Ondrej Safar, CEZ Romania: “The energy market will go through a significant change driven by the sector’s aim for zero emissions”

“CEZ will continue to advocate for an integrated energy system where consumers and investors should be able to choose the option that best matches their needs, based on prices that reflect the true cost and efficiency, a system that should ensure equal treatment for all energy carriers, making electricity and gas markets fit for decarbonization,” Ondrej Safar, CEO CEZ Romania told The Diplomat-Bucharest.

“We think that the energy market will go through a significant change, even a revolution, driven by the sector’s aim for zero emissions and the need for distribution networks to become digital with real-time management.

Also, digitization, research and innovation should be at the top of the priority for the energy sector.

It is very important to prepare the networks for the energy transition and decarbonization, starting from existing capacities to the transmission and distribution networks that need to accumulate and absorb new capacities. It will take the implementation of many systems that can operate the system and manage the flow of energy in real time, something that is very different from what is being done now at country level.”

Local market evolution

“2021 landmark was the European and national price increase in electricity and gas. Just like all the other players in the market, we were forced to review our business strategy to address the consequent challenges. Our focus point was to keep our clients protected and correctly informed, so that they can manage their consumption and contracts the way it best suited them. Of course, addressing the context also meant a continuous dialogue with the authorities dealing with it at national level.”

Company’s business objectives and strategies

“2022 is a very important milestone for the energy sector in Romania and Europe alike. The current geopolitical context will redefine the long term strategic targets. For sure, it will mean a revision of the Green Deal and its timing, putting more focus on decentralization and energy transition and putting into debate gas as transition source as topic of energy independency.”

Company’s flagship projects and innovation insights

“The level of digitization within the Group is undergoing enormous progress, thus we constantly obtain important and more effective changes at operational level. For example, in 2021 we got to use more and more digital tools, robots to help us streamline the activity and digital equipment, such as drones, video cameras, sensors that help considerably to ease our employee’s activity.

In the spectrum of digitizing, the activity of the companies in the Group have become easier with:

– 2 functional robots (DORA – software based on UiPath technology and advanced mechanisms in the company which is very helpful for the CEZ Vanzare team and has decreased the human effort required to operate NIR in SAP by 95%, with an error rate of 0% and Cronos – in house manufacturing, which brings major benefits for our HR Division, in the sense of optimizing 10 times the process of searching and generating documents for our employees).

– DocSign, a simple electronic signature applicationthat has substantially reduced the duration of signing internal documents and procedures. The actual signing of the documents can be done both on the computer and on the mobile phone and only involves checking one of the mentioned options. At the same time, the initiator of the process receives notifications regarding the signing stage of the document being signed and other applications adapted to the telework system.

Also, from our renewable energy perspective, in 2021 we received a patent issued by the United States Patent and Trademark Office for a technical solution that can improve by up to 4% the annual green energy production of a wind turbine.

At Distributie Oltenia’s level (the energy distributor within the Group), the constant investment in the grid and accessing of EU funds, gave us the possibility to connect in 2021 the largest number of prosumers in the country. The first step was to identify all the installers selected by AFM in our area and to invite them to a discussion, given the more than 3,000 requests that were to be registered. We standardised the documents and information they had to submit, staggered the connection requests so that we could meet the deadlines, and held weekly status meetings, thus resolving in good time any problems that arose along the way.

For 2022 the challenge is even greater. We estimate over 7000 prosumers connected to our network and we have already taken steps to secure the meters.

Also, Distribuție Oltenia continued its smart metering projects, approving with ANRE a smart metering plan for its operational area that will include the installation of an additional 244,000 meters by 2024.

We had some delays in the implementation of our smart meterings plans due to several procurement procedures for the services and equipment needed for the installation of smart meters that exceeded the planned periods (due to lack of vendors/suppliers). However, we redid the installation timeline and in 2021, Distribuție Oltenia has installed 90,000 meters in both urban (over 42,000) and rural (over 48,000) areas, with over 400 transformer stations integrated into the system.

This year, we will continue the process towards a smart grid, implementing additional technical solutions necessary for our smart metering plans, such as MDM + MDC (Meter Data Management System) projects that will allow us to process and transmit data from smart meters, enabling data exchange with other databases, including GIS and billing system. The system is being implemented in co-funding, European funds 3 mil euro, own contribution is about 2 mil euro (40%).

On the investment side, in 2021, for example, Distributie Oltenia’s plan included projects of more than 73 000 000 euro with European funds and positive impact in the modernization and development of the network (of which 21 400 000 euro – own contribution and ~ 29.3%, funds, axis 6.1; 6.3.).

This year, we started the implementation of the project for the modernization of the distribution network and the increase of the distribution capacity of the 110/20 kV Caracal West transformer station for the discharge of electricity produced by photovoltaic power plants (project value 43 million lei/ beneficiaries in the community: 13600 consumers in Caracal and adjacent localities).

In addition, in 2022, we launched the Advanced Distribution Management System (ADMS) project to develop an intelligent distribution network for the benefit of over 1.4 million electricity consumers. The project is worth 76 million lei, is co-financed by European funds and includes the SCADA component, or real-time data acquisition for the control of the distribution network, the DMS component for the analysis and optimisation of the network operation, which will enable the operator to supply energy at the required quality and quantity, with real-time monitoring of its parameters, the OMS component, for the management of interruptions in the energy supply, and the reporting component, for the analysis and measurement of information related to the network operation.”

What smart projects or tech-based projects have you implemented addressing the digital transformation in energy so far?

“Besides the projects mentioned at the previous question in case of the energy distributor Distributie Oltenia, we will be continuing also some other projects under the SMART Transformation umbrella:

• the MWM project (more than 2,350,000 euros invested from 2018 to 2021) with a direct impact on the time to remedy electrical disturbances almost 10% shorter in 2021 than in 2019.
• GIS which gives us a better monitoring of Distributie Oltenia’s assets, their planning for the optimal configuration of the network and the optimization of the organization / dispatching of the work teams
• Data Governance, through which we aim to standardise data processes, reduce IT risks and improve the security and control of systems.
• Enterprise Architecture which involves integrating new systems with/and within existing DEO systems.
• Digital DEO, a project aiming to improving both the experience of DEO customers and users (in the processes of connecting to the network, managing complaints, recording disturbances) and that of employees by streamlining work processes and training.
• E-Analytics – aimed at better hourly forecasting for OTC (CPT) (forecast, medium and long term), reducing the costs of energy traded on the Balancing Market for CPT coverage and increasing the identification of suspected electricity theft.
• Assets Management System, through which we aim to implement a new asset management system in the investment processes with an impact on securing distribution tariff revenues, maximising the cost/benefit recognition balance and more.

To this list we add specific projects through which we support local public authorities in the process of connecting and locating charging stations for electric means of transport or connecting various objectives of public interest (gyms, hospitals, airport extensions, etc.).”

How do you approach the green and energy transition in the company? What is the company’s strategy?

“CEZ will continue to advocate for an integrated energy system where consumers and investors should be able to choose the option that best matches their needs, based on prices that reflect the true cost and efficiency, a system that should ensure equal treatment for all energy carriers, making electricity and gas markets fit for decarbonization.

We think that the energy market will go through a significant change, even a revolution, driven by the sector’s aim for zero emissions and the need for distribution networks to become digital with real-time management.

Also, digitization, research and innovation should be at the top of the priority for the energy sector.

It is very important to prepare the networks for the energy transition and decarbonization, starting from existing capacities to the transmission and distribution networks that need to accumulate and absorb new capacities. It will take the implementation of many systems that can operate the system and manage the flow of energy in real time, something that is very different from what is being done now at country level.

As of the renewable part of our operations, we are committed to increase the capacity of our current assets and to continue nourishing the know-how hub we already have developed around wind turbines.

We have a strong incentive in the recent Patent issued by the United States Patent and Trademark Office, which I’m sure will be followed by other like-wise results.

We are also keeping a close eye on the newest technology for energy storage solutions, to be able to follow a project in this respect if the conditions are right.

In addition, we are preparing 2 grant applications granted by Iceland, Liechtenstein and Norway through the EEA and Norwegian financial mechanisms 2014-2021, for the installation of photovoltaic panels in 2 transformer stations of the distribution operator Distributie Oltenia and the installation of panels photovoltaic at TMK Hydroenergy Power, on the luster of the 4 lakes Secu, Gozna, Valiug and Timis Trei Ape.

The green vibe is a strong suit also for CEZ Vanzare and the entire Group as we have a strong interest in green-driven initiatives and sustainability. We gather our non-financial and sustainable efforts in our Sustainability reports that use as reference the Global Reporting Initiative (GRI) G 4 Guidelines reporting framework, Core Option.

Among our green initiatives, the latest would be CEZ Vanzare’s Shelter with Energy initiative, implemented in partnership with the CSR Nest Association, in which 15 homes were equipped with modern household appliances by the Vasiliada Association Targu Jiu Branch, the NGO that won the 39000 lei grant. Through the “Energy Shelter” competition, we also supported the UN’s Sustainable Development Goal 7, “Clean and Affordable Energy”, through which we open new horizons towards smart solutions and alternative energy means.

Also, throughout the European project SocialWatt (that aims to implement specific measures for energy efficiency and combating energy poverty targeting energy consumers in this situation), CEZ Vanzare carried out the following campaigns:

– between October and December 2020: information campaign on energy efficiency that offered customers the opportunity to find out the “color of their homes” depending on their energy efficiency, by accessing the platform Efficiency Portal on www.cezinfo.ro. Clients were invited to complete the questionnaire “What color is your house?” and download the E-book with practical tips to help them get a permanently efficient home.

– in 2021, the supplier launched the Energiada campaign, challenging the public to become Olympic in energy. The campaign included a series of concrete actions, meant to contribute to increasing the level of information of the public and to the adoption of an energy efficient behavior:

• presentation of 10 practical measures to reduce consumption and, implicitly, to reduce costs on energy and gas bills -> Energy efficiency manual for #Home
• sharing 5 inspirational stories of successful Romanians (Sebastian Dobrincu, Shurubel, comedian and radio host, Cristina Andrei, food blogger, Adrian Samson, representative / organizer Neversea and Diana Bulimar, gymnast – launch September 2021), who recorded performances not only in their field of activity, but also in energy.
• providing fast, unlimited and free access to the most useful and relevant sources of information -> Efficiency Portal
• supporting customers through personalized products and services, which ensure optimal energy consumption -> www.cezinfo.ro

Following the study conducted by CEZ Vanzare in 2020, based on a calculation tool provided by SocialWatt, in which 1120 localities in the Oltenia area were analyzed, 5 localities with a high degree of energy poverty were identified (Craiova, Targu Jiu, Drobeta Turnu Severin, Pitesti and Ramnicu Valcea).”

What kind of partnerships (academic, university, NGOs, corporate) did you run in 2021 or continued in 2022 and with what impact?

“We cultivate long lasting partnerships across the local community from our operational area with NGO’s, Associations, educational institutions such as high schools and universities as well as hospitals. We aim to produce a positive impact in the local community addressing its most important needs. From the extended list of our regular partners, I could name the CODE Kids Foundation, the 7 high schools partners from the Electrician Apprentice project and also Duke of Edinburgh an international organization recently added among our partners. The most recent collaboration is with the Renasterea Foundation, with which a women’s health program will be implemented in Daneti commune, Dolj County, during 08 March – 8 April and free Babes-Papanicolau tests will be provided. This initiative was designed as a celebration of Women’s International Day for CEZ partners who have been given the possibility to join the social cause of the campaign by giving us the approval to donate in their behalf.”

What flagship CSR projects did you implement so far in your company?

“Despite the pandemic and the increasing volatility of the energy sector, wekept all our traditional CSR projects for the benefit of the local community and developed new ones, meant to cover important and recurrent needs in the community.

This year’s edition of Oltenia Marathon concluded in more than 20,000 euro donated to 3 social causes (support for the Nest Foundation, the Ramnicu Valcea Emergency Hospital – Neonatology Section and the program I want in the 9^th grade, implemented by the World Vision Foundation).

The Generators of Wellbeing (an internal project challenge for CEZ employees) meant 40,000 euros and 8 dedicated projects in our traditional area. Code Kids is another project we continue to support and get involved in for the benefit of children from rural areas who learn coding (more than 75,000 euros invested so far).

Plus, we continued our project concerning the lack of professionals and the degree of retirement in the energy sector via the distribution operator’s Electrician Apprentice project, developed since 2016 in all Distributie Oltenia’s 7 counties, where we built state-of art electrical laboratories and tailored benefits for future electricians (scholarships, self-development training, dedicated technical competitions, digital tools for the online schools, regular practice sessions in our installations, the Practice Club, etc.). The distribution operator invested more than 300,000 euros in the Electrician Apprentice project so far, has roughly 300 students subscribed in the current school year (of which 32 are girls) with 440 scholarships offered in 2020 – 2021, 59 interns (Junior Electricians) who benefited so far from paid internships during 2019 – 2021 and 37 young electricians employed with the company or at our partners during or after the internship so far. In addition, DEO equipped the 7 Electrician Apprentice partner high schools with photovoltaic panel plants worth approximately 15,000 euros per high school.

The list continues with dedicated 8 March (Deeds get rooted or 10,000 sqm of forest being planted in one of the most desertified region in Constanta County), Easter (the latest campaign, Festival of local kindness, challenged our partners to join us in donating 10 – 3D printers to kids from the Code Kids program or choose a small token of appreciation for our collaborators, gifts acquired from local business) and Christmas (10 drones were donates to CODE Kids children, 100 of them who will be attending the School for drone pilots in 2022) campaigns.”

What are your sustainability objectives this year and what sustainable / circular economy projects are being developed in the company?

“Our mission is to develop a sustainable business model and to measure our progress, in 2017 we published the first sustainability report. All four reports published so far present in a transparent way our economic, social and environmental results and use the GRI Standards as reference. The certification received each year, GRI Materiality Disclosure, shows us that what we do is in line with stakeholder expectations. Also, being a high scoring company in CST by The Azores in Romania proves, once again, our clear commitment to develop a sustainable business. We continue by adopting a sustainable strategy based on the UN’s sustainable development goals.

Our commitment in the medium and long term is to invest and manage the portfolio in line with global Net Zero greenhouse gas (GHG) emissions by 2040. In this regard, our key targets for 2022 include the following strategic steps: measure the operational greenhouse gas (GHG) footprint, direct emissions from sources you own, control and consume yourself (Scope 1) and indirect emissions from the generation of purchased electricity, heat or steam (Scope 2), get a third party verified measured footprint, set a science-based target for Scope 1 and 2 GHG emissions for 2030 that aligns with net zero by 2040 and develop a Paris Agreement-aligned/ Net Zero Business Plan.”

---