Lu sandoff
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Transcript of Lu sandoff
Corporate Governance and Investments in Energy Production
Anders Sandoff, PhDSchool of Business, Economics and Law, Göteborg University
Separation of ownership and control– Different goals and attitudes towards risk
Changes are taking place– Increased focus on corporate responsibility
– The role of the corporate board of directors
The situation for the power and heat producers1. Heavy investment needs
2. Widespread State and municipal ownership
3. Potentially high profit margins
4. Low public trust and presence of externalities
The importance of corporate governance
Web survey
All municipally controlled energy companies in Sweden with power and heat production (approx 100)
Chairman of the municipal executive committee
Chairman of the board of directors
Chief Executive Officer (CEO)
Targeted question areas1. Ownership motives and goals for the company
2. Constitution, operation, role and competence of the board
3. Capital budgeting practices
4. Attitudes towards investments in power and heat production
5. Boundaries of an utility
How does this effect investments in energy production?
Based on approximately 40 % response rate
Multiple choice questionsResponse scale based on literature studies and interviews
Work in progress• Only graphic display of frequency distributions • No non-response analysis• Answers are to a limited extent based on responses from the
same companies
Tentative results
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CEO
Motives for municipalities to own an energy company
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Chairman of the municipal executive committee
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Chairman of the board of directors
1. Influence the local energy system2. Influence local environment3. Low price district heating4. Lower price distribution 5. Increase regional attractiveness6. Financing other municipal activities7. Increases quality in other activities8. More profitable than selling9. Gives financial stability 10. Heritage/historical reasons11. Unclear motives12. Other than above
Importance of municipal owner for developmentlast ten years / coming ten years
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Chairman of the board of directors
CEO
1. Very little importance
2. Little importance
3. Some importance
4. Important
5. Very important
6. No opinion
1. New connectable heat2. Profits from power sale3. Value of green certificates4. Value of CO2 allowances5. Need for added reserve capacity6. Need for increased efficiency in
existing production
Most likely reasons for investing in energy production coming five years, according to CEO
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7. Need for exchanging existing production units
8. Environmental reasons9. Increased flexibility10. High financial solidity11. Customer demands12. Owner demand
1. Increased environmental focus2. More power production3. More wind power4. More CHP5. More heat production6. More energy services7. Expansion of district heating
system8. Expansion of gas grid9. Reinforcement of power grid10. Expansion of residential house
district heating11. Existing operations doesn't need
to be changed12. Other changes
Most important changes of the company's current operations in the coming ten years
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Chairman of the board of directors
CEO
Wide spread knowledge about owners motivesInfluence the local energy system
Influence local environment Low price in district heating
CEO acknowledge the significance of these motives
Municipalities is seen as important as owners
Expansion of district heating
New connectable heat is seen as the main driving force for investmentsImportant to expand residential house district heatingLarge interest in CHP productionMany investments will be driven by aging equipment
Early lessons
Possible lines of business, if economically attractive…
1. Sales of heat pumps2. Sales of heat exchangers3. Drying of biomass4. Sales of pellets5. Manufacturing of pellets6. Indoor climate solutions7. Energy services8. Energy system solutions9. Owning production outside of
municipally10. Owning gas/oil production11. Owning forests12. Owning pellets manufacturer13. Owning a broad band network14. Sale of energy related
network contents15. Sale of non energy related
network contents16. Consultancy in environmental
planning17. Waste management18. None of the above
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0%
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CEO
Chairman of the board