"Corporations have been tottering around in circles for long time now with the counting out game on"

says our colleague Pavel Pávek in our interview aimed at the retrospect of the recent All for Power conference.

What impressions have you brought from this year’s conference?

Despite my ever enduring optimistic spirit, this conference has been a great deal of disappointment. I am truly disappointed with the situation currently lingering throughout the entire power industry. However, that is exactly what keeps its organizers eager to strive towards improvement of its international significance and they clearly good at it. The rising number of vendors from around the world is an obvious proof. This was my third annual conference and the growth is obvious. 

What has let you down then?

That is hard to summarise into a single sentence. Our industry has been struggling with numerous issues and this conference has rather burdened my mind with further worries.

We are all definitely sensing the current market situation along with the trends in energy businesses and the inescapable “green mania“. The European fight for climate is major load factor against the energy industry. All being a mere ideology and outbreak of populism. I cannot see any rational reasons for that. The overall amount of CO2 produced in Europe count for very low increments of % when compared to the largest global polluters.  45 % of the global CO2 quantity are produced by China and the USA themselves; while the remaining eight countries, including, for example, Russia, Japan and India, then generate almost 70 % of the global CO2 production. And the EU Parliament has announced the climatic alert, asking to raise the climatic objectives for the year 2030. Most of the EU countries will even fail to achieve the objectives for 2020, since they have no idea how to meet those objectives.  Objectives are made to be ambitious but this policy is going to destroy us. When I see the monthly bill for “green energy”, my word would really fail me. At the end of the day, the bill for this ideology will remain with us, the regular citizens. The more important question also is, whether the “zero carbon energy” remains affordable for everyone.

I surely have no ambitions to scoop the “Oil Gobbler of the Year” prize but I can think of more effective ways to induce a positive climate change. Europe should adopt a more global perspective on the issue, restricting the subsidies to purchases from Asia and supporting development of your own manufacturing plants.

Have you been keen on energetics since your very start at Moravia Systems?

I have been in the energy business for almost ten years. I joined the power industry from the engineering domain, which was not going through its best times then. Same as many other industries struck by the global crisis from 2008, even the machinery sector. The energy industries were blooming back then, on the other hand. My career in this industry started at the Dětmarovice power plant. Every single plant was experiencing a strong accent on investments. The investment projects remaining “in progress” back then included Tušimice, Prunéřov and Ledvice power plants, and other. Dětmarovice saw investments into environmental compliance worth several hundred of million as well. The government inflated the budget for power plant environmental improvements with approx. 300 billion Czech crowns and these investments are now recurrent, in the light of growing doubts about the green policy. I am really outraged by that.

Do you see those investments as a waste of funds?

I am not saying that. However, I can mention one clear example: The Dětmarovice power plant delivers 800 MW using four 4 power units burning bituminous coal. The rates for emission allowances grow on annual basis. The existing rate is CZK 688 per 1 tonne of CO2 released in the atmosphere. For your reference, the rate in 2018 was CZK 400 per tonne. Judging from the information presented at the conference, the rate for 2020 might reach as much as CZK 1,000 per tonne.  That makes coal really expensive fuel. The power plant is currently on the verge of economic return and will most likely close down anyway. This policy will cast the same fate over the remaining sources of coal. 

So you think power plants will began closing next year?

Obviously not. The momentum is long in there. It could last 10 years or even longer easily. Nevertheless, the progressive reduction of coal power units has already started.

One does not find much about it in the media. What can we do?

And this situation led to formation of the coal commission. The commission concentrates in the issue with proper intensity and keeps issues various potential scenarios of “coal-free” power solutions. The members gathered within are also representatives of power plant and coal mine operators. This step is essential for first determination of a properly confident plan and meaningful energy mix to promote in the EU. Even the public image in the media has improved, since there is more news about power engineering and people start realizing potential consequences brought by decisions in this domain.

What are the regional authorities currently doing with the government refunds for emissions allowances?

Nothing. The money keeps disappearing in the black hole of national budget.

How did the conference present the future of bituminous mines and heating plants within the Ostravian area?

There was no such presentation given. I am hoping to see some at the Heating Power days in Hradec Králové.

Our society has condemned Mr. Bakala totally. But we would no longer ask: what is keeping us from extracting the coal for sale? It is all Bakala’s fault apparently. He was the villain, ruthless enough to privatise the housing facilities within the Ostravian region, so he is also responsible for our negligence to the valuable raw minerals now stuck one kilometre underground. After all, we have all learnt about discontinued mining operations at the Lazy Mine and the forthcoming refill of its shaft. Sin spite of the good quality coking coal in this area and the deposits to last several decades still. Our country has significant stock of raw materials and benefits from its geographical location, making us truly one of the very few EU member countries of a kind, yet we are still unable to recast this fortune into profits.

Are you a fan of Mr. Bakala? 

This is really not about Bakala at all. I am not even a fan of the Quick-Step cycling team, after all. Yet the guilty ones seem to be easily pointed nowadays. Much easier than the search for a proper solution. The lignite mines in the Northern Bohemia are facing the same policy with identical impact. Some of them could keep mining until 2055. Yet the green mania is likely to plunge them out and we will never convert the deposits into usable energy. I am truly not looking forward to this type of outdoor museums in the future. 

Reflecting back to the matters discussed at the conference, what is your point of view? Could you describe that as two days really charged with energy?

As I had already mentioned earlier in this interview, the organizers of this conference have shown their high standard and professional approach, Mr. Měřínský and his colleagues have done a great deal of excellent work.

My opinion about some of the attendees would be more dispassionate. I might not even be in position qualified for any judgements over my more senior colleagues in the energy sector, especially considering the fact that Moravia Systems works as a vendor of goods or services to numerous participants at the conference.   

Could you mention any specific example?

I had the opportunity to speak to one unnamed member of the board from ČEZ ESCO. The company can be classed a newcomer on the market to a certain extent. Their current revenues reach CZK 4 billion a year. The company was founded 4 years ago and literally started from zero. I have a very detailed knowledge of one subsidiary of this company and its establishment. Our topic concerned the decentralisation of power industry. I was showing quite a bit of criticism and his claim saying: “If we didn’t bring this on, someone else would”, would not really satisfy my expectations. We still managed to hold some pleasant conversation though. I would only like to point out the said company ESCO generates most of their revenues from the “decentralisation“ mentioned above.

What is wrong with decentralisation then?

How could the ČEZ company drain its own funds via the decentralisation process instead of being more assertive on behalf of the government and fighting an expansion of larger rotating resources?  Why are all the media talking about the dirty, ugly and highly polluting power plant or heating plant? Would you be happier with thousands of little chimneys scattered among decentralised plants? All urban areas polluted by small heating plants and chimneys?  I wouldn’t. I absolutely disagree with higher bills for electricity or heat due to the ever growing dependency on natural has to fuel power plants. One of my other reasons would be the fact that market leaders supplying heating plant technologies are the German players - BOSCH or Viessmann. Looking at smaller-scale heating plants, all their equipment comes from Germany. Whereas out local manufacturers are capable of manufacturing the same boilers too.

Whose presentation caught the most of your attention?

I am disappointed we have just a very few characters in the industry; there are actually people who do not make themselves heard. This conference was attended basically by all the top local experts in the industry. Not even the vendors make themselves heard that much. The coffee farewell to some of our colleagues in the industry would be literally in the spirit of: “See you next year in this valley of tears.“ I believe that Asian countries and the U.S. are bursting with laughter over our concepts of “emission-free policy”.

What do you mean?

Let me mention Denmark as a nice example. They have built their hyper modern incineration plant. They are boasting with their unique piece of architecture and low-emission gem completed for an awful amount of money close to the centre of Copenhagen, cheerfully observed by Her Majesty Queen from the royal palace. This emission-free incineration plant was funded by their taxpayers to help the environment. The entire miracle is crowned with a rooftop ski slope. However, revealing the African origin of its fuel is a piece of information rarely heard or found in the Danish media. Is the amount of CO2 produced by huge tankers carrying the fuel for this incineration plant included within the total emissions produced by the plant? What do you think?

This question explains the wit by itself. Let us get back to the previous question. You are saying the industry lacks professional characters. Would you be able to mention some characters to stir the professional society?

As I said, they do not make themselves heard nor seen. Some of them would even hold their birthday parties in England and so on. I would split the recent 15 years of energy industry into somewhat affable stages of “Modřany-” and “Post-Modřany” periods. The former period was dominated by godfathers. Everybody was complaining about the foul deeds going on. There were even some parodies resembling the garage premises of ČEZ with both the receptionist and cleaning lady driving their Ferraris to work. The period was also associated with reforms and austerity measures, totally unbearable by any qualified voter seeing those pictures showing the cleaning lady driving her Ferrari. However, speaking solely about the energy sector, then to Czech lobby in Brussels adopted the right course and determined to promote a strong position of the Czech Republic on the European energy market. And Moravia Systems must have gotten a piece of that positive impact as well. The current lobbying concentrates mainly on the benefits and perks for the greatest agricultural company and we are busy consuming the savings generated during past times.

Do you mean that ČEZ is simply procrastinating now?

Not at all. The entire group is currently investing a great deal of their efforts into construction of further nuclear piles. They have also begun with significant investments and aim to increase the output MW across the entire Vltava cascade channel. Orlík is getting new turbines. There are actually some bits going on towards the energetic autonomy.

This is mainly interesting for the future.

Yes. And we shall never cling to nuclear power only.

How about other operators besides ČEZ?

I like the progress shown by our present number two energy corporation on our market - the EPH. Jiří Feist (Chief Strategy Officer at EPH) participated in the conference with a very interesting description focused on the progress and strategy implemented within the EPH based on the absolutely correct understanding the transience of the existing green trend. They know this panic with choking Europe is simply a temporary phenomenon and hence invested into classic power engineering projects, while everybody else was going green. Their new acquisition obviously came in for a rational price too.  

Could you point any interesting presentations?

There have been some straight forward opinions and presentations delivered, e.g. Mr. Martin Hájek from the Association for District Heating of the Czech Republic is aspiring to win the “Oil Gobbler” prize in Brussels himself. That would mean a certain positive effect for us though.

Another nice presentation was given by Mr. Luděk Michera from the company DYTRON, dealing with the distribution network. He managed to summarise the future impacts of this “green mania” very briefly. If we were to replace the coal and nuclear power with RES in form of wind and solar power plants, the entire surface area of our country wold not suffice, speaking of power production reflecting the current consumption only, not even venturing to reflect on any future growth of demand for power. 

What about the competitors? What is their point of view?

As I said. One big valley of tears. The ones not already transformed into somewhat, say global corporation with a certain foreign partner, or entities lacking a truly unique product are groping in the dark and crying instead of demonstrating their issues out loud. Czech companies are struggling to choose their vision and strategy without any national strategy determined for the forthcoming years. No matter which significant representatives of the companies as ZVVZ, Sigma or Královopolská a.s. sat at the same desk with me, they are all eager to build and embark on construction projects. They are reluctant to see studies and theory on power production using RES. We all want to build power plants and long for investments in such projects. I totally agree with the common opinion, which only needs to grow louder beyond the whispers at our desks. The vendors are failing to make themselves heard more. The only characters showing demonstrative approach would be the veterans of nuclear energy. And that is too sad. Although even that is a tiny humble step forward.

Are the corporations waiting for the government initiative now? 

I cannot say that for sure, really. Yet I can feel Corporations have been tottering around in circles for long time now with the counting out game on. Some of them have found the way to employ this idea and wage their business towards very fat profits there. I read the article in the Czech Economic Newspapers themed “Energetics Bogged Down in Insolvencies” about four years ago. The wording is still authentic and could be re-published without any major editions again. The corporations coiled into a circle drain the stronger companies to force them out after a certain period. The phenomenon simply runs in historical cycles. Nothing had changed really.

And when the government defines its strategy and publishes the scenarios with minimum involvement of rotary resources?

Not an easy question. The “minimum involvement” remains a somewhat vague definition. But I believe and hope we are not in to adopt the German approach. They are battling severe issues with expansion of wind and solar power. Their power outputs experiences unbelievable fluctuations. That energy cannot be controlled. And they will be probably forced to purchase power from abroad.

And what about us?

It is the time we stopped bowing. We need to build further nuclear piles. While keeping a certain number rotary coal, gas and hydroelectric plants, while investing into new ones. Making an ideal energy mix is essential and every such objective must be ambitious, hence we need to become a wholesale power supplier for the neighbouring countries. We’re the heart of Europe, after all. Look at Germany, Austria, Slovakia, Hungary and Poland - those are deficit markets. Slovakia might become a power exporter once the Mochovce nuclear power plant has commenced its operation. We have not been doing much to preserve out power exporting status so far.

How is Moravia Systems coping with the market situation?

This is an uneasy period for both ourselves as our competitors. There is no reason to present some of us remained unaffected. Our executives have implemented numerous measures and I hope we remain in the proverbial corporate circle.

Can you give us any example?

The in-house reorganization and re-staffing of Moravia Systems continues on regular basis. Our company is not idle.

Its former change of focus onto chemical and petrochemical industries is not appreciated by many nowadays. That was a substantial change. It kept us from breaking down. The variety in our focus needs to be preserved for future endeavours.  We have implemented financial controlling to aid with more precise financial management. That has also saved some worries, looking at the existing payment reliability of your customers.

We are adopting a new in-house information system that requires considerable investments too. I believe these details will also count to move us forward. We have found new partners in China, improved our relations with European armature manufacturers and become exclusive representatives for renowned global brands on the Czech market.  We are launching our construction project with a new manufacturing workshop to produce piping supports and piping prefabrication. We still have some progress to brag about despite the uneasy times.

All the companies in our neighbourhood are facing serious financial issues. Unfortunately, the vast majority of those rank among our customers, bringing a noticeable impact on our condition too.