INTERVIEW: Slovenia's Resalta focusing on renewable projects, public infrastructure

Public lighting projects, with their low risk profiles and capacity to generate savings, and small renewable projects, which can accelerate asset growth, hold a huge business potential, Luka Komazec, director of Slovenia's Resalta, said.

The switch to LED lighting is a great way for municipalities to increase savings and become more sustainable, Komazec told SeeNews in a recent emailed interview.

"As a result I’d say our pipeline is now quite focused on public lighting projects," he added.

Heating projects and energy retrofits of municipal buildings and institutions such as hospitals are also a big focus for Resalta, a Ljubljana-headquartered energy services provider.

The shortage of investment in public infrastructure in Southeastern Europe (SEE) due to limited state budgets has led to many facilities being neglected and energy inefficient. This has created opportunities for private initiatives to engage in projects for the renovation of facades, windows, doors, thermal insulation, which are all elements included in energy retrofits.

"The advantage of Resalta is that we offer not just funding but also our know-how to bring the best suited solutions for each particular client; we identify the best ways for municipalities to achieve savings, which is something banks do not do," Komazec commented.

Resalta's clients include public institutions such as municipalities, hospitals, schools, prisons, nursing homes, as well as various commercial enterprises such as hotels, spa resorts, retail centres and office buildings. The company also offers services to a wide array of industries, from food and manufacturing to automotive, paper and other industries. Its clients include Slovenian home appliances manufacturer Gorenje, Bulgarian dairy producer Cremio, Slovenian poultry firm Perutnina Ptuj, Montenegro’s Plantaze winery, and retail chain Mercator in Serbia, among others.

"For the industrial sector, the food processing industry is interesting for us since this particular industry often requires steam, heating and cooling, which means there is a lot we can provide to not only improve conditions but also speed up production cycles and optimize processes," Komazec said.

"In the commercial sector, I’d say we have many retail centres in our pipeline, but hotels are also in our focus given that investments into energy efficiency in the hospitality industry are generally low and priority is given to improving customer experience."

Resalta has a long track record of collaboration with Slovenian hotel operators. A project which the company carried out at Sava Hoteli's Terme Ptuj resulted in a 67% reduction of electricity consumption. With the help of Resalta, the Terme 3000 Moravci spa complex now saves 172,351 m3 of ground water, 23% of heating costs and 65,000 m3 of drinking water annually, while Grand Hotel Union has reduced its cooling costs by 28% annually. The list of its clients in the hospitality industry also features Grand Hotel Bernardin, Hotel Histrion, the San Simon Resort and Laško Health Resort.

RENEWABLE PROJECTS IN THE WESTERN BALKANS

"We see the highest untapped potential in renewable energy projects in the Western Balkans, and we are investing time and resources into developing these," Komazec said, adding that renewables are a highlight of the company's business plan because they accelerate total asset growth.

One of the company's key projects is the 5 MW Slatina cogeneration plant in Croatia running on biomass. Slatina has signed a 14-year power purchase agreement with Croatian electricity market operator HROTE.

However, renewable energy projects are highly dependent on subsidies and incentives from both national governments and the EU. Without these subsidies, it would be impossible to develop many of the existing projects in the region, Komazec said. Luckily, these subsidies exist as most governments do feel a strong need to increase the share of renewables in their countries' energy mix.

In this field the ESCO model, where a firm offers solutions for achieving energy cost reductions, has a clear advantage since it does not depend on subsidies. The investment is recouped from created savings that are established based on the cost of energy and the possibilities for efficiency improvement.

"We plan to carry out a large number of new small-to-medium size ESCO projects diversified through the region, as well as in terms of measures implemented and sectors. We are a highly adaptable company with diversified experience, so we want to provide our services to clients across the board and to take advantage of our in-built ability to carry out different types of projects," Komazec explained.

SEE ENERGY PRICES CONVERGING WITH EU LEVELS

The two key trends impacting the markets in SEE are a growing focus on energy efficiency and converging energy prices, Komazec pointed out.

Energy prices in the region were kept artificially low for a long time but this is slowly beginning to change and they will soon start to match price levels within the EU.

On the other hand, the lack of properly structured financing products on the markets in the region is another trend that directly affects the business.

"We provide financing partly through our own equity, while the other part of financing comes from banks and development institutions. The lack of bank financing products that would provide funds for these types of projects is an obstacle to developing energy efficiency and renewable energy projects," Komazec noted.

In particular, longer tenors, higher leverage and matching repayment schedules are all prerequisites for energy efficiency projects since these are by nature long-term projects with longer repayment terms.

Despite the hindrances, Resalta is contemplating options to expand its footprint in the region.

"We are constantly looking for ways to grow in the region and are certainly planning on including all Balkan countries in the scope of our operations. We have recently begun work on some projects in Macedonia, and are also looking at the Romanian, Bosnian and Albanian markets."

Resalta, formerly GGE, was founded in 2011 by Slovenian companies Gorenje, Geoplin and Energetika Ljubljana. Earlier this month it said it is rebranding to better reflect its growth and its position in the SEE energy market. The name GGE originally stood for the three founding companies. It has outlived its purpose – not only has the shareholder structure changed, GGE’s ambitions have currently exceeded all initial expectations and the company has, alongside the brand, grown regionally at a very fast pace, the company explained.

The company's current shareholders are Gorenje, Energetika Ljubljana and venture capital companies Black Peak Capital and Post Scriptum.

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