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The Warsaw Voice » Other » May 7, 2008
The £ód¼ Voice
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Promoting Renewable Energy
May 7, 2008   
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Frederic Faroche, vice-chairman of Dalkia £ód¼, talks to Agnieszka Ostapowicz.

People in £ód¼ are increasingly familiar with the name Dalkia, which has taken over the majority of shares in the cogeneration, or combined heat and power (CHP), plant previously called Zespó³ Elektrociep³owni (ZEC).
Purchasing 85 percent of ZEC shares was Dalkia Group's biggest development outside France until we acquired a large U.S. firm recently. Our first three years in £ód¼ have been very positive. First, the cost of heating has not gone up and is actually cheaper in real terms. This is especially noteworthy given the reservations city authorities often have about selling this kind of public utility. Second, the privatization went ahead without affecting any planned projects or running down the plant's capital stock.

Has the result been as positive for the target company as it has been for your company?
This is a process that cuts both ways. We're a large group and we've been in business for 70 years. We contribute capital, experience and know-how, especially in complying with regulations and implementing modern procedures. At the same time, Dalkia Group has a lot to learn from a company like ZEC which is far more advanced than the rest of the group in some respects. The GIS-aided heat distribution management system in £ód¼, for example, is more advanced than anything else in the group. So, the transaction has been advantageous to both parties.

The Dalkia £ód¼ website stresses quality and competitive prices. But everybody says that.
In our line of business, quality means minimizing the number and duration of power outages. We are installing state-of-the-art systems to ensure that every indicator is constantly monitored. Price competition is also important. Contrary to popular opinion, we do not have a monopoly on energy supply. Gas, for example, is widely available. Customers usually have alternatives to what we have to offer so price, not quality, is most often the deciding factor. Competitive pricing is of major importance to Dalkia. We want to show our customers the benefits of cogeneration, that is the combined generation of power and heating, as they are often unaware of how much money they can save.

The environmental effects of energy generation are an issue for local residents.
Naturally. And we are meeting all the standards laid down by the European Commission. We find the LPC directive [Large Combustion Plant Directive 88/609/EEC] the most demanding as it obliges us to control our sulfur dioxide, nitrogen oxides and dust emissions. We have had to invest zl.100 million over the past two years, zl.70 million last year alone, just to comply with the standards that came into force Jan. 1 this year, that's on top of spending on ongoing projects. We also promote renewable energy. We are upgrading our facilities to cater for biomass combustion.

How much of the energy you generate will be coming from renewable sources?
We are adapting our coal storage facilities to biomass storage. Right now, we can only generate 5 percent of our energy from renewable sources. Our plans are closely aligned with European objectives. We are planning to produce 20 percent of our energy from renewable sources by 2020.

Is that energy going to be cheaper or more expensive?
All energy mix strategies involve costs. Our existing facilities were designed to burn coal and it's going to cost hundreds of millions zlotys to convert them. So initially, we're going to have to raise the price of energy generated from renewable sources. We obviously benefit from state support and European funds and we expect to continue to do so. This sort of support can cover as much as 25 percent of costs but the producer has to make good the rest.

Does Dalkia take part in activities organized by the City of £ód¼?
Of course. We are sponsoring the Dialogue of Four Cultures Festival, Camerimage, the Festival of Pleasant and Unpleasant Plays, the Yappa Festival, the Science and Technology Festival, and even the Budowlani Sports Club rugby team. The French consider rugby their national sport and Budowlani are Polish champions. They beat Warsaw 50:0.

Any other initiatives?
We organized Dalkia's first Open Day last year and we'll be sponsoring the £ód¼ French Days festival this year. Interest in our open day surpassed all expectations. People came in droves. We'll be running it again this year. We are happy to support any city development project that involves power. We like to help out whenever the city authorities turn to us so long as what they propose is profitable or beneficial to the community.

Do you like living in £ód¼?
I can't complain. And the situation is changing rapidly. Let's not forget that this city has been through an awful lot. Getting through the crises of the 1990s was a long and winding road but the city made it. £ód¼ could have buckled under but it didn't. Today, the city keeps attracting new investors like Dell, Indesit, Manufaktura, Hilton and plenty more besides. These are not charitable institutions we're talking about. They've done their sums and figured that it's profitable to set up here. This shows that a lot of foreigners have faith in £ód¼ and we're really chuffed about that.
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