He believes that bigger and faster steps need to be taken to speed up the energy transition, even though the cost may be higher at the moment. Luis Pinho, Country Manager of Helexia Portugal, argues that working on energy efficiency in companies is the big challenge, although it can be seen as an intrusive process in many operations. The conversation centered on energy storage, electric mobility, circularity and future ambitions.
From the current context, how do you see the energy sector in the short/medium term? What can we expect?
I'd like to be able to give a very romantic and pacifying image, but it's still not that much... we've been through serious difficulties that we all know about: first the pandemic, which has impacted and is still impacting the logistics chain, then there's the context of war, the gas issue, which is very important for Portugal and Europe, and all of this will take a long time to resolve...
On the one hand, this instability has a positive effect, which is to force companies to look at the cost of energy, how they consume it and what kind of energy they consume... this has been a catalyst for more interest from companies in being more autonomous and more efficient, and that's the positive aspect.
But the energy context can't just be looked at in our universe, in the national context, because the effect of countries in Europe, the United States, Russia, has a very big impact on industry.
There is an urgent need for companies to make this transition, for companies like Helexia to be able to do this quickly, despite all the logistical difficulties at the moment... But this has an effect on prices. Installing photovoltaics today is more expensive than it was two years ago.
Is it more expensive to invest in photovoltaics?
Investments are more expensive and I believe that in 2023, but especially in 2024, the trend will reverse and equipment will start to return to the prices of 2019/early 2020, because there is indeed an urgency that also has to do with what is happening at the moment between Europe and the United States.
The United States passed the Inflation Reduction Act, which is actually a huge support of more than 300 billion to help companies in the energy transformation. And this is obviously destabilizing the balance of trade forces and enticing European industries to move to the United States.
Therefore, in the short run there is an urgent need for Portuguese and European companies to become more self-sufficient and efficient in terms of energy, and in terms of energy costs, because in the medium term we could increase the industrial problem we have in Europe.
So when a company like the giant BASF says it's going to move all production to the United States, a company like that doesn't back down. And when big chemical giants, or others, make this move, they drag a series of other companies with them... and this can have pernicious effects in the medium term.
"We shouldn't just talk about energy production, we should talk about energy efficiency"
Luís Pinho, Country Director Helexia portugal
In other words, European incentive policies also have to keep up?
This is a game of chess... the United States has moved a little against the rules of the World Trade Organization, so now Europe has to make a move.
We don't have deep pockets like the United States, although we do have some countries with the capacity to do so, such as Germany, but more peripheral countries like Portugal, Spain, Greece or Italy don't have the capacity to do so...
I want to believe that Europe will unite around this challenge, which is very important for the future of industry in Europe and for our sustainability. And not all countries are at the same level of energy dependence. After all, there are different realities...
I would say that northern Europe took pioneering steps twenty years ago. Norway, for example, was already doing what we are starting to do now, they were ahead of us, but the impact of this is not immediate, it is medium-term.
The industry is leaving Europe to go to the United States and we could have a problem in the photograph. That's why we have to take bigger and faster steps, even if investments are higher now.
Is it possible to make this transition and have relative autonomy in the energy sector? In other words, to work with a very solid base of a renewable energy mix?
Yes, Portugal already has a very interesting energy mix. The step we're taking now is to enable democratic access to energy production. Self-consumption, energy communities, collective self-consumption are mechanisms for doing this and a lot is happening in Portugal.
Are energy communities still very much linked to domestic consumption, or is that changing?
Because of the regulation on which they are based, they tend to be used more by local authorities and the domestic network. For industries, I would say that some things may happen, but I don't think it will ever be very relevant. As for collective self-consumption, yes, it's easier to implement, it's easier to manage with several companies, the investment risk and management are different.
Back to the mix...
Yes, it will allow companies to compensate a little for what comes from our integrated energy system and enable them to produce a large part of their energy. Without thinking about storage, a company can produce between 20 and 40% of its energy during the day.
You can do this on your own premises, if you have the space, or at a short distance away, so that you can integrate collective self-consumption. Therefore, the regulation of collective self-consumption helps companies that consume a lot of energy but don't have the space to install photovoltaic systems. With this they can produce 20, 30 or 40%, in some cases even a little more, of their own energy. This is very important.
The second aspect is that companies will also have to look at their production process. I remember a case of a company that told us that when they have a lot of work, they work overtime during the week. Maybe it doesn't make sense to work overtime during the week, it might make more sense to work on a Saturday morning than to work an extra hour a day from Monday to Friday... This adjustment is necessary and that's why we shouldn't just talk about energy production, we should talk about energy efficiency. You need to know what energy you use and how you use it, and carry out an energy audit.
I would say that today companies are more aware of this, which obviously has to do with the rising cost of energy. This knowledge of the energy cycle is crucial, but it's not that common in Portuguese companies.
There are two aspects here: On the one hand, there are regulatory audits, which energy-intensive companies are obliged to carry out, and reports are produced which are well done and have some consequences. But what I find, from what I observe, is that despite all the suggestions and indications from the audits, with indications of investment paybacks , etc., nothing happens, no decisions are made. Energy production is simpler, because you just build a system that will produce some energy.
But energy efficiency involves tinkering with the existing system, it's not always tangible, you have to get into the production cycle of companies, you have to tinker, see how they produce so that you can then help them consume less energy. This is more intrusive and the decision-making process to make the change takes longer, that's what we feel.
But energy efficiency involves tinkering with the existing system, it's not always tangible, you have to get into the production cycle of companies, you have to tinker, see how they produce so that you can then help them consume less energy. This is more intrusive and the decision-making process to make the change takes longer
When inefficiencies are found, isn't this seen as an opportunity to reduce costs?
For many companies, yes, but there is resistance because it is a more intrusive process. But when the price of energy reaches current levels, it starts to make sense to change lighting systems, ventilation systems, all the implementations...
Where do you feel there is more work to be done in terms of energy efficiency?
I would say, and I repeat this many times, that the most important and fundamental aspect is behavior.
We see it in every company, we see it in our homes, I see it in our office... when someone forgets to turn off the light, this is behavior... The point is to educate people to be careful, because this behavior has a very big impact and is more difficult to evaluate and monitor when implementing.
Then there are the simpler things, like replacing old lighting with LED lighting, which has a huge impact, there are companies that save more than 60/70% on lighting. There are even more intrusive processes that involve tinkering with the production system, tinkering with the heat generation system, tinkering with the cold generation system, optimizing the systems they have. We see cases of companies where, in one part of the production process, they are consuming energy to produce heat and further on they are consuming energy to produce cold and in the middle they are losing heat and cold.
But this assessment is intrusive, it involves audits that are very intense, very in-depth, that really get to the heart of what companies do and how they do it, but that's where the difference can be made. It's much more in-depth and also requires us to have a much more in-depth knowledge of the industry, because relighting is relatively simple, but going to an industry in the field of ceramics or meat processing or plastics, these are all different realities and we need electrotechnical, mechanical, thermal, fluid skills, it's a very wide range of skills that have to evolve over a long period of time. There is a lot of accumulated knowledge to be able to help.
And there is no single model that can be applied to all...
No, each case is different, obviously there are sectors where the cycle of the production process is similar, but in practice it's never the same, so all of this involves a lot of knowledge.
"We need to produce new, more efficient batteries, but at the moment they tend to be going into a different area, they're being directed towards mobility"
Luis Pinho, Country Manager Helexia Portugal
Returning to storage, could it be an important factor in accelerating change? What will happen in the short term in terms of batteries?
Looking at our portfolio, when we see that we have a range of clients where on average 15 to 20% of the energy is injected into the grid, because it is produced over the weekend when industries don't consume energy, there is an opportunity here: how do we ensure that this energy is not injected into the grid? And how do we get these companies to accumulate energy on Saturdays and Sundays, for example, so that they can consume it on Mondays and Tuesdays? This is one scenario. Another scenario is companies that produce energy, but have the capacity to produce more, but to be consumed within a relatively short radius, in a collective self-consumption mechanism that includes storage.
The technology exists, but it's still not economically viable compared to the cost of energy. Well, if we had done this exercise at the time of the energy price spike, maybe there were times when it was viable... but looking at the long run , it's not yet. I believe that within one to three years this will evolve very quickly and then it will have a big impact.
Do we need to scale up the technology to bring the price down, or are there other constraints at the moment?
There is existing technology, which has to be scaled up in order to lower the price, but there is also the issue of mineral extraction, which has to be done somewhere and this has to do with the regulation of various countries, with the availability of these materials and with the ability to produce batteries and reuse them, because we can't just think about producing batteries, we have to think about reusing them, those of electric cars, for example.
In other words, there are questions of sustainability in the life cycle of batteries...
Exactly, but here there has to be a virtuous circle in time, we need to produce new, more efficient batteries, but at the moment they tend to go to a different area, they are being directed towards mobility, to achieve greater autonomy in cars, buses, heavy transport, and only then to industries to store part of the energy they produce.
Then there's the second way, which is to reuse batteries, for example from cars, and here there's still a lot to be done and the technology has yet to evolve. It's possible to reuse batteries from electric mobility at the end of their life cycle, which can still be used for stationary batteries and can work as long as they're retrofitted... there's still room to evolve.
In other words storage is no longer developed because battery production is focused on mobility?
Yes, I'd say that's happening at the source... and that makes batteries for storing energy in industry more expensive, because at the source they're going to all the brands that are betting on electrification, like Tesla, Mercedes, BMW, etc. The production capacity is being directed there, and for energy production either little is coming, or it's coming at a cost that isn't yet economically viable.
And how is the recyclability of photovoltaic panels? Have we managed to have a more refined cycle in the sense of recycling these materials and a longer life cycle for this equipment? cycle of this equipment?
Yes, everything that is metal is recyclable... in the case of panels, there has been a great deal of progress, and there are entities that collect and process them. What we have seen, in the history of our projects and our experience, is that photovoltaic panels are the most important component and have a 25-year cycle.
At the end of this time, there is an 80% production guarantee, which is great, but what we have seen with all the brands we work with is that these panels still produce more. So the life cycle is not 25 years, it can be extended.
What I think will happen at some point is that the process of recovering materials from existing panels will be so efficient that it will justify retrofitting a photovoltaic system that is not yet 25 years old, maybe 15. Because the recycling process will be so efficient that it will be possible to replace them with more viable and efficient equipment. In other words, they will have a shorter life, but not a useful life, because they will end up back in the system. And people and companies will be able to buy more efficient equipment. But that's not happening yet, and at the moment we're extending the life of the equipment as much as possible.
"Because the recycling process will be so efficient that we'll be able to replace it with more viable and efficient equipment."
Luís Pinho, Country Director Helexia portugal
What is being done with damaged or old equipment these days?
There are collections by certified entities, the various components are separated, glass, aluminum, etc...
And is it the responsibility of companies like Helexia to collect this old equipment when they install new panels?
All companies are responsible, and when you buy modules, the price is implicit. For example, when we're doing a construction project and a certain amount of equipment breaks, it's collected by an entity at zero cost. It's already built into the price and the process.
One of the recurring criticisms in this sector is the licensing processes and bureaucracy. How has this issue evolved?
I have been critical of the administrative process and, accordingly, I have to stop being so. Obviously we always want the administrative and regulatory services of the DGEG [Directorate General for Energy and Geology] to be more agile, but what we have seen recently is that there has been a great deal of progress. There are still waiting times that aren't met, it's true, but there have been some very big and important steps forward in terms of regulation.
What used to happen was that regulation took a long time to arrive or to keep up with what the industry needed. This is no longer the case. Regulation has come out for collective self-consumption, for energy communities, storage is already being addressed as well, in electric mobility regulation has evolved.
We've had processes that used to take two or two and a half years that can now be resolved in two or three months. So this time I'm not going to be critical, I think we've evolved a lot and it's important to maintain this pace and ensure that these entities have the necessary resources to respond on time. But progress has been very good.
Hydrogen is a hot topic, but it takes a lot of energy to produce. Is it feasible to add it to the mix?
I would say yes, but not so democratically here. Because in order to produce it, we need to be close to areas where we can produce a lot of energy, it needs to be surplus in order to be used and we need to have a lot of water available. Sines is a case where this could obviously make sense, because there is space, water and interconnection capacity.
There may be other cases where there are large areas, and I'm thinking of industry, where there is often a lot of space and not a lot of energy consumption, for example in the logistics area. I think there's still a lot to be done in this area, I confess that we're not looking at it very closely yet. In 2023, probably from the second half of the year, we will look at this issue.
Focusing on Helexia, the company arrived in Portugal in 2016 and has enjoyed very interesting growth. What is your strategy?
At Helexia in Portugal, we have replicated what is our core business: energy production and energy efficiency. Obviously, in Portugal, as in other countries where Helexia operates, the first lever for our growth was photovoltaics. As I've already said, in this area the decision-making process is quicker, it's easier to do projects, it's easier to move forward and, obviously, to create the economic sustainability for the business to grow.
In Portugal too, we've grown a lot in photovoltaics and as investors in the photovoltaic projects we've built. In 2021/22, as a result of the market, we opened the door to also doing turnkey projects, projects in which we weren't investors, but we did the engineering, the construction, commissioned the projects and then did their operation and maintenance. We tend to like to be the investor, we have that capacity and we want to help companies make this energy transition without having to allocate their capital.
We believe in energy efficiency and that's why we chose to make an acquisition, we bought a company that was one of the first to work on energy efficiency in Portugal, they've been doing it for 17 years, and they already have this component of industry knowledge, in the various areas of expertise. This is very important for us to be able to give a quick, efficient and serious response to our industrial clients, not just to carry out the audit and understand how they consume energy, but to help them in a process of decarbonization or energy transition.
Therefore, we are now starting to balance our focus a little beyond energy production, our goal is increasingly in the area of energy efficiency and we expect energy services to grow by at least 30 to 40% of our business volume.
What about electric mobility? They are also investing in this area...
Yes, we did some pilot projects, Helexia Portugal was the first to invest in electric mobility [within the Group] and now we're also leveraging this for other countries. The first projects were tests, it was a bit of a time to see and learn, I would say that we had a moment here when we didn't focus so much on this area, because we were in a learning process that was important for us to guarantee the sustainability of our projects and our model.
We're already there, we've done the fine tuning we thought was necessary and so 2023 is going to be a year in which we're going to invest even more, and reach more customers, always bearing in mind that we see electric mobility as not being separate from energy production. Ideally, we have a client where we audit, help them to be more efficient, produce energy and have electric mobility, in an integrated logic.
Electric mobility on public roads isn't really our focus, we're more oriented towards industry, towards the retail sector, where electric charging works as a complement to the activity, as a convenience.
"And what we're doing is starting to sell photovoltaic engineering services to all countries"
Luís Pinho, Country Director Helexia Portugal
You've invested in an Engineering Competence Center. Why?
Geographically, Portugal is not a very big country. But when we compare results between countries, within the Helexia Group, Portugal has a very important weight. If we think that the Group is in Portugal, Spain, France, Belgium, Italy, Brazil and opening up geographies such as Romania, Poland and Hungary, Portugal represents more than 30% when geographically it is one of the smallest, or probably the smallest of all of them.
I don't want to reach a certain point and see that our weight has been reduced. We know that our market will be saturated at some point, even though there is still a lot to be done in energy efficiency... What I realize is that we have engineering that is good, as good or better, so I don't see any knowledge advantage here over other countries, and if we can do it well, if we can do it competitively, I think it's my obligation to my team to ensure that we continue to grow in a sustainable way. And when the market, because it will happen, changes and becomes saturated, we have the capacity to do other things. And what we're doing is starting to sell photovoltaic engineering services to all countries.
All the photovoltaic studies are carried out in Portugal by the Portuguese team. There are other services that we want to provide, such as asset management and the performance of assets in which we are investors in photovoltaic systems, from Brazil to Hungary or Africa. We're going to do this in Portugal and, therefore, we need to consolidate the capacity here, on the one hand, to do engineering and do it well, because then we're also going to do asset management. And if we do the engineering badly, we'll have problems further down the line.
We are creating capacity, skills, but also a guarantee for other countries that the projects they are going to do are well done from the outset, and that we are also going to guarantee their performance, and thus make a skills center that we can export.
Is it a differentiating factor within the group?
It's a differentiating element within the group and, curiously or not, it's also what Voltalia does, which is our shareholder and has its engineering and skills center in Portugal for the countries where it operates. Obviously in different projects, utility-scale...
We are doing the same thing, we don't have a market to grow, but we have engineering, skills, good schools and we want to use and capitalize on that because we can do it, and I don't want to hurt any feelings, but we can do it better than others and more competitively.
What are the company's future ambitions?
We want to continue growing for at least the next five years, there's a strategy of continuous growth, we're going to make some adjustments along the way, obviously. We know that photovoltaics will have to change at some point, the projects will be different, and we'll have the capacity and dynamics to adjust. But we see a lot of growth happening on the energy efficiency side, there are a lot of companies, a lot of industry, in need of knowledge in this area and we have the capacity to help identify what can be improved, how they can be more efficient, and more than that have the capacity to implement and have the capacity to invest and help companies to be more energy efficient, without having to make an investment.
I would say that over the next few years this will be the shift, in other words, we're going to have less weight on photovoltaics and we're going to focus more and more on energy efficiency, and that's what will fuel our growth and our sustainability.
What is the expected turnover for 2023?
In 2022 we'll close at around 15 million and next year we expect to grow by another 30%.
Ewen strengthens energy efficiency area
In 2022, Helexia acquired a majority stake (60%) in the Portuguese consultancy Ewen Energy, based in Porto and specializing in energy services and energy efficiency.
The Portuguese company has a portfolio of around 200 clients, representing an annual electricity consumption of 4 terawatt hours (TWh) and more than 17 TWh per year of natural gas consumption, with a turnover of around 1.3 million euros.
Interview with Luis Pinho for Revista Sustentável.
