Environment
Thousands of contracts for our energy
9. October 2018
Thousands of contracts for our energy
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Volkmar Held
As a freelance writer, Volkmar Held reports for voestalpine on topics that move people. The content of his stories ranges from archaeometallurgy to future technologies.
The quantity of electricity voestalpine purchases for its Austrian sites every year would be sufficient to power 340,000 households. The purchasing team are known for their market understanding and speed.
Power Plant in Linz
The voestalpine site in Linz covers more than 80% of its electricity requirements by generating its own power. Even so, every year additional power has to be externally sourced, in quantities sufficient to cover the needs of 125,000 Austrian households.
Unusual electricity purchasing
At voestalpine the practice of purchasing electricity is naturally different from that in private households. “We purchase in 15-minute cycles,” explains Hannes Pesendorfer, Head of Energy Purchasing at voestalpine Rohstoffbeschaffungs GmbH. “The prices change every quarter of an hour, fluctuating by up to €150 per megawatt hour.” For that reason there is close cooperation with the Group’s own power plants in determining current consumption levels.
"We react sensitively both to changes in our own energy situation and developments in the energy spot markets. Each year in Linz around 18,000 contracts are made with energy providers and consumers in order to optimize purchasing, and include everything from long-term purchase agreements through to short-term intraday trades."
Quick and courageous action can bring huge advantages, for example, when so-called “negative prices” are paid for electricity.
Free electricity?
A colorful landscape of prices for the electricity buyers at voestalpine Rohstoffbeschaffungs GmbH: every day the electricity prices change every 15 minutes in the spot market.
When the voestalpine energy buyers purchase electricity it can sometimes cost nothing. Indeed, when megawatt hours are sold, they even get paid. What initially sounds contradictory soon becomes clear after looking at the relationships between power networks spanning national borders. These networks are fed by conventional power plants, but also with electricity generated from so-called renewable sources (wind power and photovoltaics). When the weather is right, supply can suddenly exceed demand and the grid risks becoming unstable. Rather than powering down time and cost-intensive generation capacities during such situations, it is cheaper for network operators to pay for large quantities of power to be drawn from the grid over the short term. Energy-intensive companies such as voestalpine can benefit from these developments if the purchasing professionals keep a close eye on the market and act quickly.
"You have to react incredibly quickly in the power market."
Joint presence in the market
An energy buyer’s workspace is similar to that of a stock trader, the monitors filled with current price, supply and consumption information. The employees not only consider the situation at the site in Linz. Wherever possible, voestalpine draws on its market experience as a bulk purchaser, utilizing opportunities to exploit optimum purchasing prices, and to provide important information to the Group companies. This cooperation benefits everyone. There is a special structure in Austria, with voestalpine creating its own natural gas balancing group. This negates the need for intermediaries, and provides all sites with flexible and market-focused access to the electricity markets.
Cooperation across national borders
voestalpine generally tries to establish electricity and natural gas pools across divisional borders in each country in which it operates. Where this has already been achieved, for example, in Austria, Germany, and the Netherlands, it has been shown that procuring larger quantities brings significant advantages. In the USA, too, efforts are made to unify sites within a joint pool. Natural gas and electricity purchases for the direct reduction plant in Corpus Christi, Texas, are also managed by the buyers in Linz.
"We organize energy procurement for Texas from our base in Linz. Natural gas from the USA, currently at a third of the standard price paid here."
More on environment at voestalpine: www.voestalpine.com/environment
Volkmar Held