Monday 18 June 2018

Interview: Energy boss turning up the heat on traditional fuels as bio era arrives

Interview: Gino Vansteenhuyse, Calor CEO

Vansteenhuyse graduated from the Solvay Business School in Brussels with a Masters of Economics
Vansteenhuyse graduated from the Solvay Business School in Brussels with a Masters of Economics
Ellie Donnelly

Ellie Donnelly

Gino Vansteenhuyse has been chosen as the man to lead Calor Gas in Ireland as it begins a new era for the business in the renewable energy sector with the launch of bio liquefied petroleum gas (BioLPG).

Prior to his January appointment here, Vansteenhuyse was chief commercial officer at Primagaz in France, which is also part of the family-owned SHV Group that owns Calor.

He was country manager for Primagaz in his native Belgium before that.

He thinks the scale of the international business gives Calor the heft and expertise it needs to compete in a tough sector.

SHV, he points out, is the largest dedicated global LPG distributor on the market, operating in 27 countries and supplying LPG to over 30 million customers.

In an organisation of that size big people learn a lot from each other, he says.

"We have a lot of meetings with functional peers and so on, this is a major benefit, it is important to be able to have meetings with the person that does the same thing as you in Germany or in Belgium or wherever and then you identify early best-in-practice methods."

The other big benefit is access to new products, including the BioLPG being launched here, a gas fuel created from waste and vegetable oils capable of running heating and transport systems, he says.

"The second benefit to being part of a larger group is your capacity to do innovation, and I relate it to BioLPG, we would never have been able as a traditional Irish-based big brand with 50,000 customers, to do the research into BioLPG and guarantee the long-term future.

"It is also an important possibility for young people with ambition to be able to go and work abroad within the company," Vansteenhuyse says.

"You can gain a lot of experience and insights into how people in other countries do or handle the same business that you have at home. I think this is a good way of investing in your people, your business, and so investing in your customers.

"Also, in this family-owned business, the values of people, respect, and longevity are very key."

That said, Calor has different challenges to its sister companies elsewhere in Europe. Vansteenhuyse says he was aware of this "interesting" market.

"Ireland is an island, which is different from mainland Europe in the whole energy reflection, security of supply and so on.

"A country that's about 50pc rural is a nice market to work in because you can promote your energy and your solutions deeper and in a larger scale than in Holland where 98pc is natural gas, or even other countries where it is 80 or 70pc".

That said, Vansteenhuyse admits having a "very rural" market requires Calor to have a big fleet on the ground to deliver to all the regions.

"Access-wise it is a challenge for a company such as Calor, to go the extra mile - and I am very impressed by the way Calor is doing this."

On a slightly negative note, Vansteenhuyse notes that the energy environment has "maybe got a little less interest in Ireland than I saw on mainland Europe, in terms of energetic transition, especially on energy efficiency".

That's costing customers, he says.

"The quality of insulation of houses is way lower in Ireland than in mainland Europe and this is an important thing ... there is a big need to get houses and buildings upgraded, whereas this has happened over the last 15-20 years on mainland Europe.

"What this means for the end consumer [in Ireland] is that a bigger chunk of their income is going to energy instead of to other things."

As a newcomer to the country Vansteenhuyse is proud to have discovered that Calor is "a fantastically well-known brand".

"In the time I have been here, I hear the brand come up when with other people, whether it is the butcher or the hairdresser, or dentist, if I say Calor, they all know the brand, they can all say "Oh, that is an Irish brand that has helped the way Irish homes are equipped and how people live."

"It is nice to hear that the brand is so well-respected and so well known.

"There are a lot of similarities in how you serve customer needs, but when I look for the differences, I think that in Ireland, the customers that are using our product LPG as a home heating solution get extremely well serviced by Calor.

"Three-quarters of the customers have a gas tank in their garden - similar to an oil tank - and we know centrally precisely what is in the tank, so that makes a big difference in terms of the service. It is always there, customers don't have to worry, and that is a big difference between most countries and Ireland. Ireland already made the step over the last 10-15 years of bringing that extra service to our customers."

The conversation turns inevitably to Brexit - Calor operates across the island of Ireland - something that may well pose a future challenge to the new CEO.

"We watch it but we are not majorly concerned, as we are already operating with a North of Ireland company and Republic of Ireland company, we fill our cylinders in the North and we fill them in the south."

However, he acknowledges that were a hard Brexit to happen, Calor will lose some optimisation in how it moves its trucks around the country, something that he says will lead to higher costs and "non-efficiencies".

Vansteenhuyse also notes that some of Calor's customers would be negatively impacted from a hard Brexit.

"We see that the dairy industry, the hotel sector, could be a bit hurt, farming is the big one, Calor would have a big market among dairy, poultry, and grain farming, so Brexit might affect some of our customers."

Perhaps surprisingly, Vansteenhuyse doesn't see the fact that almost 40pc of gas comes into Europe from Russia as being a "major issue".

"There are loads of floating and fixed LNG terminals. Security of supply around Europe with the interconnection was a big goal. America is now a net exporting country in oil and in natural gas, and ships can go easily from America to all the LNG terminals assuring supply for the long-term.

"Today supply is greater than demand, so the dependency on Russia is becoming smaller and smaller.

"We see also that the LPG supplies for us have gone up, which is good news for us and for our customers. What that means is that long-term there will be less price volatility on the market.

"The fact that the US has turned into an export country has brought some more stability."

Looking to the future, Vansteenhuyse says Calor is not on the lookout for acquisitions.

"We are focusing on growing our traditional business on traditional LPG and we are growing our customer base each year, so we are successful in convincing people to join us and leave oil.

"This will definitely continue in the future, because most governments in Europe have seen that oil is not the sustainable future for tomorrow, so we have a big role to play there."

However, he does see opportunities in Ireland, including liquefied natural gas. "Why? It is a totally different product, we are going to look at this in respect of the transport industry, because Europe is looking at changing heavy lorries from diesel-driven to LNG-driven, France and Germany are leading on this, and Italy, this is not an acquisition, it is a diversification, but close to our core business.

"Doing those three things is a lot of work, and a lot of energy, so we are not looking for acquisitions in Ireland.

"We are further acquiring at group level, entering new markets. We just acquired a company the size of the Calor Ireland business in North America, where we want to grow as a group.

"But in Ireland it is going to be organic growth, innovation and new products and innovating in value-adding products in order to grow our own business."

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