An energy pioneer's one-man conservation mission
Upending the perverse incentives of state socialism is a challenge at best. Reversing horrendous energy-wasting practices inherent in the previous system, however, can be a winner for individual budgets as well as for the country's economic growth.
Andrzej Gawrylczyk, 45, is one of Central Europe's energy-savings pioneers, helping educate local officials about how they can save money long term by investing in energy-conservation steps today.
He's president and director of Finesco, a start-up energy conservation company that netted a zl. 300,000 profit in its first year and is projecting zl. 2.5 million ($625,000) in 2001. Its initial share capital was zl. 21.1 million ($5.4 million); it has commitments to increase that to zl. 50 million ($12.8 million). Investors include Adam de Sola Pool, founder of Environmental Investment Partners (EIP) , the PBK Capital Group, Prochem Holding and PSE Capital Group.
Gawrylczyk defies the stereotypes about entrepreneurs someone 30 years old or younger and who grew up without "socialist pollution" in the head, who makes money in the new economy.
He came from the Mazurian lakeside town of Gizycko to study law at Warsaw University in the mid-1980s, but gravitated toward economics instead. As development chief of the Bank of National Economy in 1993, he worked on increasing the number of government-owned rental flats, but veered into environmental issues when the appalling energy-waste picture became clear. In 1994, he was point person on setting up the government's National Agency for Energy Conservation (KAPA).
He learned environmental issues on the job, working with Danish, Dutch and British partners to grasp the principles of energy audits and then adapting those to Polish realities (including block-housing norms where heating bills were based on the size of the flat, not energy use and where winter-time heat was moderated by opening the windows).
It was a shock to discover after 1990 that coal-mining costs far exceeded revenue from sales, to realize "that we sold energy at a price that had nothing to do with the world market," he said.
He looks back at the economic sorrow brought to millions when energy costs skyrocketed early in the transition. But he spent his time trying to alert city officials to the solutions to the energy problems. For more than five years, he spent two days a week on the road, jawboning thousands of officials about how to use their money more wisely with energy-saving investments. He also worked with housing-co-op chiefs who were discovering that the buildings themselves were hugely energy inefficient.
He was a latecomer to the private sector, even to the concept of making profits. By 1998, however, he and another KAPA veteran began to strategize about a private-sector company that could go beyond education.
That March, Pool launched EIP and began looking for investors. A staffer put him in touch with Gawrylczyk. Months of discussions followed. "He had an investment idea when he came to us but it made no sense," Pool said. "It involved going on the stock market, but it wasn't possible to do that and expect people to buy your shares without any track record."
But Gawrylczyk was an authority not just on energy audits, but on how to persuade local officials to act on them. He also "had developed a good business plan" on how to finance this, Pool said, for below-investment-grade clients a housing co-op, a bus system, school or a hospital.
These "are generally hard to finance because banks don't want to take the time to assess that sort of risk. But when you do this on a large scale, you diversify the specific client credit risk," Pool said. "Gawrylczyk knew the market and could arrange the securitization of receivables.
"It was not ever going to be a huge, huge market but a very solid, growing market year in and year out."
And so it seems to be.
By this May, Finesco provided 158,000 square meters of thermal insulation for roofs and walls in building societies in Bydgoszcz, Warsaw and Piaseczno and is the leading company spearheading these reforms.
Last fall, it launched street-lighting projects and by this May replaced 2,756 street lights where the savings compared to the old system average 55-64%, via longer-lasting bulbs and cheaper maintenance.
"We are the ones who go to the client and say you're losing money you don't have the correct lighting system," Gawrylczyk said. "You can save money when you modernize. And you don't have to have any money up front."
Once a deal is struck or in some cases a public tender is called "Finesco issues an invoice to the city and they have to repay it over five years," he said.
Finesco is working with Bielsko-Biala on converting its fleet of 138 gas-guzzling and pollutant-causing buses into a fleet of 140 new ones fueled by natural gas. The projected savings: zl. 15,000 a day.
The company is rare in making profit as a start-up. Even rarer is its forecast to increase its profit eight-fold in the second year, Pool said.
And for Gawrylczyk, how does he take to being an entrepreneur, supervising 23 employees and a handful of subcontractors? "I have great personal satisfaction in implementing these projects not just talking about it," he said.
