.2 GW of installed capacity in various stages, and emissions reductions that are equivalent to 2,202,698 tons of CO2 each year. By doing so, we deliver solid commercial returns, yet create tangible social welfare.
JF:Our headquarters are based in the Czech Republic, in the centre of historical Europe, and yet serving as an emerging renewable technologies hub. The combination of new and old values inspires and allows us to concentrate on energy fundamentals research and the establishment of longterm investment opportunities. SYNECTA has been active in the energy market since its foundation in 2007, but has acquired more than 100 years of solid metallurgical material manufacturing expertise from its original parent company, founded in 1903.
Please describe the management, the organisational structure and business model of your company.
MK: At SYNECTA a.s., we have organised our business structure in a way that is transparent and efficient with regard to what we do. We have five departments directly reporting to the Management Board. Among these departments, Strategy & Development and Procurement & Engineering have the most importance. In general, each department and professional has direct contact with the others, which allows for prompt and effective communication between a readily available team of experts.
JF:Among the Board Members, we have in total 45 years of senior management, strategy advisory and engineering expertise. I, personally, have an expertise built on 29 years of dedication to the field of domestic and commercial renewables installations across Germany. Dr Kuznecovs joined the Board after working in global business development management in a Swiss-based firm, and in strategy development for a UK-based company. Mr Jurijs Kuznecovs (Board Member) joined SYNECTA a.s. after occupying finance director, CFO and board member positions in the Baltics and CIS. Our employees are well educated, and as a rule, they have university degrees in the field of their proficiency.
MK:We understand the complexity and challenges of the energy and renewables industries. This is why our business model is longterm oriented, yet considers shortterm and midterm optimisations based on energy market conditions, related industries, general economic conditions and the overall public reliance of the whole energy industry. We collaborate with the best experts and teamwork is the ultimate prerequisite for the successful establishment of the complex energy projects. This is the reason we have established business cooperation with Commerzbank, the second largest German bank, which allows us to operate with more efficient financing terms, the benefits of which are passed on to the energy end user.
JF: At SYNECTA a.s., we are continuously thinking about the future and adapting our business strategy model to meet everhigher demands for cleaner and more efficient energy portfolios. This is why we closely cooperate with and always welcome business partners, whether they are well-known or emerging professionals. In our current projects, we work with such recognised names as General Electric, Siemens, Kuehme, SNC Lavalin and various internationally known distribution and freight companies.
Could you elaborate on the energy technologies targeted by Synecta and why.
MK: At SYNECTA a.s. we concentrate on the three key technologies, which we believe, offer the best integration and collaboration of the technological, environmental and commercial aspects of generating cleaner and secure energy: thermal power stations, wind resources and solar deployment.
JF: With regard to thermal power stations, these are the most efficient and economically effective ways to generate secure energy supplies on a larger scale, thereby reducing operating costs and positively impacting electricity pricing. At SYNECTA a.s., we have collaborated on and led the development and reconstruction works for a chain of power plants in the Eurasian region.
MK: As for renewables, the wind is the most cost-competitive and publicly recognised clean energy renewable energy source. As my direct experience relates to this type of energy source, we have set targets across a number of countries to develop wind resources. Also we are on course to introduce solar energy installations as these will allow diversification of the energy generation sources and establishment of greater security in energy supplies.
There are widespread debates, both at public and governmental levels, that renewables technologies are not cost-effective and that these significantly increase the electricity prices to the public. Can you provide us your view on the impact of renewables on the energy market and electricity prices?
MK:For the past decade, the energy market has seen increased activity of the renewables introduction. To put this into context, if we refer to the latest OECD/IEA reports, the renewables generation has increased from 2’920 TWh in 2000 to the expected 5’668 TWh by 2015, constituting around 20%- 25% of global energy production (to compare, in Europe the renewables generation is expected to be around 10%-15% of total generation). Some governments have completely or partially slashed renewables incentives (e.g. Scandinavian countries, South Africa) or are still considering the implementation of such policies (e.g. Poland, Belgium) as these are seen to pass the significant cost share to the energy bill. However, we see that competent renewables professionals are able to enhance technologies to make them more competitive with ‘conventional’ energy sources.
The debate over renewables will reach another focal point at some point in the future, because its decisions have prolonged cost effects in the longer term and because the vast majority of countries face a lack of energy independence (Europe is a prime example).
I think that the mixed expectations over the commercial performance of the renewables technologies will contribute to negative arguments. By commercial performance, I refer to the dependency on the subsidies (i.e. FIT, Green certificates etc.) with exceptions, such as Chile, where the current electricity price is high enough on its own, and coupled with good wind resources, is enough to exploit such poten- tial without support mechanisms. But it leads to a positive side effect, on which I can see SYNECTA build and which allows us to work in two directions: modernisation of existing power plants in order to make the energy generation more efficient which is coupled with establishment of renewables portfolio; and simultaneously allowing significantly lower CO2 emissions. More concretely, we have recently expanded to Eurasia, with projects scaling to 2.2 GW of cleaner energy generation enabling emissions reductions that are equivalent to 2,202,698 tons of CO2 each year. At the same time, we always keep in mind that investments shall not only provide commercial returns, but also create tangible social benefits.
Thank you very much for your time and it was a pleasure talking to you. It would be interesting to see how your company is progressing. We wish you prospective business in the field of delivering more efficient and cleaner energy generation.
MK:It was our pleasure talking to your magazine.