The Covid-19 pandemic has highlighted the need to decarbonise and digitalise simultaneously, believes N. Venu, managing director, India, and region head, South Asia, Hitachi ABB Power Grids. In an interview with Power Line, Venu spoke about the changing landscape for grid technologies, the company’s plans and priorities for the Indian market, as well as the outlook for the sector…
What has been the impact of Covid-19 on the power sector in India? How would you rate the sector’s response to the crisis so far?
The Covid-19 pandemic has triggered various headwinds for the power sector. Electricity demand sank, affecting the revenues of discoms, which, in turn, hurt payments to upstream providers. That impacted the complete value chain. The industry would have seen delayed decision-making in the award of projects, or the cancellation of a few projects by utilities. In the budget, the government allocated Rs 220 billion for power, renewable energy sector and discom reforms. About Rs 1.7 trillion was promised toward transport infrastructure. We have also been seeing a solid push to localisation in the power sector and incentives being given for solar parks, e-bus manufacturing and more. Therefore, the long-term demand drivers look intact and we see power demand recovering as we head toward normalcy.
What has been the impact of Covid-19 on the company’s operations and projects? What have been the mitigation strategies adopted?
Complying with the nationwide lockdown guidelines, we kept our shop floors, project sites and offices shut for more than 30 days. The pandemic resulted in short-cycle demand plummeting, and system installation and service activities facing extensive mobility restrictions. However, the quick implementation of intensive cost mitigation efforts provided support; so did operational resilience and effective use of digital technologies.
We amplified customer engagement through technology, leveraging the power of digitalisation. We de-risked our factory acceptance tests, product service and training, and even the commissioning of certain projects to maintain business continuity. Many of our customers were concerned about how they would test our equipment before delivery and meet project timelines without coming to the factory. But lest physical proximity became a debilitating barrier, we offered the option of conducting the tests remotely. That is called a Remote Factory Acceptance Test – RFAT. Even in times of crisis, our customers were assured of on-time delivery, equipment reliability and quality. We carried out RFATs for leading industry players in diverse sectors. We also conducted numerous virtual technical webinars, attended by over 5,000 participants from the utilities, industries, transport and infrastructure segments across 19 countries. The reopening of factories from the last week of April in a staggered way further minimised impact on performance.
During this pandemic, we have clearly defined our priorities as protecting our people, ensuring business continuity and preparing for the new “norm”. Our fundamental market drivers remain intact, with the growing need for sustainable energy. We will keep trying to mitigate the impact of the crisis and work toward a better liquidity and cash position, as well as identify service growth opportunities.
How do you see the technology landscape in the sector changing in the post Covid world?
Carbon emissions fell to record lows during the Covid-19 lockdown. We see that as an opportunity for power players to bring about change with greener energy alternatives through the integration of large-scale renewables into the grid. We hope to see intensification of transport electrification and decarbonisation. Already, schemes such as FAME and 100 per cent foreign direct investment for e-bus manufacturers provide great incentives for lowering the costs of electric buses to make them more affordable and facilitate their adoption in the country. Plans to achieve 100 per cent rail electrification will also play a key role. However, our transport sector will only be as green as the grid it depends on. We must make the grid stronger, smarter and greener. We have to decarbonise and digitalise simultaneously. Therefore, we should see partnerships between industries – say, between those in the e-mobility sector and those in the power space, like ourselves – to expand access to reliable, sustainable and affordable electricity. Besides, the pandemic has accelerated new ways of working and doing business. As we are shifting to a new work-from-home model across industries, digitalisation will help unlock new business models and serve the needs of prosumers, whose purchasing habits will drive transformation in the power sector. We could not have pulled off the nine-minute-lights-out call had it not been for smart technology to give us a window to our power network and changes in load. In the post-Covid world, remote work will accelerate the pace of transition to intelligent technology.
What are the new and promising technologies that can support the integration of renewables into the grid?
In light of making the grid stronger, smarter and greener, we have to deploy technologies across sectors such as utilities, transport and infrastructure, and industry. Our technologies such as eMesh, digital twin, TXpert™ Ecosystem for transformer digitalisation, SCADA, digital substations are supporting and will continue to support renewables integration in the grid, and maintain the resilience and longevity of mission-critical assets.
What is your perspective on the e-mobility market’s growth in India so far? What are the unaddressed challenges?
India holds a huge untapped potential in the e-mobility space and has the will and ambition to transform its transport segment. The government has provided many an incentive for the adoption of electric vehicles (EVs) in the country. That indeed is paying off, as we had a 20 per cent jump in EV adoption in 2019-20 from 130,000 units in 2018-19. The majority of this, however, comprised two-wheelers, with just about 600 being electric buses. To decarbonise and decongest our cities, we will need to understand the entire ecosystem. Our transition to clean mobility should have us readjust our transport mix and prepare for a higher share of public road transport.
But the adoption of EVs doesn’t only mean that the front-end changes. It also means grid modernisation happening in tandem to support changing consumption patterns. So first, we must operationalise a nationwide network of accessible charging infrastructure. Second, we must modernise the grid through intelligent digital solutions that can help us handle and sustain our energy revolution with much more confidence and ease.
What have been the significant highlights for Hitachi ABB Power Grids in the past six to eight months? What are the synergies expected from the Hitachi ABB merger?
The joint venture brought together two iconic companies to create a new global leader in the power sector with a sizeable and complementary presence across global markets. It sent a clear signal of continuity in terms of business, strategy, transformation and people, ensuring that Hitachi ABB Power Grids can build on its strong heritage.
Hitachi’s leading digital technologies, combined with world-class power grids solutions, will help us actively support the global transformation and decarbonisation of the energy system. The alliance will facilitate growth opportunities for the new entity in areas such as mobility, smart cities, industry, energy storage and data centres. For the global organisation, it opens up new geographies, most notably Japan, the third largest economy in the world.
Synergies and access to new and growing markets provided by Hitachi will help take Power Grids to the next stage, further strengthening its leading position. Combining our respective technology strengths will bring us new market opportunities and enable us to deliver greater customer value. As Hitachi ABB Power Grids, we will be able to boost Power Grids’ renewables leadership with Hitachi solutions, leverage the Hitachi infrastructure investment for Power Grids solutions, enlarge Hitachi’s one-stop solution with Power Grids’ grid connect, combine Power Grids’ EV charging with the Hitachi smart city concept and grow our service portfolio offering for existing and new customers.
What are the company’s key priorities and growth plans for India?
In this difficult time, our immediate priorities are to protect our people, preserve business continuity and prepare for the new norm. As normalcy returns, we see the government’s push for infrastructure development under Make in India lending support for industry growth. We see ourselves growing in some strategically selected high-growth segments, namely renewables, green energy corridor transmission, rail electrification and metro, data centres, grid digitalisation, and smart sector integration (e-mobility), among others. We will continue to make in India for India and for the rest of the world. To support nation-building projects, we have the largest installed base in the country. Our products, services and systems reach more than 75 countries. We aim to grow faster than the market, investing in building the right talent pool for the power sector going forward as well.
How would you summarise your outlook for the power sector in the next few years? What are some of the opportunity areas?
In the backdrop of a nationwide lockdown, suspension of industrial production and other energy-intensive sectors, demand for energy has dropped by a fair bit. However, demand has started to recover as the lockdown is being eased and as facilities are opening. In addition, the liquidity infusion announced by the government has eased the immediate cash stress. The financial stress due to the lockdown, coupled with the already precarious position of the sector, requires a renewed focus on and commitment to reforms that are not only well thought out but are also implemented at an accelerated pace.
As Hitachi ABB Power Grids, we see scope for expansion in sectors like mobility (for example, electrification of railways and buses), industry (for example, energy management and asset optimisation), smart life (for example, smart cities, energy storage), and IT (for example, software solutions and data centres) – all contributing to social innovation. We believe that there is significant potential to enable customers to scale up and accelerate digitalisation by leveraging our capabilities in power systems and advanced digital technologies as well.