We are focusing on increasing indigenisation: Kari Hietanen and Neeraj Sharma, Wartsila India
We are already one of the few multinational energy companies who have a factory locally. We have a state-of-the art factory at Khopoli in Maharashtra
Wartsila India, the power solutions provider for the marine and energy markets, is bullish on India growth story. In an exclusive interview with ETEnergyWorld, Chairman Kari Hietanen and President & Managing Director Neeraj Sharmashare a perspective on renewables integration, plans for hybrid solar-cum-storage business and the larger focus on India market. Edited excerpts:
What is Wartsila’s larger philosophy and the motivation for growth strategy?
Kari Hietanen: We are a technology company catering to the marine and energy markets. Sustainable society is an important part of our direction and motivation. Also, our products can contribute to a better environment. A lot of our R&D effort goes into improving environmental footprint. We want to make the world a better place and build sustainable societies with the technological knowledge that we have. Based on this, we have two broad strategies — smart energy strategy and smart marine strategy. We can see a strong drive for renewables in the energy market, especially solar and wind power. That is predominantly because of the decreasing costs of these technologies. We are welcoming that. We think the energy systems of the world will change dramatically. That is a big change because the energy system will be dependent on the availability of the sun. That puts totally different requirements on other parts of the energy system. This also means that there has to be a balance for the variations in solar and wind.
What are the ways to address this problem of variations?
Kari Hietanen: We have two solutions for that. We are typically looking at computer simulations of how to most optimally build a power plant. In addition to renewables, the future power plant will need two main components – flexible generation and storage. Going forward, areas with better storage will become more important. However, only renewables and better storage will not be sufficient. We also need dispatchable power generation, which is flexible. This is how we see the world developing. India is in a great situation in this respect because there is a lot of renewable here. Solar power will have a big share but at the same time the rest of the power system will also face challenges and it has to be developed accordingly.
The progress in India on both these aspects – flexibility and storage – has not been very fast. Wartsila has been working on developing storage systems here. Can you give us an idea of the specific projects and the plan?
Neeraj Sharma: Globally, power system changes are gradual. It is a step-by-step evolution going in the direction we described. When we talk of investments in any country, it is important to think of how those investments would work in the future. In storage, for example, we have to look at what are the models available. In terms of developing better storage projects, we are very much on that route. On storage, our initial strategy is to work for hybrids. Storage alone is a little distance away. We are working on hybrids of solar-cum-storage. Coal plants are already running at less than 50 per cent PLF to allow storage to come in. Gas can be used to create flexibility. I think the government has to seriously view the hybrid type of concept at the system level. The government has to ensure the cost of power does not go up. Also, supplying power round-the-clock is the main objective of the government.
Wartsila is a technology company. How would technology drive solar tariffs in days to come?
Kari Hietanen: We are not in the business of making solar panels. But yes, panel costs have come down and battery cost has also come down. Lithium-ion seems to be a more important subject. And that is what we are doing. We believe solar will remain competitive.
Wartsila has set up 250 power plants with 3,500 Mw capacity so far. What is your larger outlook on thermal power side in India?
Kari Hietanen: Renewables are challenging thermal. The government has ambitious targets for renewables. On thermal, the plants that are in the pipeline, should expectedly come up till 2022. Coal usage will become less in India in times to come but it will remain as solar and wind cannot be available all the time. Coal will continue to be the baseload for some time to come. At the same time, I will not be surprised if in years to come, renewables too become baseload. How this transition happens and how many years it takes, is anybody’s guess.
Given the rising share of renewables in the Indian energy basket, do you think the country’s grid is equipped enough to take up the challenges it would pose?
Neeraj Sharma: I think the answer is the same in India as it is in other countries of the world. The grid is not equipped because the electricity system was built for a different world. With increasing share of renewables, we have to bring about changes. We need to have short-term and long-term balancing.
When it comes to growing in India, what will be the main focus of the company in years to come? Are you looking at setting up more facilities?
Neeraj Sharma: We are already one of the few multinational energy companies who have a factory locally. We have a state-of-the art factory at Khopoli in Maharashtra. We will be looking at how to utilize the factory for enhancing our business to Make in India and make Wartsila more competitive. We are also looking at how we can indigenise more, without dropping the quality of our products. That is a part of the strategy. Another strategy is that if the renewable integration happens, and gas engines play a role in creating the system flexibility, it will open up big opportunity for us. We are very committed to the India market.
What is the company’s larger investment plan in India going forward?
Kari Hietanen: We have a factory. We are looking at new initiatives at the factory. And when we take these initiatives, we will invest. We are also looking at Marine services. We already have a sizeable organisation here and we are committed to our business in India.