hse group

2.13 RESEARCH AND DEVELOPMENT
42
Prepared for Challenges
Forecasting the future is an immensely
ungrateful action in the ever-changing
conditions of the Slovenian as well as
wider electricity market. Despite this
we are almost certain in our claims that
the competition will become even
stiffer during the following years. At
HSE we are prepared for challenges,
we are expanding to new fields of
activity, and are also executing additional
activities to improve our position
in the competitive environment. Despite
the increasing level of competition
of foreign and domestic power
suppliers it is the goal of both the parent
company as well as HSE Group to
remain the largest electricity producers
and traders in Slovenia. The signed
annual contracts with our consumers
for 2003 confirm the feasibility of the
set goals. Based on signed annual contracts
we will sell a total of 4,620 GWh
to domestic power distribution companies
and 1,050 GWh to direct consumers.
At ELES’ (Slovenia’s operator
of the power transmission system)
tender at the end of 2002 HSE Group
managed to attain cross-border transmission
capacities for the export to
Italy of some 1,500 GWh annually, of
which one half was awarded in the
form of long-term three-year contracts.
Based on the attained cross-border
transmission capacities we have signed
long-term contracts with Italian consumers.
As the Italian market, especially
with the submission of certifications
that the power is generated from
sustainable sources of energy, provides
us with the possibility of achieving
extremely favorable prices, these
contracts provide a solid foundation for
the realization of the set goals.
Internationalization
Internationalization is essential for HSE,
as the Slovenian market will not allow
sufficient growth rates and development
after 1 January 2003 due to its
small size and the additional foreign
competition.
We are estimating that our foreign market
sales will amount to some 80 million
EUR in 2003. Traffic in both directions
will be worth over 100 EUR million.
At the moment we are conducting
intensive discussions with partners for
the entrance to the Italian market, even
for a joint representative network,
while at the same time talks are held
on the opening of offices in Serbia,
Bosnia and Herzegovina, and Croatia.
We are not aiming only to be traders in
these markets, but rather to become
also involved with capital; not merely in
the field of electricity generation, but
also in the field of electricity distribution.
HSE will establish balance groups in
certain countries of the European Union,
which will enable the company to
directly trade in the Western-European
electricity markets and thereby achieve
more favorable prices. We will try and
capitalize on our knowledge of South
European markets and our reputation
as a reliable business partner among
the Western European electricity traders
and use our strategic position as a
bridge between trade flows in different
regions. Substantial increase in the
trade volume with countries to the
southeast of Slovenia can be expected
at the end of 2003 with the establishment
of a 400 kV network throughout
Croatia. Electricity surpluses in Bosnia
and Herzegovina combined with massive
demand for it in Montenegro,
Serbia, Macedonia and Greece present
us with a major challenge. As trade is
increasing both in volume as well as in
the number of partners involved and
product diversity, in 2003 we are starting
the use of a specialized program
package, which will enable integral
tracking and supervision of all trading
activities.
We are expecting that most of the participants
in the Slovenian electricity
market will join our balance group in
2003.
Alternative Power Sources
A part of the company’s activities was
also focused on alternative power
sources, which currently do not represent
a substantial share in the HSE
power balance sheet, but they are
essential regarding the future trends in
the sector.
Cooperation with Governmental
Agencies
Cooperation with governmental agencies
was established in the preparation
of two documents, namely the
National Energy Program of the Republic
of Slovenia and the Long-term
Spatial Planning Documents of the Republic
of Slovenia. Both documents,
which are to be adopted in 2003, will
co-influence the HSE field of development.
Despite the stiff competitive conditions
in the electricity market we venture to
claim that HSE will keep on strengthening
its role as Slovenia’s leading electricity
supplier and trader in 2003, while
at the same time establishing itself as a
respectable partner in the wider area.