Exclusive interview with Mr. Alexander Moskalenko, GCE Group CEO. What prospects do you see for your business in Africa?


ALEXANDER MOSKALENKO

PRESIDENT AND CEO

GCE GROUP

www.groupgce.com

 

Alexander Moskalenko is the President, CEO and founder of the GCE GROUP.  He is also an Energy Engineer Emeritus with over 30 years of professional experience.

During the past 19 years, Mr. Moskalenko lead the transformation of GCE Group into one of the world’s leading energy consulting companies.  Due to his tremendous success with GCE Group, he has received distinguished awards from both the Russian Presidential Commission for State Decorations and the Presidium of the International Academy of Environmental Science and Human Safety (MANEB) for his contribution to the preservation of the environment, and human and environmental safety.  He is an academician of MANEB.

Alexander Moskalenko is a recognized global expert on energy efficiency and industrial safety.  In 2012, he chaired the second UN Economic Commission for Europe Expert Working Group meeting on Safety Guidelines for Oil Terminals. He frequently provides expert commentary on the safe and peaceful use of atomic energy topics in Russia.  He is an honorable member of the American Chemical Society.  Alexander is also a regular keynote speaker or participant at international conferences, such as the 20th International Petroleum Congress (WPC) in 2011. He is well versed on energy conservation among oil companies in the Persian Gulf and spoke at the 2012 London conference “Russia Power” on the topic of identifying the source of energy losses.

Alexander Moskalenko actively participates in the development and reform of energy sector legislation. He was a key initiator of revisions to the Russian federal law on energy conservation and the improvement of energy efficiency.  In his efforts to advance the best global practices in this field, in 2001 he founded and hosted the first annual international forum on Industrial Safety. It attracts hundreds of the world experts and practitioners from more than 30 countries.

Alexander Moskalenko was born in 1962 in Saint Petersburg, Russia. He graduated from the Highest Naval Academy and earned a PhD in Economics from the St. Petersburg State Technological Institute. Alexander is married and has two children.  He speaks Russian and English languages.

1. What is the nature of your business?

Our goal is to help industrial enterprises to reduce energy consumption. Therefore, the larger goal is to reduce it for all mankind without any loss in the quality of life.

Humanity is concerned with the climate change problem. The Kyoto Protocol was signed as part of the solution to this problem. It’s hard to say how effective it turned out but at least some sort of financial instrument was created as a result. In fact, I used to say that it is not the right thing to do. The climate change is related to greenhouse gas emissions that is, indeed, primarily due to increasing energy consumption, and only secondarily – due to agriculture. Thus, it is necessary to lower energy consumption that will result in an automatic decrease of greenhouse gas emissions.

2. How did it start?

Before the founding of my own business, I worked for a long time with complex energy structures because I started my career as a naval officer. I will reveal the Polishinel secret The energy conservation theme in Russia was raised first in 1996, with the implementation of a new law “on energy efficiency ” that was, indeed, replaced by a more detailed law “on energy savings and increase of energy efficiency” four years ago. Thereafter, the notion of an energy audit has appeared. Despite the fact that the energy at that time was very cheap (and even now it is not that expensive), it was understood that the country uses it inefficiently.

One of the provisions of the law made ​​it mandatory for large energy consumers to conduct an energy audit. Before that, there were no energy auditors. The market was created almost from scratch. GCE Group began with support for our current clients, large companies, such as Gazprom. Knowing that I am a good engineer and have a good engineering team, they began asking me if I know what it is, and if I can do it. We knew we could.

3. What are the most memorable moments in your career?

The first thing that comes to mind are interesting circumstances of GCE Group’s entrance on the international arena. At that time, we have already occupied the leading position in Russia. We realized that we could benefit outside the country too. It was decided to expand. One evening, late at night, I was thinking in what direction to move forward. In that moment, I received a call from my friend in Brazil, who I have not seen for seven years. He called just to chat, to tell that he moved to Brazil, where he is writing his doctoral thesis. Since then he became the director of our Brazilian branch. Over the years, he has established himself as a successful leader. The Brazilian branch is the first step in expanding the geography of GCE Group. As they say in Russia, “we are not looking for easy ways”: from the northern and eastern hemisphere we immediately spread the influence in the west and even in the south.

Initially, while creating a company in Russia, I aimed for leadership in the country, which was achieved. But now I realize that if GCE Group was originally established as an international company, I had been building it somewhat differently. For example, staff requirements would have been slightly different, etc. Because of the orientation on Russia, it was difficult for us to move beyond own borders. It was sort of a blind walk. When we already had Brazilian, Indian, and European branches, I came upon a theoretical article on the conduct of global business where it was told what mistakes should not be allowed. You know, I laughed over this article a long time because I made every mistake mentioned there, yet achieved a great success.

4. What are the difficult moments you can recall in the history of GCE Group? If they were, how did you overcome them?

I remembered a really tough year in 1998 – the colossal crisis in Russia caused by default. It was hard even in terms of appearance: in a huge business center where we were based, that was full of voices, people, businesses and ideas a month before the August events, and then it was emptied. All that remained were us and another tenant – the radio center of one of the sea shipping companies.

To cope with it was difficult but the anti-crisis measures were chosen properly. Perhaps my naval experience helped there: we acted decisively and responsibly. Unfortunately, we had to cut staff, which is always difficult. Nonetheless, some solutions were really successful. At the time, it was decided, due to the instability of the ruble, to display prices in dollars. We stubbornly tied all of our work to the national currency. It has greatly drawn clients to us. We quickly minimized the income of top management, i.e., our salary became ​​below the average.

Now, I can be considered an expert in the field of marketing, training in which took place by overcoming my own mistakes. For example, in the early years of the GCE Group, we were truly happy to every client. However, the payments crisis proved ineffectiveness of this approach. I remember one paper mill paid us with two carts of toilet paper. After that, we raised the question that is key in marketing -who is our client. It turned out that it was not just someone who wants to place an order with us, but one who can also pay for it. At that moment we crossed off a number of clients. They stood at the end of the chain and were dealt with last. By limiting ourselves in one way or another, we, in fact, survived.

5. What prospects do you see for your business in Africa? What GCE Group can offer Africa? Is there potential for improving energy efficiency in Africa, and what is the vector of energy development in Africa?

Africa attracts and allures, of course. Our work is of a great interest there but for various reasons, including political, we still have not secured our business on the continent. First and foremost, we are interested in such countries as Egypt, Nigeria, Algeria, Kenya and Tanzania. In Egypt, for example, there are four huge steel plants that are one of our key clients. They consume a lot of fuel but with incredibly low energy efficiency. Nigeria also declared its decision to legally embark on the path of energy efficiency.

At high rates of industrial development that is typical for Africa, there is a considerable potential for a business. For some reason, everyone thinks that if the production is new, then it is effective. However, if to go onto the track with a low quality new car, it’s inefficient driving. Therefore, advanced equipment under certain conditions is often ineffective. Mining and manufacturing industries on the continent are moving slowly. In the meantime, energy savings’ potential of such facilities, for example, reaches 8-9% of consumption.

Thus, our services in the field of energy consulting in African countries would be in demand. Moreover, we can attract investors if they are risky enough to implement our proposed measures to reduce energy losses. In particular, by 2013, we already have an agreement with the European and Asian funds that are willing to invest.

Negotiations are conducted with African companies who express the interest. What is happening now in the north of the continent for some time has postponed our actions. Sending our people in “hot spots” is simply unacceptable.

Speaking of the energy industry development, I note that it is Africa where a large number of people live without energy supplied on an industrial scale. The continent is in need of developing generating capacity and networks for energy transmission. Moreover, it is not only about providing people with energy by all means but also about doing it effectively and efficiently, avoiding the problems faced by other countries.

In conclusion, the currently popular “green” energy industry is easier to implement in Africa than anywhere else. There is enough sun. There is a fast growing biomass that is used as a raw material for biofuels. There are significant water resources for hydropower.

 

6. How do you see the future of your business so far?

I see two main paths: globalization and technology development.

In fact, the market for consulting services in the field of energy efficiency has not been monopolized by anyone. There is no “big four”, as in the financial audit sphere. There are no “monsters” that occupy the same niche as the Hatch in the field of metallurgy. We are now leaders, but our market share is small. There is room to grow.

Technically, we have learned that it is not enough to only advise to change this motor or reconfigure that transformer. We are becoming carriers of new energy efficient technologies, diligently searching for them all over the world: in research institutions, large and small, and in the laboratories, private and public. Moreover, we now are developing our own. Of greatest interest for our own research developments are Organic Rankine Cycle (ORC) and automation of the processes controlling the combustion efficiency.

7. What is the global market? What difficulties, in your opinion, can be identified today? Why? What are the solutions?

The market is large, and it is rapidly expanding. When we were talking to people about it 5-6 years ago, nobody could understand us. We had to replace the terminology that will be understood, for example, in Scandinavia, Russia and China: an energy audit is an energy check, or energy saving. Now this is not the problem. The whole world began speaking the same language.

It is pointless to speak of global challenges because they vary from region to region. For example, in Russia they realized that the power system of any enterprise is a living organism, the components of which are interrelated. Such complex organism cannot be prescribed treatment by parts. However, Europeans still want to be told how to increase the energy efficiency of concrete pipes, transmitting, for example, hot water. For a large Russian petrochemical company, we have prepared three programs to increase energy efficiency. It would seem that nothing prevents them from combining them into one. The first program is aimed at improving the efficiency of existing systems and capacities. The second one involves the replacement of all old and inefficient systems and processing units with new ones. The third program was linked to the main problem of the plant – the irrational use of electricity. We offered to withdraw from the purchase of electricity from the outside but instead to create its own wind plant. We discovered that the enterprise is located in the region with a very steady wind field. Therefore, the client can supply itself with 100% of their electricity demand. The payback period for each activity is 2-3 years. This is an example of a systemic approach.

Very often we are told, “we have a shop so let’s solve its problem”, or “here is air utility, let’s solve its problem”, or “we have a gas or steam turbine”, but they are all connected with other enterprise systems. It is impossible to consider them separately when it comes to energy conservation.

The main difficulty in the development of GCE Group is a different level of training of engineers in different countries. With all respect to European, Brazilian, and Indian universities, the quality of engineering education in Russia is higher. However, my colleagues from Russia cannot handle a large scope of work around the world. It is a great difficulty to form local teams to conduct local operations in any part of the world. There are solutions, of course. We decided to dedicate a training center for growing our own specialists, and for the exchange of experience, gained over two decades, with other companies.

www.groupgce.com


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