NOTE B2 Underlying raw material & energy costs
- 1 NOTE B1 Net sales
- 2 NOTE B2 Underlying raw material & energy costs
- 3 NOTE B3 Underlying EBITDA
- 4 NOTE B4 Underlying depreciation & amortization
- 5 NOTE B5 Underlying net financial charges
- 6 NOTE B6 Underlying income taxes
- 7 NOTE B7 Underlying profit from discontinued operations
- 8 NOTE B8 CAPEX
- 9 NOTE B9 Free Cash Flow
- 10 NOTE B10 Net working capital
- 11 NOTE B11 Underlying net debt
- 12 NOTE B12 CFROI
- 13 NOTE B13 Research & Innovation
Energy costs are an important part of the Group’s cost structure.
Net energy costs represented about €0.61 billion in 2017(2), circa 11% higher than in 2016. Energy sources were spread over electricity and gas (69%), coke, petcoke, coal, and anthracite (circa 27%), and steam, fuel oil, and others (5%). More than half of the costs were incurred in Europe (53%) followed by the Americas (28%), and Asia and the rest of the world (19%). The Group has pursued an active energy policy for many years. As a major energy consumer, Solvay operates an electricity generation park with a total installed capacity of circa 900 MWe.
Within the Group, Solvay Energy Services (SES) focuses on optimizing the Solvay’s energy costs and fostering greenhouse gas emission reductions. In particular, SES rolls out the SOLWATT® excellence program to identify and deliver energy savings and CO2 emission reductions at existing manufacturing units, through operational and technological improvements as well as management behavior changes. The first SOLWATT® wave was introduced in 2011 and is now covering nearly all the energy spends of the Group. A second wave was launched in 2016. By end 2017 it had been deployed at most sites with a large energy consumption totaling 41% of the Group energy consumption. New annual savings from actions completed in 2017 are estimated at €9 million or 1.5% of the Solvay energy costs and 0.1 Mt CO2 emission reductions. The Soda Ash & Derivatives and Specialty Polymers GBUs are among the top beneficiaries
The overall raw materials spend of the Group amounted to circa €2.5 billion in 2017, 16% higher than in 2016. The raw materials spend can be split into crude oil derivatives (42%), minerals derivatives (22% – e.g. glass fiber, sodium silica, calcium silicate, phosphorus, and sodium hydroxide), natural gas derivatives (9%), biochemicals (12% – e.g. glycerol, guar, fatty alcohol, and ethyl alcohol), others (circa 15%).
 The divested Functional Polymers are not included. The energy consumption and expenditure of the polyamide activities that will be sold to BASF are not included in the report, those assets no longer being consolidated in the Group financial report. However, the energy consumption and expenditure of the Performance Polyamides activities located at the Paulinia site in Brazil remain in this report, those activities not being included in the BASF deal.