Management's Viewpoints

INTERVIEW WITH SENIOR MANAGEMENT

Our response to the challenges of future is a stable, reliable and low-carbon energy mix.

The world entered the second year of its battle against the COVID-19 pandemic in 2021, while climate and energy issues returned to the fore after a year-long focus on the health crisis. Despite the complex challenges faced by the world, the GEN Group reliably supplied Slovenia affordable, low-carbon energy, and performed well in unstable market conditions.

We spoke with the senior management of the GEN Group about the results achieved in 2021, which were based on synergies between the group’s production, sales and marketing and development and investment activities, about the management of the company in demanding economic and environmental conditions, and about the group’s future plans. The latter will ensure that the group is able to respond reliably to energy challenges in the future.

Despite difficult market conditions, 2021 was a successful year for the GEN Group in business and operational terms. Which results would you like to highlight?
blaz-kosorok

BLAŽ KOŠOROK

Chief Executive Officer (CEO), GEN energija d.o.o.

Despite difficult market conditions, 2021 was a successful year for the GEN Group in business and operational terms. Which results would you like to highlight?

Blaž Košorok: The GEN Group’s energy facilities operated very stably in 2021 and, for the most part, achieved or even exceeded planned results. A scheduled major overhaul was completed successfully at the Krško Nuclear Power Plant. Otherwise, the NEK operated at full power at all times and thus exceeded planned production. It produced 5,419 GWh of electricity during the year.

At 619 GWh, HESS and SEL produced more energy than the previous year in changing hydrological conditions. Both companies achieved record production in May, but generated near-record low production during the second half of the year in the context of poor hydrological conditions. HESS continued with preparations for the construction of the Mokrice HPP. At the end of September 2021, the Administrative Court annulled the Slovenian government’s decision overriding the public benefit of nature conservation and sent the matter back for reconsideration. We respect legal frameworks, but feel obliged to point out that formally delaying the construction of a new hydroelectric power plant is very harmful for Slovenia and its citizens during the current energy and climate crisis.

The Brestanica Thermal Power Plant (TEB) was activated and started up 10 and 12 times, respectively, for the purpose of balancing the Slovenian electric power grid. I should also point out that the TEB, together with the NEK, even saved the European electric power grid from collapse on occasion. We generated more than EUR 3.5 billion in turnover, while profit was up by 64% relative to 2020. Careful planning over the decades has paid dividends, not only in terms of stable operations, but also in terms of improving financial indicators.

Group companies made investments of more than EUR 79 million. The NEK invested primarily in dry cask storage for spent nuclear fuel, while the TEB successfully completed the project to replace gas turbine PB7. SEL began a project to replace the spillway gates at the Medvode HPP, while HESS focused on the Mokrice HPP and the construction of a 6 MWp photovoltaic power plant at the D3 sediment depot alongside the run-of-the-river Brežice HPP. The GEN Group ranks among the strongest groups in Slovenia in terms of investments.

Contributing significantly to business excellence was the sales and marketing function ofthe GEN Group, which achieved excellent results last year. Record results were driven by well-planned investments in the data infrastructure, which have facilitated the rapid development of the digitalisation of support activities, and rapid, analytically supported decision-making using the most advanced tools. Global trading contributed most to the group’s record results.

You mentioned the difficult conditions on the energy market, which were felt by everyone, from households to the industrial sector, and which had an indirect impact on the state of the national economy. The overall situation was further exacerbated by the war in Ukraine. How has the GEN Group addressed the energy crisis? What conditions can we expect on the energy market in the future?
You mentioned the difficult conditions on the energy market, which were felt by everyone, from households to the industrial sector, and which had an indirect impact on the state of the national economy. The overall situation was further exacerbated by the war in Ukraine. How has the GEN Group addressed the energy crisis? What conditions can we expect on the energy market in the future?

Blaž Košorok: The energy crisis and rising energy prices were very evident in Slovenia at the end of last year, when prices began to spike. Of course, we saw the initial signs of the energy crisis well before that. For several years now, I myself have been watching with suspicion the German understanding of the electricity transition, the so-called Energiewende. Not only because of that country’s reliance on Russia, but also because the closure of nuclear power plants has proven to be a disaster, as Germans themselves are discovering. Despite an increase in wind and solar capacities, which are unreliable and reduce the stability of the electric power grid due to their dependence on weather conditions, all of the effort invested by Germany has failed to reduce carbon dioxide emissions. The only tangible results of that country’s transition are higher energy prices and the reduced stability of the electric power grid.

Because Germany was dictating the tempo of the energy transition, all of Europe, including Slovenia, has been put in a tenuous position. Fortunately, Slovenia did not recklessly follow Germany’s utopian ideas. For this reason, in part thanks to the GEN Group, we have a significantly smaller carbon footprint, lower prices and a more stable grid today than in Germany.

The war in Ukraine has exacerbated an already difficult energy situation in Europe. Analysts predicted that conditions on the energy market would ease with the end of winter. However, prices turned volatile again on 24 February when the Russian Federation attacked Ukraine. That conflict represents an entirely new geopolitical and energy paradigm. Such price fluctuations and the situation on the international markets highlight the need for Slovenia to be as independent as possible in a number of areas, including energy. We must therefore be aware that the challenges we face are a wake-up call and a sign that the time for change is now. It is time to plan and invest effectively in our energy future; it is time to consider ways to increase energy efficiency, how to actively involve citizens in the energy sector, how to successfully electrify sectors and how to digitalise society. For all of this we need a stable, reliable and low-carbon energy mix. The GEN Group has just such a vision. We call it Vision 3+1.

danijel-levicar

DANIJEL LEVIČAR

Chief Operating Officer (COO), GEN energija d.o.o.

But you also achieved high profits.
gordana-radanovic

mag. GORDANA RADANOVIČ

Financial director, GEN energija d.o.o.

But you also achieved high profits.

Gordana Radanovič: The expertise, professionalism and commitment of employees on the one hand, and the prudent management of production and the exploitation of market opportunities in the context of the sound management of risks and liquidity are the factors that provide the group a high level of added value and the possibility to generate profit. We channel our capital into development and investments, in particular the continuous and comprehensive maintenance of existing production facilities, and the responsible planning and construction of new, low-carbon production capacities for the purpose of supplying electricity to Slovenia. Worthy of mentioning in connection with achieved profit is the fact that GEN is owned by the state. This means that all added value that the company generates is reinvested in the functioning of group companies, either in the form of funds for maintenance or funds for investments in new sources. In the future, that profit will be felt by each and every citizen, in particular because they will have at their disposal a stable source of low- carbon electricity.

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