Market environment and success factors – Environmental Services segment
In the Environmental Services segment encompassing the water, wastewater treatment and waste incineration activities of the EVN Group, EVN has successfully positioned itself in niche markets and has gained a reputation as a competent partner for comprehensive solutions.
In addition to the regional supply of drinking water in Lower Austria (EVN Wasser), the WTE Group is responsible for implementing national and international projects in the fields of drinking water and wastewater treatment. The waste incineration business mainly consists of EVN‘s waste incineration facility in Dürnrohr, Lower Austria, and comparable international projects. Contract orders are shaped by the continuous rise in demand in Central and Eastern Europe, but are also dependent on financing provided by public institutions such as municipalities and local communities.
The expansion of EVN’s Environmental Services business generally counteracts the seasonal nature of the energy sector. However, the implementation of large-scale projects can lead to fluctuations in earnings, depending on progress in construction work.
Thanks to long-term operating contracts, full waste incineration and drinking supply capacity utilisation will continue to generate a stable cash flow in this segment. In the 2007/08 financial year, the Environmental Services segment contributed 7.7% of total EVN Group revenue (previous year: 12.3%), and 15.2% of its EBIT (previous year: 19.3%).
Drinking water supply in Lower Austria
EVN succeeded in expanding its portfolio of public services in 2001 due to the takeover of Lower Austria’s regional water supply, and thus strengthening its positioning as a multi-service utility. At the end of the 2007/08 financial year, EVN supplied drinking water to 620 cadastral municipalities with more than 481,500 inhabitants (approximately one-third of Lower Austria’s total population). Drinking water is usually supplied indirectly via deliveries to municipalities and local communities. During the period under review, EVN increased the number of end customers directly supplied with water to 41,500 inhabitants, up from the previous year‘s level of 30,800 people.
International drinking water and wastewater treatment
Via the WTE Group, EVN plans, builds, finances and operates municipal and industrial water and wastewater installations in Europe. The scope of services depends on customer requirements, and ranges from WTE serving as a general contractor and ongoing facility operation to the BOOT model (Build, Own, Operate, Transfer). Within the context of the BOOT model, construction usually lasts for a period of two to three years, whereas operational responsibility is for a considerably longer period of time.
The particular facility remains in the hands of the project company established to implement the project, and is later handed over to the contracting party. For example, the drinking water facility in Moscow will be operated by WTE‘s project companies until the year 2016.
Waste incineration
EVN operates a waste incineration installation in Dürnrohr, Lower Austria through its subsidiary EVN Abfallverwertung NÖ. As the Dürnrohr plant is being operated at full capacity throughout the entire year, the decision was made to expand the facility by adding a third waste incineration line. Furthermore, the company is actively involved in international projects, offering the competitive advantage of the BOOT model. In the field of waste incineration, Dürnrohr operates in accordance with the “waste to energy” principle. The steam generated by the waste incineration process is transported to power plants and district heating networks, and thus integrated into the electricity and heat generating processes. The successful completion of the waste incineration plant in Moscow was a significant milestone in the international business.