Strnad sold the energy company Advance Energo to Veolia. He continues to believe in the energy sector, but will bet mainly on nuclear

Source: E15 Date: 26.02.2024 Author: Ondřej Souček

Jaroslav Strnad's industrial Group CE Industries is leaning out its activities in the energy sector. It has sold the energy services provider Advance Energo to the French group Veolia, with which it started building its energy division four years ago. For CE Industries, energy services have become marginal after the expansion of other sectors in the group, while for Veolia the acquisition is an opportunity to strengthen its position in a market where it has only been operating for a short time and has to catch up with the competition. Both parties to the e15 deal confirmed the transaction but did not comment on its size.

CE Industries decided to sell its 100% stake "based on an assessment of its strategic objectives and opportunities for further expansion", group spokesman Andrej Čírtek told e15. Both parties to the transaction also stress that joining Advance Energo to a strong multinational energy group already operating in the industry is the best solution for its further development and expansion.

The sale has been speculated for many months. Advance Energo did not meet the two main criteria CE Industries normally requires of its companies. Firstly, it does not look like it could become at least the third largest player on the market over time, and secondly, it does not generate revenues in excess of half a billion crowns. In other words, the company has grown more slowly than CE Industries had initially hoped, and the energy put into its development has not had the same effect as the rest of the group's companies. How the company fared last year is not yet known, but in 2022, when it was still in the building stage within the group, it made only CZK 145 million, CE Industries spokesman Andrej Čírtek said. Revenues for the entire group reached 10 billion in the same year.

Founded as a startup in March 2020, Advance Energo has dozens of building energy-saving projects under its belt, according to CE Industries. The vast majority have been so-called EPC projects, where the customer typically does not invest its own funds and pays the solution provider only on the basis of future savings from reduced energy consumption, for example through new rooftop photovoltaics.

In addition to the largest project at the Kutná Hora Hospital, Advance Energo has also carried out, for example, the modernisation and greening of the thermal management in the Moravian industrial complex of the Sigma Group or projects for companies from its own holding CE Industries.
The energy services sector has experienced a major boom at a time of record high energy prices. Although the unregulated part of the energy price is now slowly returning to pre-crisis levels, the regulated part is growing and will continue to do so in the future given decarbonisation plans. Moreover, the demand for energy saving measures is supported by subsidies and funds from the European Union, which has set energy savings as one of the main objectives of its energy policy. CEZ ESCO is the largest player in this field on the domestic market, followed by Tedom, Amper Savings and Enetiqa, formerly MVV Energie CZ.

Veolia, which focuses primarily on the heating industry, only entered the energy services sector in a significant way last year. The acquisition will accelerate its growth in the sector. "Advance Energo will continue to focus on business and implementation activities in the field of energy services, energy construction and EPC projects in particular, but also in the field of new energy based on renewable sources and state-of-the-art technologies. In many cases, it is not only about savings, but also about decarbonisation and reducing environmental impacts," says Jakub Tobola, Veolia Group's Chief Commercial Officer.

CE Industries Group is not leaving the energy sector with the sale of Advance Energo. According to the Group's chief executive, Adam Šotek, it remains one of the "strategic pillars" of its business, but wants to focus mainly on the nuclear industry. Two of the Group's companies, Chemcomex and MICo, are active in the sector, and Šotek has high hopes for the planned construction of new Czech reactors.