Sotecnisol Power & Water, the Portuguese Sotecnisol’s business department focused on green energies, felt a “huge acceleration” with the war in Ukraine, a conflict that resulted in a hastening of decarbonisation in the European Union and a growth in the investment in renewables. CEO Filipe Bello Morais tells ECO that the activity of Sotecnisol Power & Water in Portugal, where this department was born 15 years ago, follows a positive evolution and that, therefore, the next steps are the internationalisation of the business.
“We are resuming our internationalisation process. For 2023, we will already have news. Right now, we have two or three market possibilities we are still evaluating. We were looking at the Eastern countries but the war made us re-evaluate. We understand that the business in Portugal, despite being interesting, is starting to be small for our ambitions. We know how to do well here. The company want to do well abroad,” says Filipe Bello Morais.
Did the war in Ukraine impact Sotecnisol Power & Water’s growth? Have they taken advantage of the renewables boom and efforts to speed up decarbonisation in the European Union to better position themselves in the market and strengthen supply?
Yes. There is a huge acceleration of [renewables] at the moment and the war in Ukraine turns out to be the ultimate exponent. It has a direct impact on the energy landscape at the European and even global levels, I would say. At an early stage, there was an impact on the economy via Covid-19 which led to the development of the so-called European “bazooka”. This created powerful mechanisms to help speed up the energy transition and the decarbonisation of the economy.
I would say that the war in Ukraine is the ultimate boost in renewables for very unfortunate reasons, but here at Sotecnisol Power & Water, we feel a huge acceleration. Both in terms of demand – because we are seeing a tremendous increase in energy costs, which leads companies to seek ways to mitigate this increase in costs, which often affects economic activity – but also by the role of the State, in wanting to eliminate legislative licensing barriers, which have been a great difficulty for companies.
How can the ‘Simplex’ mechanism for environmental and energy licensing influence your activity?
It can have a significant impact. The government has set 2023 to eliminate several barriers.
There are three very important aspects. The environmental aspect, which is being worked on, and where we have already seen some improvements, although they are very slow. For example, integrating the platforms and portals of the Portuguese Environment Agency (APA), with those of the Regional Coordination and Development Commissions (CCDR) and with the Directorate-General of Energy and Geology (DGEG) has already been announced, to have a single point where all entities can consult information, speeding up this process, which is sometimes very watertight. In this aspect, there will be greater integration, but it will take a long time. The president of APA, Nuno Lacasta, and the engineer of the DGEG, Maria José Espírito Santo, mentioned that it might take a year and a half to integrate.
Then, we have the municipal licensing, with a focus on local authorities, which currently have a very intense acceleration program. And finally, the energy licensing within the DGEG, being fed with information from the Energy Agency (ADENE) and E-Redes, in terms of distribution and transport. And there, yes, we will feel a huge acceleration, because, until now, they are the major obstacles.
As a player in the market, we want to do more, but often we cannot because licensing is very complex. This simplification is going to be a huge trigger that will make this activity accelerate very quickly.
How do you expect to close this year?
Our expectation for this year was to have a growth of 25% to 30% in invoicing. We are going to exceed that margin, it is already clear to us. We will invoice around 8.5 million this year.
Is there any factor that can influence or compromise this outlook?
One of the great difficulties that companies face today has to do with the supply chain for equipment and materials, and the associated logistics component. We have a well-structured company, internationalised at the public level, and therefore we dominate the logistics and supply component well. However, there are often situations that go beyond what could be expected. Sotecnisol has a very large storage capacity for materials and equipment, around 10 thousand square metres, and this enables us to stock on time. These warehouses are distributed throughout the country and this is a great advantage for us. With this, we try to overcome the constraints in the supply chains and we have been able to do so until now. Our customers can rest assured in this respect.
However, I would still say that this is the biggest challenge: the disruptions in the supply chains and the logistics chains; the difficulties in the ports, and the sea transit. Fortunately, we have been able to mitigate that. We can store with some anticipation, and therefore I think we are well prepared to face these variations that we feel.
Similarly to what is already happening with the internationalisation of Sotecnisol, do you intend to expand the business department focused on renewables abroad as well?
Yes, we have that ambition. Sotecnisol Power & Water had a very well-mapped-out plan to internationalise its business. We have been looking at some countries in Eastern Europe. We are a company that wants to have our feet firmly on the ground. Covid-19 changed a lot the way we see the world… the lockdowns in each country – both in terms of the movement of people internally and externally – the entry and exit of goods… they changed our reality a lot, which ended up slowing down our ambitions to internationalise the business. From then on, we focused a lot on optimising the internal market.
But at the end of 2021, given the pace of economic recovery, we began to look at this issue again with a desire to do well abroad which we already do well here. We are resuming our internationalisation process. For 2023, we will already have news. We have two or three market possibilities that we are still evaluating. The macroeconomic circumstances make us constantly rethink our strategy. We were looking at the Eastern countries, but the war made us reassess. We understand that the business in Portugal, although interesting, is becoming too small for our ambitions. We know how to do well here. We want to do well abroad
We are resuming our internationalisation process. For 2023, we will already have news. We have two or three market possibilities that we are still evaluating.
What has Sotecnisol Power & Water’s growth been like in recent years? Have the investments and the pace of growth lived up to expectations?
We are a company that has been in business for a long time, almost 20 years. We have followed, from the beginning, renewable activity and its evolution and we have managed to position ourselves well in the market.
Besides betting on our offer to the market, we also bet on our team. In an initial phase, we sought to invest in people, know-how, grey matter and in resources to respond to our clients, both in terms of negotiation and in terms of execution. We have a top-level team.
After stabilising the team component, we looked to assess what we can do more for the market, and we realised that the answer was in the technology, in the customer experience and how you relate to it [the technology]. Since early 2020, right at the start of the pandemic, we have invested heavily in developing a user experience technology platform for customers in our plants. At the moment, the Remote Operating and Maintenence Aplication (ROMA) is a candidate for innovation support from the Sistema de Incentivos Fiscais à Investigação e ao Desenvolvimento Empresarial (SIFIDE).
How much was invested to create this platform?
We invested 120 thousand euros and applied to SIFIDE to receive a contribution of 65 thousand euros. Around 60% of the investment was supported by innovation programmes.
Are you satisfied with the results? Is the feedback from customers positive?
Yes. At ROMA, one of the information provided is the permanent comparison with the projections. Whether it is on an hourly, weekly or monthly basis. The customer can see, understand and compare immediately, in the defined time interval, what was the real production of that power plant and what is expected in an initial economic model. This is a very important aspect because the client can understand the result of his investment. This is something that we felt did not happen with other suppliers. Customers made an investment but were not sure of the real performance of their power plant, and often when they questioned the companies, the answers were always very vague. It’s very interesting because the customer can evaluate impacts and request compensation for these failures.
What expectations do you have in terms of expanding the portfolio of installations and customers?
We want to attract new clients. We want to show the market what we are and what we have to offer to help overcome the challenges of the macroeconomic environment. Our installations allow us to reduce electricity costs in the order of 30 to 50% of the bill. It’s a message we want to get across very strongly. With this, many customers of all types, sectors and nationalities come to us. We want to attract the largest number of customers who want and are interested in the opportunity of working with a company like ours, which can provide improvements and help overcome the difficulties of the current circumstances.
We have a wide range in the tourism, agri-food, hotel and industrial sectors. Companies at a national level, multinationals. For example, in the tourism sector, we are currently building the fifth power plant for the tourist complex The Oitavos, at Quinta da Marinha, in Cascais, with almost 1 megawatt per hour (MWh) of installed power. We dare to say that it is one of the tourist complexes with the greatest installed power in Portugal. If not the biggest. We have also had more installations in the Delta group and Agriloja, for example.
In terms of multinationals, we had the Monliz group, which is owned by the multinational Ardo, of Belgian origin, which last year installed a 1 MWh plant with us and awarded us the extension of more than 2,200 panels, of 1.2 MWh, also becoming one of the largest agribusinesses powered by photovoltaic parks. We were also awarded, in July, the contract for a plant with around 900 kilowatts per hour (KWh) for the Italian multinational, FassaBortolo. The work is valued at 600 thousand euros. This is the first power plant they will install in the group’s factories that are present in more than seven countries, and they chose SotecnisolPower & Water for this energy transition. It will be concluded by the end of the year.
Our focus is also to repeat installations with clients who have already come to us, and who already recognise us as an added value and support. We have had a great desire from these clients to do it again and to do more. What was an experience a few years ago is now a certainty. This is what we have been passing on to our clients, and they have recognised it.
The government has repeatedly stressed its intentions to strengthen the production capacity of green energy. Can Portugal lead the energy transition in the European Union?
Yes, we have everything for that. We have a great political will to be a reference player. This has always been very clear and is a very positive aspect of national and international policy. And we also have the advantage that Portugal is not rich in fossil fuels but in endogenous, renewable energy resources, namely solar, wind and hydro. The idea is clearly to position Portugal in the first line of the most attractive countries to invest in green technologies, even for exportation.
Does this export capacity exist?
I think so. In terms of solar energy, we have enormous radiation to feed our internal needs and we can export a lot of energy to our neighbouring countries, like Spain. Where are the limitations? The electricity grid is notorious for its transmission capacity. The grid, at the moment, develops along the coastal area and has to be structured to reinforce the entire interior area, which is where we produce energy. Once that first barrier is eliminated, we’ll be able to put enough energy on the Spanish side.
Then, we have a situation that is no longer in our hands, it is in the hands of European policy and the will for a more integrated approach, which is to eliminate the barrier in the Pyrenees. The Pyrenees have a very limited capacity at the level of electrical interconnection between Spain and France. We can produce a lot, but if there is not the capacity to transport to France, we will always be very limited. That is the idea. Let’s move in that direction, create the conditions in Portugal to produce a lot of renewable and solar energy, reinforce the capacity of internal and external transportation, and then, with the Spanish, have enough strength to lower the barriers to the transportation capacity to the central European market. We can be a major exporter.
Besides reinforcing the development of ROMA and betting internally, what other projects do you have on your agenda? Are you going to bet on the diversification of the offer?
Sotecnisol Power and Water is investing heavily in several sectors. Reinforcing its competencies and its team, in resources to meet the demand, reinforcing and investing in improving the experience that clients have when working with us, and then adding to our offer a set of technologies that will be more customisable according to each client.
Our concern at this time is that, given the enormous increase in requests that we will experience in this market, we want to provide our company and our team with a response capacity that is even more intense, more effective and more precise. We have divided this second or third growth phase into the resources component. Within two years, we want to have double the number of people and therefore be able to accompany with an excellent response what our clients’ requests will be, both at the commercial and production levels. In addition, we want to elevate the customer experience even further. We want the client to truly understand the result of his investment. We want to give more information. We have a second investment package for ROMA to provide that tool with even broader, more dense information.
We also want to develop, in the next few years, an innovation department that will allow us to add to our offer innovative projects that complement what we already do, namely in terms of batteries. We are developing a response and adding to our offers batteries that are sufficiently effective economically and technically to reach another type of customer – customers with less consumption during the day but with more consumption at night and who can benefit from the technology in this way and who can have a performance and a result very similar to those companies that consume during the day.
We are also working on an offer at the level of energy communities. It is a topic that we see with a lot of interest. We want to fine-tune it for the coming years.
In terms of electric mobility, we have some interest in adding to our power plants a mobility experience and electric vehicles, coupled with solar energy and the electrification of consumption and the way we move around.