What was the significance of 2019 for your business?
HTC established its energy department in 2016 as part of its growth and diversification strategy. 2019 saw this department achieve operational breakeven. A second 2019 achievement includes successfully reaching out and engaging with international and local solar developers to establish partnerships to address local market needs. This is significant, as a key missing aspect in our solar offering was the financial element allowing for plant leases over capital investment. Finally, 2019 was more about efficiency and utilization of manpower. We also introduced KPIs to monitor our employees' productivity. We looked at projects related to the fourth industrial revolution and started carrying out them as sub-contracts, which allows us to better understand the market and the technologies themselves.
What challenges prevent you from engaging with the B2C market?
B2C is a huge market with various hurdles. First, there is a fragmentation of technologies. However, Apple, Amazon, Google, and Zigbee Alliance have founded a consortium to standardize their different protocols. If this consortium develops a single standard of interoperability, this will help galvanize the market. Right now, there are some suppliers for home automation services but there are two different business models. Unifying the standards means the new model will start to erode the margins toward a service market, and we will see something in the middle, which is typically where we play in. The second issue with the B2C market is that the utility tariffs for water and electricity are extremely low, and the incentive for efficiency is low. The third issue is the electricity sockets and light switches. Usually, for home automation to work properly, you need to have a live, neutral cable going. However, in Oman, homes can only have a live, ground cable, not a neutral one. This blocks 95% of the home automation market, as homes need to be able to send their data to a command center. As such, we are trying to understand the safety and technical aspects of this divergence and see how we can address it.
Do you think tariffs will go up and there will be more awareness?
Privatization is having an effect on demand, since Oman is extremely cyclical in terms of energy consumption, as winter and summer demand differ hugely. We have many plants that lie idle during certain times, while there are extremely specific peaks at other times; so, on the demand side, energy storage could be used to fix this. Distribution companies could install batteries in your house at their cost and when the demand and tariff cost are low, they start storing energy. Meanwhile, when demand and tariffs go up, energy could be pumped from the batteries, meaning there is no need for generators. What makes it challenging is that our tariffs are attractive for manufacturers, so solutions will have to wait until they mature. If you do not have a serious challenge, there is no motivation for innovation. If there were carbon credits, they would be another driver toward efficiency and smart solutions. If it remains as it is, it will be challenging.
What are your objectives and priorities for 2020, and what are the drivers behind them?
In telecoms, we purposely chose niche segments that we can excel in and that are typically passed over by the majority of solution providers. As such, we will keep on with our operational efficiency initiative and seek new markets to apply a strategy based on IoT and energy efficiency. The solar industry will grow exponentially in the commercial and industrial segment (where we operate in), and we will remain agile to capitalize on our position to continue leading the market share and value delivered to customers. Finally, we now have maturity and autonomy in telecom and energy, and moving forward we will seek more interaction between the two departments to leverage on markets.