10 May Refining energy transference
Sæmundur Sæmundsson, CEO, and Steinþór Gíslason, Director of Energy, EFLA Engineering Consultants, work at a company that is creating Europe’s energy future just at the time it needs it the most.
For 50 years, EFLA has been thriving as one of Iceland’s top engineering firms. Sæmundur, you took the reins with years of executive experience at other major companies. What is your strategic vision as CEO of EFLA?
Sæmundur Sæmundsson: It has been 49 years to be exact, we will celebrate our 50th anniversary next year. EFLA is a market driven organization that develops and builds its knowledge, expertise and experience based on the current market and its future needs. Ever since the company was founded, it has always been EFLA’s aim to strive to be at the forefront of technology. We have four main pillars focusing on energy, buildings, community and industry, but what is happening now is that these four areas are merging together more and more. I’ve only been here for a year, and it is really exciting for me to experience the drive within EFLA. Fifty years is quite a bit for an Icelandic company, but the drive is here just like it was fifty years ago. My strategic vision as CEO of EFLA is to facilitate the change of the company from a traditional engineering service provider to a knowledge hub that merges all types of engineering services, along with other technologies, into integrated solutions for our customers.
You came into the position amidst a global pandemic that caused major supply-chain disruptions across the globe and stunted productivity on many construction projects. How has the pandemic affected EFLA’s main projects?
Sæmundur Sæmundsson: Fortunately, it has affected us less than we expected at the beginning of the pandemic. We were already experiencing a slowdown in our activities in 2019 due to an economic slowdown in Iceland, as 80% of our business is within the country. When the pandemic hit us in 2020, we experienced quite a steep slow down in our activities and, unfortunately, we had to lay off some of our people. In 2021, when I joined the company, there was still uncertainty on how the year would evolve, but things turned out well from the second half of last year. We are back on track and now we are experiencing a growth in all fields of expertise.
Steinþór Gíslason: The revenues only decreased 5% in 2020 compared to 2019, and they are picking up again in 2021. And I think that, aside from the challenges, opportunities also arose from this pandemic. There has been a great leap in the development of teleconferencing worldwide and that has helped us a lot. Just to take one example, our employees in Iceland work a lot in Swedish projects, and in 2022 we are expecting five times more work in that market compared to 2019. We are an Icelandic company working in the Swedish market and Covid has shortened the distance for us: EFLA Iceland has been able to offer Swedish clients similar service as Swedish companies since everybody have been working remotely during Covid. Clients have now learned that this works very well in general so there has been a very big shift toward positive attitudes regarding remote work, something which helps companies that work in projects internationally, like EFLA does.
Thank you Steinþór. As the director of the energy sector, what is the breakdown of the various sectors EFLA focuses on? Sæmundur mentioned that they are merging together. Can you explain a little bit about how important your sector is becoming in this picture?
Steinþór Gíslason: I think that partially this is another positive outcome of Covid, as we were all working from our home offices across Iceland and in our offices abroad and somehow this has brought the international EFLA group closer together. Now there is more cooperation between the different offices, merging know-how and expertise and facilitating this overlap between the sectors that we traditionally focus on.
There are big changes happening, and, especially now in Europe with the energy transition, there are huge opportunities for us in this sector. We have very strong expertise in design of transmission lines and substations, with a strong position in the European market and especially in Scandinavia. One of the reasons for our international success is that transmission lines in Iceland need to withstand extreme weather conditions, something which has given us very valuable experience and know-how that we can export to other countries. For example, this expertise has helped us getting into the Canadian market and other Nordic countries, and now we have a group of 70 people working solely in transmission line and substation projects worldwide.
EFLA’s Energy division is also active in geothermal and hydro projects and we also foresee that wind energy will be very important in Iceland in the upcoming years. Many wind projects are in the preparation stage at the moment, and EFLA is involved in some of them. It will be very exciting to see the development with wind energy in the upcoming years in Iceland.
In fact, EFLA has an impressive international reach stretching from affiliates and subsidiaries all over Europe, numerous projects across the Nordic countries, even geothermal projects in East Africa. Where have you seen the most growth opportunity and where do you expect to be working in the near future?
Steinþór Gíslason: Surely in Europe in the power grid sector, as there is a huge focus on building the next generation of the power grid in Europe, and this is happening for various reasons. Firstly, big investments are made to increase grid capacity and integrate on-going and planned connections of renewable energy in Europe, mostly wind farms. Secondly, there has been robust development in cross-border connections between countries. Thirdly, a big part of the transmission grids in Europe are 50 to 70 years old and needs to be reinforced or rebuilt in the next decades. Just as an example, the Nordic TSOs are planning to build over 6,000 miles of lines, over 100 new substations. This will make a total investment worth around $27 billion in the next 10 years, according to the recently published Nordic grid development plan, so there is a lot of work in the future in this sector.
Sæmundur Sæmundsson: Indeed, we are seeing this huge increase in investment in power transmission all over Europe: in Norway, Sweden, France, and Poland, to name few examples. This is happening everywhere, due to the energy shift needed for the world to cope with the climate problems. In addition to that, I think the war in Ukraine might speed this process up even more, because Europe is facing their reliance on Russian energy. Suddenly, Europe has to make a U-turn and react to the fact that they can’t rely on Russia anymore for energy. This might speed up the energy transition projects even more than what was expected just a few months ago.
Earlier this month it was announced that EFLA has been commissioned by Carbfix for a pre-design of Coda Terminal, a highly scalable CO2 mineral storage hub in Straumsvik, Iceland. Could you share with us more information about this project?
Sæmundur Sæmundsson: We are very excited to have won this contract with Carbfix, where we are working with the latest game-changing technology to grab CO2 and turn it into stone. This is an extremely fascinating project because we are taking the experience that Carbfix has already proven on a small scale and turning it to an industrial scale operation. All our divisions are bringing their knowledge together, from the industry division to our sustainability experts and building experts. We are bringing all our expertise on this project with the goal of storing 3 million tons of CO2 into the ground on a yearly basis. This is huge, it reflects about 40 to 50 percent of all of Iceland’s emissions.
Furthermore, the project is about being able to transport CO2 between countries and storing it permanently. I think it will be mind blowing when this operation will be up and running, to see tankers from Europe docking in Straumsvik and taking the CO2 from Europe and pumping it down to earth in Iceland.
Steinþór Gíslason: EFLA has decades of front-line experience in environmental management and implementation of projects in environmentally sensitive and geologically unstable areas. EFLA has been in a leading role when it comes to sustainability and environmental issues in Iceland for over 20 years. This project fits very well with our focus and strategy as a company. We are extremely proud of taking part in this very important project with Carbfix.
Talking about environmental issues, the warmer waters make year-round Arctic shipping increasingly viable. EFLA is involved in the development of Finnafjord deep-water port in Northeast Iceland for transshipment across the North Pole?
Sæmundur Sæmundsson: Sure. This is a project that is still in the development phase. It initially started when there were ideas to drill for oil in the Atlantic Ocean, north east of Iceland, but those these ideas have been abandoned, as everybody wants green energy now. But this particular position on the Northeast coast is a remote area where few people live, and it’s a relatively flat land with great access for big ships, so it’s easy to build a huge harbor that could serve many purposes. It could be a docking base for ships sailing from Asia, the North Atlantic or North Pole route. It is an ideal position to be used as a hub between America, Europe and Asia. In addition to this, very close to this harbor there is the potential for developing huge wind farms. The wind energy could be used to make green, hydrogen-based fuel, that could be used domestically andfor ships that need refueling on the route to different continents.
Construction hasn’t started. We are still in an early research and development phase, but it has huge potential and also shows how EFLA has always focused on long term development projects like this. We’ve been working on this for about 15 years now, and we are ready to work on this for another 10 years before we see if it materializes, but it’s a huge opportunity for Iceland if this harbor comes to reality.
Another long-awaited project that there has been lots of talk about, even before the pandemic, is the expansion at Keflavík Airport.
Sæmundur Sæmundsson: Yes, that is a project we are currently participating in. We play quite a big role in expanding the airport buildings and additional facilities. We are bringing in new ideas about how things can be more sustainable, how we can build with less CO2 emission and how we can operate the buildings with less emissions in the decades to come.
Steinþór, regarding the energy sector, many Icelandic companies are seeing the opportunity to export their know how on geothermal energy solutions that can contribute to the worldwide energy transition. Is EFLA working on any geothermal projects and are you seeing this increasing in the near future?
Steinþór Gíslason: Geothermal energy is one of the most reliable and sustainable forms of renewable energy available today. The knowledge on utilization of geothermal energy for electrical production, as well as district heating and direct use, has been building up in Iceland for decades, and EFLA is one of the companies with decades of experience in this field. In general, Icelandic companies have been quite successful in exporting this expertise worldwide. Our international experience has mainly been in Turkey, Indonesia, Kenya and the USA, and in the last few years we have been focusing mainly on projects involving direct use of geothermal energy. EFLA’s know-how and experience in geothermal energy is one of the services where we can sell our expertise internationally, and we foresee many opportunities in this field in the upcoming years.
In terms of R&D, is the Icelandic government supporting companies with the right incentives? How does EFLA enhance the R&D in its own company operations?
Sæmundur Sæmundsson: In the past 10 years or so there has been a huge positive change from the government’s part in supporting R&D and also private funding for startups on top of that. The whole economic scene around R&D and startups has changed dramatically. EFLA, like many other companies, has applied for these funds and has been quite successful over the years. At any point in time, there are several projects being conducted within EFLA in various fields where we are using the public R&D funds to support our own research.
We strongly believe that in order for us to succeed on the long term, we need to put a heavy focus on R&D. In 2019 we completely renovated the corporate structure, and it’s a really flat structure now, with short communication lines. That’s how we try to to engage all of our staff. Anybody that has a good idea should try to make it to a project.
As a final question, EFLA excels in finding innovative solutions to some of the toughest challenges around the globe, making it emblematic of the international image that Iceland portrays to the world. What values do you wish to see attached to Iceland’s image on the international stage?
Sæmundur Sæmundsson: Iceland has huge potential to be at the forefront in the energy shift. Being very green already, we have the potential to become the first society on earth to be carbon neutral. There’s always a debate on how and whether we should be using nature’s resources in producing energy versus taking care of nature. Nations need to work together, no one nation can solve this climate problem on its own, and Iceland has an extremely advantageous opportunity to be on the leading front. We must succeed in finding this fine line of using natural resources while at the same time preserving our nature. You can’t have both. We will have to set up wind farms, new geothermal and hydro power plants in order to produce more energy, and we have to be able to envision that we can serve. We can produce energy for other nations that might not be so well suited when it comes to green energy production.
Steinþór Gíslason: I agree with Sæmundur. I would also like to add that I think Icelanders are, in general, hard-working people and have ambitions to do well in the projects they undertake. We at EFLA have received very positive feedback in our international projects, and I think that the reputation of Icelandic engineers is quite good and will continue to grow in the future.