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MarketScreener Homepage  >  Equities  >  Bolsa de Madrid  >  Ferrovial    FER   ES0118900010

FERROVIAL

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Interview with Fidel López Soria: “greater environmental efficiency is perfectly compatible with cost savings”

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07/09/2020 | 03:38am EDT

The Archbishop's Palace in Alcalá de Henares is where Christopher Columbus first met with Queen Isabella of Castile, on 20 January 1486. That meeting laid the foundations for the discovery of America.

People may not be aware that this city, just 30 kilometers outside Madrid, was the first in the world to be planned entirely around the needs of a university. That plan, by Cardinal Cisneros, resulted in Alcalá becoming one of the jewels of Spain's Golden Age. It saw the first printing in several languages of the full text of the Bible, early in the 16th century, a testimony to the Christian humanism of the Renaissance and also a milestone in Spanish typography for its time.

With the same pioneering spirit, and with a view to the current and future challenges, the University of Alcalá is currently recognized as a world leader in sustainability,according to the Greenmetric international index, as it ranks first among Spanish universities and 19th among 780 universities from around the world.

We talked with the CEO of Ferrovial Services about the energy efficiency contract with the University and his view of this industry in the context of Europe.

When we talk about energy efficiency, what does that mean?

It means obtaining goods and services with least possible energy consumption and the least possible pollution, but with the same or a greater level of comfort while maximizing the resource life cycle. In short, the maximum performance with the least possible consumption.

For us, energy efficiency means sustainability because, in contracts of this type, we can achieve energy savings ranging from 30% in buildings to 60% in public lighting. Those savings have enabled us to cut CO2 emissions by 135,000 tons since 2009.

Energy efficiency also means competitiveness, since we help our clients use their resources more efficiently, which means monetary as well as energy savings.

And energy efficiency also means job creation, since the 70 million euro invested in our clients' facilities have helped create numerous opportunities for professionals.

How is this sector performing in Europe?

The 2015 Paris Agreement essentially meant that the fight against climate change was no longer an option-it has become an obligation. Years earlier, in its Green Paper on Energy Efficiency, the European Commission had estimated that the entire European Union could reduce its energy consumption by 20%, and that it could do so cost-effectively. That is to say: greater environmental efficiency is perfectly compatible with cost savings.

What, in your opinion, are the most important initiatives for advancing in that direction?

There are lots of variables in play, but I'd emphasize three lines of work to achieve savings and obtain more and better lighting while consuming less energy.

  • Understanding that energy efficiency is a necessary investment

Investment by both the public and private sectors is necessary to reduce energy waste and remove obstacles to fulfilling the climate targets. It was Spain that proposed that the European Union Council of Energy adopt a new methodology for accounting for such investments. Previously, the public sector was required to recognize the entire cost of the initial investment as a deficit in the national accounts; however, the accounting standards were finally clarified to enable public administrations to invest in improving energy performance and amortize those investments over time.

  • A more prominent, pro-active role for consumers

The Paris Agreement contemplates substantial improvements in energy efficiency indices and in renewable energy use (to at least 27% by 2030). To achieve this, consumers must play a central role, for example by managing their electricity bills better, since people often pay more in standing charges than for actual power consumption. There is also a need for more transparency in labelling products such as domestic appliances, to enable consumers to make better decisions.

  • And it is vital to promote new business models that encourage not only investment but also innovation and continuous improvement.

It's been found that, under a conventional bidding approach, some savings are achieved initially but they are diluted over time unless there are clear incentives for investment in new technologies and in sustained savings over the medium and long term. For that reason, there is a growing tendency to use a concession approach where the energy services company invests in modernizing the client's facilities and is remunerated on the basis of the savings that are achieved.

Under this approach, the concession company-for example, Ferrovial Services-has an incentive to develop, say, a technology for connecting all the devices in all its contracts into a single platform to track and manage energy consumption in real time. Overall, in all the countries where we operate, we are responsible for over a million street lights-that's four times the number you find in a city like New York. The knowledge, experience, scale economies and results orientation of specialized companies are essential for achieving the necessary savings.

Could you give an example of this type of contract?

I could mention our contract with the University of Alcalá, which is where we are today. We swapped in over 50,000 LED lamps here, both indoors and outdoors, to provide a longer life and more lighting power while reducing energy consumption; we estimate savings will amount to nearly 40 million kilowatt hours over the term of the contract. As a result of our services, the University of Alcalá was the first in Spain to achieve ISO 50001 certification for energy management, maintenance and efficiency improvement, and also a certificate from the National Energy Council to the effect that all the power the University consumes is from renewable sources.

Is energy efficiency a business priority for Ferrovial Services?

Absolutely. It cuts across all our lines of business, from public lighting contracts with city governments to energy management in hospitals, to cite two cases where we lead the field as an energy services company working for the public and private sectors. That strength is reflected in the 700 million order book in this area, which we expect to expand in the next five years.

Is energy efficiency the basis for sustainability?

It's often said that the cleanest energy is that which is not consumed, but 'zero energy consumption' is a utopia. For that reason, all the players involved - by which I mean legislators, governments, private sector clients, consumers and energy services companies - have a fundamental role to play in achieving a rapid and significant reduction in energy consumption through innovation, investment and the production of more efficient goods and services.

In short, from both an environmental and an economic standpoint, energy efficiency is probably the first lever for achieving sustainable development as a society.

Disclaimer

Ferrovial SA published this content on 09 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 July 2020 07:37:03 UTC

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