A more than 900-year-old history, which made it one of the symbols of the Italian steel industry from the beginning of the 100s up to the years of the economic boom, only to then reinvent itself, in recent decades, as a producer of XNUMX% clean energy. It is the somewhat paradoxical story of the Falck group, which since 2010 it has been de facto called Falck Renewables (the Falck Spa holding holds around 62% and is its only business): once an "energy-intensive" industry par excellence, today one of the most important players in the new renewable market.
“But not even so paradoxical – Toni Volpe, CEO of Falck Renewables since 2016, tells FIRSTonline -: precisely because the iron and steel industry requires a lot of energy, Falck already had production plants at the time, especially hydroelectric ones. What was already a small part of the business has now become the only one: now we only produce clean energy – or we provide services related to this – even if we no longer do hydroelectric but mainly wind, 77%, photovoltaic, a small share of biomass and we have a waste-to-energy plant for waste”. The current story is about a turnover which at the end of 2017 approached 290 million euros and a stock on the Stock Exchange that in 2018 was steadily above 2 euros per share, with a 65% gain in the last 12 months.
The five-year plan prepared at the end of 2016 and updated at the end of 2017 has given the company a big boost, thus far contributing to reducing financial debt and setting itself the ambitious goal of almost doubling production between now and 2021. What are the pillars of this floor?
“The plan, presented at the end of 2016 and then strengthened at the end of last year, was designed to bring production from 822 MW at the end of 2015 to 1.375 MW at the end of 2021, returning the company to its fundamentals: more wind and solar , compared to other sources, and more international expansion, in order to seize all opportunities and above all to diversify risk. For us it is more important to be present in several countries rather than concentrate on a single reality. Two years ago, when I arrived at Falck, we were present in four markets: Italy, the UK, Spain and France. Today we have doubled, adding Sweden, Norway, Holland and the USA. Furthermore, we are increasingly focusing on highly specialized services to be offered to companies that want to produce clean energy. This is still a small part of our business, but it allows us to be present in many countries where we do not produce, such as Japan in particular but also Mexico. We hope to transform this presence, for now only engineering, into an industrial opportunity over time”.
The services sector is linked to an important acquisition that you made in 2016, that of the Spanish Vector Cuatro, which deals precisely with this. Do you have other acquisitions in the works?
“From the point of view of the plants, not at the moment, but we are always attentive to the opportunities offered by the market. We are interested in the possible acquisition of service companies such as Vector Cuatro because it allows us to further diversify our business and be present in more countries”.
Among the many turning points that have taken place under your administration, there is also the performance of the Stock Exchange: the stock took a breather in these first months of 2018, but has gained 65% since June 2017. Did the investors also like the plan?
“The share lost something in 2018, it is true, but it is physiological after reaching a peak of 2,35 euros at the end of 2017, after the update of the plan, and in any case it is steadily above 2 euros per share, i.e. on the values higher since 2011. It should be taken into account that in the 2017 calendar year the average value was 1,3 euros, while in 2016, before the plan we presented in November, it was 0,8 euros. In June 2016 we reached the lowest value (0,65) following Brexit, which penalized us because we already had several activities in the UK then. Although we actually discounted a surge that was purely 'emotional' in nature, because Brexit has no real impact on our business. On the other hand, the performance of the last 12 months is, among other things, the best in terms of percentage gain among the European competitors in the sector: evidently our plan has set clear targets, some of which have even already been achieved and this has convinced investors".
The EU recently increased its clean energy targets to 2030, bringing the target for consumption from renewable sources to 32%. Do you think this goal is achievable?
“In Italy we are already at 36,4% of production according to Terna data and the SEN has established that we can produce over half of the energy from renewable sources between now and 2030. As regards consumption, in Europe at the moment the percentage is 17% and 10% worldwide, but I believe that the goal can be achieved because the renewables sector is currently growing by 8,3% in terms of installed capacity globally (IRENA data for 2017), which is a very high figure and gives an idea of its expansion. Only we, like Falck, want to almost double production between now and 2021 and I assure you that we are not doing anything exceptional: in a market that runs at +8,3% every year, the goals we have set ourselves are absolutely normal and reaching them we would only do our own. The revolution has now begun and it is certain that it will be completed, there can only be a doubt about the timing”.
Despite some skeptics, even very influential ones, like US President Donald Trump?
“Trump talks about denying climate change, but in reality, not even he is hindering the development of renewables. Suffice it to say that in the broad tax reform approved a few months ago, the president could have touched the incentives for clean energy production plants, but he didn't. Renewables create many jobs, especially in the republican states”.
And Italy, with the new government, how is Italy moving on the front of energy policies?
“From the first steps, as far as I can see, I'd say right: the Calenda plan was already very good, but the new executive seems even more ambitious to me. It is significant, for example, that in one of his first outings as Minister of Economic Development, therefore with responsibility for energy, Di Maio helped push Europe to further raise the target for renewables to 2030: Italy, together to other countries, he proposed setting it at 35%, while France and Germany had more conservative ideas, especially Berlin. In the end, 32% agreed, but our line was more courageous than that of others. Little has been said about it, but it was a first important signal at an international level: the new government seems conceptually more interested than the previous one in having ambitious objectives on renewables".
However, the new executive has not yet been clear on the enhanced market protection regime, the expiry of which is theoretically expected in July 2019. It doesn't affect your business directly, but what do you think of that step?
“I am in favor of liberalisation, because I hope that the benefits of clean energy will also reach consumers and liberalization can lead to this”.
In the coming years we could therefore really spend significantly less on energy bills (just last Thursday the Authority announced significant increases for electricity and gas from July)?
“Reasonably yes, for various reasons. First of all, because clean energy will cost producers less and less. The plants do not require the same maintenance as the old thermal plants, and the technology is well-established and improves every year, making the process more and more economical. It is a safer, more stable business and above all more predictable in its costs, even in the very long term. Of course it is linked to climatic variables (but the risk is overcome with a good geographical diversification) but by now it is fully self-sufficient, it no longer depends on public subsidies and above all on the fluctuations in the prices of raw materials such as oil, gas, coal. There will be more energy independence and this will also be good from a geopolitical point of view, especially for a country like Italy, which is not rich in raw materials”.
Can aggregators, the so-called CCA (Community Choice Aggregation), who sell non-profit clean energy in California also play a role in Europe and in Italy, with a view to further economic benefit for the consumer?
"Yes. Now the European legislation provides for it, it is up to the individual countries to implement it. I call them the "energy Groupon", they are buying groups, aggregators but of a cooperative nature, non-profit, which aggregate the demand for energy by offering even more competitive prices. In California, 25% of electricity is sold in this way”.
The challenge of renewables has therefore been launched: but in a future in which it will cover an ever greater percentage of the entire production, will it be able to satisfy all global demand?
“In reality today, electricity consumption in the world is decreasing, thanks to energy efficiency. But in the future they could increase again, because new challenges are coming onto the market. For example that of electric mobility, but also that of heating/cooling: with a view to decarbonisation, the goal is to make less and less use of gas and to use electricity also to regulate the temperature of our domestic and working environments. This will lead to new consumption, but the important thing is that they are increasingly covered by clean energy. Today's big challenge is to make electricity production clean not only for traditional electricity consumption, but also for transport (not just electric cars) and heating/cooling".
