The CEO's column
Sweden is going through a recession with one foot on the brake and the other on the accelerator. Hopefully, we're going to see the brakes released pretty soon and we can all invest for the future.
2023 is drawing to a close, a year in which the troubles in our world hardly became any less. Instead of witnessing an end to the war in Ukraine as hoped, we saw a new war start in the Middle East with more human suffering. The general security situation has deteriorated, and Sweden now faces a threat situation we are simply not familiar with. We feel it through increased security awareness at our customers, and signing a confidentiality agreement as part of a contract has become more common.
Inflation and interest rate increases have incurred considerable costs for us during the year and the recession has led to a severe drop in construction industry activity. On the energy side, electricity prices have been lower than expected, whilst the price of biofuel has reached new heights. But the battle against inflation does seem to be having an effect at many levels and hopefully means we will see falling interest rates within the near future, which will be good news for the investment climate. And investment is needed to tackle what is probably our biggest challenge – climate change. Investment is needed to drive the transition and to deal with its effects, such as the competition for green carbon. The high price of biofuel at this time is not just the effect of limited supplies. It's also an effect of growing demand in line with the usual trends. The competition for green carbon is growing, which probably means that some businesses will need to invest in other sustainable solutions moving forwards.
The UN COP28 climate conference has just ended, and reports from it indicate that progress is far too slow for us to reach previously agreed temperature targets. And that's despite a lot of conversion projects in progress, especially in Sweden. FVB is experiencing very high demand for consultation services on projects linked to the green transition. They concern the conversion of energy processes, such as from fossil fuels to biofuels and recovering surplus heat from existing industrial activities. But they also concern new or modified industrial processes that involve dealing with very large energy flows. One example is Hybrit's fossil-free manufacture of sponge iron in Gällivare, where Gällivare Energi is looking at the possibility of recovering heat from the process to use in district heating. FVB took part in the feasibility study, which you can read about in this edition of FVB News.
A key component in the manufacture of fossil-free sponge iron is hydrogen. And of course, it has to be "green hydrogen", i.e. hydrogen produced with renewable energy. Green hydrogen is expected to be extremely important to climate transition, both in manufacturing processes (green steel, artificial fertiliser, e-fuels, etc.), and as an energy carrier for the storage and transport of large amounts of energy. FVB has considerable know-how and experience within many related areas, and we are currently improving our skills even more to expand our activities within the hydrogen field.
In these times of high investment costs and tough competition for investment funds, the trick is to invest wisely and use existing resources as far as possible. One example is the linking of two or more district heating systems to be able to increase utilisation time at plants with low variable costs and cutting the need for expensive peak production. That was Habo Energi's thinking when it decided to connect its network to Jönköping Energi's instead of investing in renewal of its own production plant, which you can read about in this edition. FVB was responsible for design of the transit pipe and a new pump station.
District heating is being referred to more and more as a key component for energy conversion in Europe, with an increasing number of countries interested in developing their system and building new ones. In this edition of FVB-Nytt, you can also read about the development of district heating in the UK, where a goal has been set of 20% of heating requirements being covered by district heating by 2050. FVB has had a presence in the UK for several years, and our company FVB District Energy UK is involved in many of the projects currently in progress. We're hoping for the same success in the UK we have had in Canada, where we set up a company in the early 1990s and have made a strong contribution to the development of a district heating market there. Over the years, the relationship between FVB Sweden and FVB District Energy in North America this year has involved the transfer of skills expertise and experience from Sweden, as we have always been way ahead in the development of our district heating systems here. But given the rapid progress within energy conversion and decarbonisation taking place all over the world, the solution for which probably lies in many different systems being able to work together, skills exchanges of expertise will begin to go both ways, to the benefit of all members of the FVB Group and ultimately to all our customers.
Winter came early this year, with a real cold snap and plenty of snow as early as November. It feels like a symptomatic conclusion to a year in which the weather has been pretty mixed in general. If it can just stay below freezing a little while longer, it will provide an atmospheric setting for Christmas when we all go on a calm, relaxing and well-deserved holiday.
Everyone at FVB wishes all our customers a very Merry Christmas and a Happy New Year!
CEO, FVB Sweden