Focus on operational efficiency

Although the Eurozone economy showed signs of recovery in late 2013, total heat production in Finland is estimated to have decreased. The continued weak economic development was reflected in an unusually low number of new construction projects in 2013. This caused the demand for district heating and alternative heating solutions to decrease. In addition, the year was slightly warmer than average in Finland, which also reduced the overall demand.

Elenia Heat recorded a good result in difficult market conditions

Despite the challenging operating environment, we achieved most of our goals for 2013, and our sales volumes were only slightly lower than in the previous year. Our total volumes were 1,1 TWh (2012: 1.1 TWh), and our net sales were EUR 73 million (EUR 75 million). Under the circumstances, we can be satisfied with these figures. Our stable development is based on district heating still being the most competitive form of heating in our area of operation. For this reason, businesses and housing companies continue to have demand for district heating.

Even though construction remained low in 2013, several major projects were launched in our area, and we were selected to participate in them. These included the construction of a cover over the Hämeenlinna motorway and the building of adjacent commercial properties.

After significant rises in 2012, fuel price developments were more moderate. This enabled us to raise our prices only by around 3% which was below the average in our sector.

Our key goals for 2013 included enhancing our operational efficiency. To achieve this goal, we made a significant investment in the Lammi heating plant. We acquired a flue gas scrubber, which considerably improves the efficiency of the plant and reduces fuel consumption and particulate emissions. In addition, we enhanced our fuel delivery systems, which was reflected in an improvement in the performance and overall efficiency of our plants.

The share of renewable fuels continued to increase

Customers’ expectations and increasingly strict environmental norms require operators in our field to reduce their environmental impact. New, stricter CO2 emission limits were determined for district heating producers in 2013. This had practically no effect on our operations, as we have increased the share of renewable fuels in our production in recent years. In 2013, renewable wood-based fuels represented 64% of our district heating production.

We are committed to develop our operations by further increasing the use of renewable fuels. At the moment, the availability of peat, which we mix with biofuels in our combustion, is a cause of concern in our fuel procurement. Because of slow permitting procedures and environmental aspects, peat producers do not have access to sufficient swamp areas. For this reason, there is a constraint on capacity in response to demand. We hope that a solution to this problem can be found soon, so that it will not hinder the promising progress made in the transfer to renewable fuels in district heating production.

Key areas of development include increased information for customers

To be able to save energy by monitoring their heat consumption and heating habits, our customers need more real-time information on the use of our services. Providing even more useful and accurate information will be a key area of development for us over the coming few years.

In addition, we will continue to improve our operational efficiency. In 2014, we will invest in enhancing the efficiency of the Toijala heating plant in the same manner as we improved the efficiency of the Lammi plant in 2013. Major projects also include the Turenki bio boiler plant, which will be completed in the autumn of 2014. The plant will use wood and peat as fuel. This investment serves to continue our transfer from fossil fuels to Finnish renewable fuels. In addition, we are in the process of developing our maintenance information system in order to improve our overall maintenance planning and functionality.

Apart from investments in plants and new tools, we will enhance our operational efficiency by continuing to invest in managerial work, competence development and job satisfaction. Once again, we recorded good results in job satisfaction in 2013, and our staff turnover was low.

I would like to take this opportunity to thank our customers, Board of Directors, employees and business partners for their supportive and profitable cooperation in 2013. I hope that the economy will finally begin to pick up and that the projects that were postponed during the recession will begin to materialise in the near future. District heating continues to be competitive because of its reliability and low environmental impact. Our highly competent staff and continual development serve to ensure that it remains so.

Matti Tynjälä
CEO

Elenia Lämpö Oy