Corporate transformation towards decarbonization, decentralization and digitalization

VOICEOVER Welcome to the DNV Talks Energy podcast series. Electrification, rise of renewables and new technologies supported by more data and IT systems are transforming the power system. Join us each week as we discuss these changes with guests from around the industry. 

MATHIAS STECK Welcome to the next episode of DNV Talks Energy. Our guest today is Csilla Kohalmi-Monfils, EVP Strategy and New Business and Communications Asia Pacific, of ENGIE. Welcome Csilla.

CCSILLA KOHALMI-MONFILS Hello, good to be here.

MATHIAS STECK Csilla, we want to talk today about ENGIE's transformation, responding to the imperative of decarbonization and adapting company strategies accordingly. But before we start with this, it would be really great if you could briefly introduce yourself and explain what ENGIE is doing as a company.

CCSILLA KOHALMI-MONFILS Okay. So ENGIE is one of the largest multinational energy companies in the world. It's a new brand name, ENGIE; it's been for the last year and a half more or less. Before the company was called GDF Suez, so that is Gaz de France Suez, and before many other things dating back to the Suez, Panama Suez Canal which was built by Suez back in the 1800s. So it's a very large company with a large history. We have 155,000 people across 70 countries and we are very much present in the whole energy value chain, so in the gas, electricity and energy services all across the value chain. So apart from just doing power plants, we also do a lot of services. Actually 100,000 of the people who work in the company, so, two-thirds, are in energy services; because those businesses are very much people-intensive and they do a very broad scope of activities: facility management, installations, energy performance contracts, smart cities, all sorts of cool stuff. And then the rest of the people are working in the full gas value chain.

So, even though recently we have sold our, or we are currently selling our exploration and production business, but before that we are in the full value chain. So, starting from exploration and production then, sort of, liquefaction also of gas, transportation, we have a couple of LNG carriers and then re-gasification. And then of course gas to power, but then all sorts of power generation including, in the past we were in gas, coal, renewables, everything. So, it's a very large company but of course the whole energy industry is in transformation, and as such we definitely, with our new CEO, Isabelle Kocher, has signed on to a very new type of company, a very new future for energy in all the countries where we exist.

MATHIAS STECK Right, actually to lead us into this topic I wanted to read something what Isabelle Kocher was actually stating on your website. But before we do so, in our talks, before we record it we talked a bit about your management structure and it was quite remarkable the gender diversity you have there. Maybe you can briefly say something about this because at least, as far as I'm concerned, that's not what I normally see in companies like ENGIE.

CCSILLA KOHALMI-MONFILS Yes, I guess the energy industry typically tends to be dominated by males obviously, given already in the engineering studies I guess it's mostly men who study. In our company, in the top executive board, out of 12 people there are three women, so the CEO, the CFO and the Chief Communications Officer are all females. And they're actually from three different nationalities. Altogether we have five or six nationalities in the board of 12 and this is a change for ENGIE as well. I mean, it used to be also very much a French, male-dominated board which is now very much going towards a gender diversity and also international diversity.

MATHIAS STECK Yes, so why don't we start with what Isabelle Kocher states there, I think it summarizes a bit what we want to talk about. She says if ENGIE is to engage fully in the global energy revolution we must become more agile and more closely connected to our stakeholders, and work closely with them to invent the solutions of tomorrow. So, can you elaborate a little bit what's going on in ENGIE and what's your dream, I mean the company's dream maybe rather than yours?

CCSILLA KOHALMI-MONFILS Yes. So, what, that is the biggest transformation that has happened in our company I think, in the company's lifetime. Before we were organized, as I told you, we are present in many parts of the value chain and we were organized according to different sections of that value chain. And typically, so, for example, there would be a gas business which was responsible for everything gas in all of the different countries where they operated, or the LNG business or power generation; there was one company doing Europe, which is called the Business Energy Europe, and another one doing international, which was Business Energy International.

So, these were branches that pretty much operated like separate companies all the way up to the top. Even their way of organizing their geographic business was different from company to company. And she realized that this way we cannot really be close enough to our customers, because the different branches would be addressing the customers separately rather than with a holistic joint product offering, product and service offering.

So, the transformation was to do away with these five branches and to move to 24 business units which are much more local and who are responsible for all the different aspects of the business in that specific region. So, our region for example is BU Asia Pacific, so we cover all the countries between Myanmar and New Zealand, except for Mainland China which has its own business unit.

But we cover everything, so, we cover not just the energy but also the services, operations and all sorts of new business. Of course among the 24 there are a couple of business units that are still global just because of the nature of the business, so, LNG for example has to be global because they put it on a ship in one location and it goes somewhere else so you cannot have it locally. So, some of these are very much global, but we have one of the geographic business units which is responsible for the region.

MATHIAS STECK Right. So, I heard this term, three Ds, connected to your strategy and I know that ENGIE also wants to decarbonize the business you are in, so become greener. At least that is what I understood. Could you explain what the three Ds are standing for?

CCSILLA KOHALMI-MONFILS Yes. So, the three Ds are decarbonization , decentralization and digitalization – and the three are actually very much connected. So, decarbonization in the sense, as I said, originally we had a fleet of power plants which included coal. We have decided, about a year and a half ago, not to build any more coal-fired power plants and, you know, to reconsider our participation in the coal-fired power plants that are currently still in the fleet. And actually. in the last year and a half we have managed, we have gone a long way in this decarbonization.

So, if I talk only about our region, we have sold a power plant in Indonesia, we have closed another one in Australia earlier this year and we are right now in the selling process of another one in Australia. So, just in the region we will be at half of our original capacity but that's because we will have gotten rid of the coal fired power plants. At the same time, we need to of course be much stronger in developing new renewable power plants, so, we have been for a very long time doing renewables but we just need to really scale up and do a lot more of them.

So, we have acquired a company called Solairedirect, which is now ENGIE Solar, which has a very strong solar operation and we're doing a lot of solar plants around the world. We do also wind, offshore wind, hydro plants, we are developing the Group's first geothermal power plant in Indonesia and there will be another one to follow. So that is, part of the decarbonization is to very much move from the fossil-oriented towards renewable power. Of course we still believe in gas as being the accompaniment to renewable power, given that renewable power tends to be intermittent. So, we believe that gas can be a good complement to that and can help stabilize the grids during these intermittencies. The other part of decarbonization is of course the greenest energy or the cheapest energy is the one that you don't consume. So, therefore, energy efficiency is very strong on the agenda and our large services team is looking after energy efficiency for cities, for industries, for households to make sure that we consume much less energy and therefore that can be a lot greener.

Decentralization goes along with this because first of all renewable power plants tend to be smaller sized than the traditional coal-fired or gas-fired power plants. They tend to be more decentralized in this way already, but we are also facing the phenomenon that with these renewable power plants we no longer need to have large power plants with large grids, but we can put them pretty much closer to where the load centres are. And therefore the grid becomes, rather than being a one-way street it, becomes very much a two-way street. And actually right now what we see is that with the technologies becoming cheaper and cheaper, people have solar panels on their rooftops, and essentially the consumer has become a producer, so we call this the prosumers, and so, therefore, they are no longer just buying energy, they are also selling energy to the grid. So, it's very much a decentralized system which of course needs to be aided by digitalization. So,in order to make all of this work, we need to become much more digital.

MATHIAS STECK So, you just mentioned a very interesting aspect, digitalization. What does it mean for ENGIE? It's an enabler obviously for a change in the energy ecosystem but what specifically does ENGIE want to do about digitalization?

CCSILLA KOHALMI-MONFILS Well, ENGIE actually has three pillars of a digital roadmap of what we need to achieve, so, one of those is yes, very much internal, that given that the sector that we were in, I guess maybe we were not really up to date with the newest digital trends, and that did not help the collaboration internally, or our operations.

So, two of those pillars are quite internal. One of them is to digitalize our operations, so therefore looking for digital solutions for our power plants, for our assets, which is mostly an efficiency gain in most cases, so, when we have large gas pipelines, to be able to check those with drones of course is much cheaper and more efficient than having to have people dispatched and look for the problems and the faults and things like that. So, there's a lot of operational efficiency we can gain with digitalization.

The other aspect is the internal digital office and internal collaborations. So, we have set up internal social media sites where people across the Group can communicate on certain topics of interest, and we have a lot of cases where people have actually helped each other, you know, not having to reinvent the wheel, having the same problems as somebody across the globe. So, it's a very vibrant community now – on – we use Yammer. It's a very vibrant community. It's just like our internal Facebook. And we have also implemented the newest digital communication tools with regards to emails and SharePoint and all these things. So, we can have a lot more virtual teams working on certain aspects of our new strategy and that's very important.

And then the third pillar of course is the customer engagement. So, we do serve 30 million customers around the world, so, that's a lot of customers that we need to engage with and of course all of these customers are becoming digital in their own merit and they're looking for engaging with their suppliers online or on an app. They're not looking to go into a customer service office or anything like that. And they're much more demanding in terms of the products and services that they require, so they want to be able to track their energy consumption, you know, without just getting the bill at the end of the month and things like that. So, we are very strong on the digitalization in terms of the customer interaction, and so we have developed a whole bunch of applications, sites etc; there are different kinds of services which are digital towards the customer.

So, these are the three pillars at a Group level. I would actually add a fourth pillar just because I'm also responsible for new business, so, new businesses for us is businesses that ENGIE was not in previously, and it tends to be new businesses that are new in the world as well. I mean it's the new technologies that bring these new businesses so we are constantly scouting for start-ups and new technologies and new business models, and in many cases these are digital businesses. So, for example, here in Singapore we are currently at the end of the deployment of the first IoT network – first in Asia actually. It will be here in Singapore and so that's, for me it's digital business. It has nothing to do with the other three pillars. It's a new pillar. It's actually developing new digital businesses.

MATHIAS STECK Right. Just allow me to step back to the decentralization for a second because I picked up that you were talking about these maybe more intelligent ways how grids operate now; we have prosumers and we could have maybe smaller networks. And this is a great region to adopt this here because we have all these islands and countries where there is low electrification rates, so we could do something greenfield, which is smarter than what we have in established markets. Will ENGIE also try to develop these kinds of things actively, so that they are rolled out in a region like Asia Pacific?

CCSILLA KOHALMI-MONFILS Yes. Actually we are very active in this field, so absolutely with the new technologies, first of all the coming down of prices of solar, but also with the new digital technologies that are available; we find the countries in this region which have very low electrification, like Myanmar, 30%, can actually leapfrog into the future by enabling these customers to have electricity with solar panels and enabling them to have it, you know, without having to wait much longer. So, we are very much looking into this space. We have some partners in three countries already to do this, and I think by the end of the year we'll have a couple of pilots up. And then we actually plan to scale up quite quickly and it's very exciting, because we will have customers who will never see a paper bill in their life and who will never be consuming electricity the way we have learnt to do it in the more developed world. But they will be just looking to pay for hours of television or hours of refrigeration and they will be able to do that on their mobile phones. So, it's a very exciting area and we are working hard in this respect.

Of course it means that our own skill sets need to be transformed as well so it's, for a company that's very much used to building, let's say, a large gas-fired or coal-fired power plant, our DNA is in managing huge complex projects. It's a well-oiled machine with a lot of people sitting around the table and we know how to do that very, very well. Most of those skills cannot be applied in this setting when we are going to be developing micro-grids of the few kilowatt scale in many locations. So, we do want to become the first, sort of, rural utility, if you will – but it means that we need to collaborate and partner with different types of companies. So, in the case of micro-grids we want to collaborate with the NGOs who have the community relationships and who can help us on how to sell this product to those communities. And so, we need to become much more small-scale and we need to have our processes become a lot leaner and a lot more cookie-cutter approach if we want to be able to address this market.

MATHIAS STECK Right. We are unfortunately already coming to the end of this episode but I have one more question for you, and you gave me actually a good bridge to that already. We talked a lot about the technical stuff so far, but for ENGIE itself or for companies undergoing this kind of transformation, this is also means a major shift in mindset and culture. So, how are you addressing that; how do you take your employees on that journey?

CCSILLA KOHALMI-MONFILS There are different programs. We actually ran a survey last year which was called ENGIE and Me to try to assess where people are with regards to understanding the strategies, standing up behind a strategy and what they can do for this; and we're actually doing the next one this September. So, it's something that we want to do every year and see how we get along on this culture change. As a result of last year's survey, there has been a whole suite of trainings that have been developed, and which are meant to be rolled out across the organization to make sure that everybody is on the same page and to make sure that everybody is motivated towards doing this.

We have also started, or Isabelle Kocher has started a system called executive leadership sessions, whereby she visits every year every single one of the 24 BUs, and that is the place where the BU's management can discuss the key strategic topics and challenges that they have so that she understands what everybody is going through, and can give certain direction for us. So, all of these exercises help us to really rally up behind the strategy, and make sure that we're going in the right way forward. And culture, yes, is a very important aspect of it and I think through cascading of various initiatives we managed to do that on a local scale, but then we check with the survey to make sure that it's there and the cascade has not broken anywhere.

MATHIAS STECK Right. Thank you, Csilla, for these very interesting insights in the transformation of ENGIE into a decarbonized, decentralized and digital future. And thank you, everyone, for listening in. That was Csilla Kohalmi-Monfils, EVP Strategy and New Business and Communications Asia Pacific from ENGIE. Thank you very much for listening and talk to you next week again.

VOICEOVERThank you for listening to this DNV Talks Energy podcast. To hear more podcasts in the series, please visit dnv.com/talksenergy.