India’s coal power plants are reported unhealthiest in the world and you have solutions which can be used for making those plants clean. In this context, how do you see the business potential in India?
Juha Suomi: Over the last 30 years, the European Union has periodically tightened the air emission regulations and particularly the NOx emissions for coal fired power plants. Fortum, being a leading clean-energy company, is offering, among other energy efficiency programmes, its own NOx reduction technology since 1990s. Now that the Indian government is bringing stringent laws to restrict NOx emission levels for thermal power plants similar levels to Europe, we see tremendous potential here for our offering. We have already done a couple of Low-NOx pilot projects with NTPC at their Ramagundam plant and one other with a private power producer. Our forte is not to sell only the equipment, our goal is to provide solution for our customers.
In India, not much of capacity addition is happening in the thermal power segment. Still, why do you consider it as a potential market?
Juha: Energy consumption per capita is increasing in India and it is envisaged that the thermal will remain the mainstay in the country’s energy mix for the next 30 years. Moreover, the existing coal-fired plants will need to go through technological upgradation to meet the stringent emission norms. Even the 15-20 years old power plants have potential to improve their energy efficiency and reduce their air emissions significantly, like in case of NOx emissions, by adopting the best available technologies. Through our global experience and product portfolio, we are in good position to offer such solutions also in India.
What are the advantages of your NOx reduction technology?
Juha: Fortum eNext’s advanced NOx technology reduces emissions effectively by staging and optimising the combustion process, thus elimination of NOx formation at its source. Compared to alternative and expensive solutions, there is a minimum need for new equipment, no auxiliary power consumption, no water consumption, and no ammonia or urea consumption thus no by-products for disposal. We are also committed to make the necessary physical modifications within the scheduled shutdown of the power plant.
How do you see the acceptance from the Indian market as there is a CAPEX involve?
Juha: The CAPEX we offer for the NOx abatement is 50 per cent less than what was anticipated in Indian markets two years ago, so it is really welcomed. Our solution provides one-off CAPEX investment for the customers without additional OPEX required and therefore is really cost-effective. We have estimated that for a 500MWe coal-fired power plant the life-cycle cost for the first five years of our Low-NOx implementation would be around 3 MEUR compared to a selective non-catalytic reduction (SNCR) being approximately 25 MEUR. Then comes the other options like the catalyst, which is an extremely expensive costing around 40-45 MEUR.
Sanjay, what will be your focus areas?
Sanjay Aggarwal: We would start off with private sector first as there are lots of captive plants. We will keep looking at PSUs also.
You have a significant presence in the Nordic region especially in the renewable energy segment. How would you like to strengthen your Indian market presence?
Sanjay: We are a leading clean-energy company having significant presence across in the Nordic and Baltic countries, Russia and Poland. We are one of the major players in Nordic region for heating business. In India, we started operations in 2012 and today we have a portfolio of 685 MW.
How challenging is the solar power sector in India?
Sanjay: Tariffs have gone down over a period of time. The return levels have also gone down. Probably the return expectations have also gone down. But we are still in the market which obviously means that the thresholds that we have, we still meet those. So, it all depends on how effective engineering you do and how effective sort of purchases that you do. If you actually see the tariffs have come down, it is not only that the developers have reduced their return expectations. The module prices have come down by more than a half. So, everybody is passing the benefit of reduction in the cost of inputs of the tariff. Nobody is taking it with them.
What’s your comment on the bid cancellations?
Sanjay: Bid cancellations are really disappointing. But I would say that everybody has played a part in that – one cannot point fingers on why they are cancelling the bids because we have made tariff as the centre of everything whereas it should not be like that. Reason being, tariff would depend from state to state because irradiation differs, and it would depend on what is the timeline which is required for commissioning the plant and so on and so forth. But when you break down everything to the lowest common denominator obviously these things would happen. You would have the tendering authority who expects a certain amount of tariff to be achieved and if you do not get to that tariff, they always have the right to cancel it. Yes, it is disappointing and according to us it should stop. The fact is, a lot of resources, both money as well as manpower, goes in preparing the bids as well. People prepare the bids, bank guarantees to submit, and everything has a cost to it. It is not that anybody can create a 250 MW bid at free of cost. So, as we move forward, people would start realising and if they feel there is the possibility of a bid getting cancelled, people would not bid.
In future, will you continue with bidding?
Sanjay: We would not randomly bid. As long as we feel that the counter party is someone that we can rely upon it and passes through our credit checks. We would only bid where we feel that there is a decent probability of acquiring land, the transmission line is fine and the counter party is ready, we will participate there.
You have presence in thermal power, renewable, heating and cooling. Where do you see the business is coming from in India in next 5 years or so?
Sanjay: From our perspective, renewable would remain the central piece and in renewable it will be essentially solar. Alongside, we see electric mobility coming up. With respect to e-mobility whether it is battery swapping or electric EV charging infrastructure, we would be there. We are putting up a bamboo-based bio-ethanol refinery in Assam in a joint venture with Numaligarh Refinery Limited along with Chempolis. In the next 5 years, we would build on whatever we have done in solar and in e-mobility. We would complete bio-ethanol projects and look for more opportunities.
You are expected to build around 700 EV charging stations in India by 2020…
Sanjay: I would not get into those numbers. I think, there is no fun in putting up charging stations without electrical vehicles being made. All we are saying is that we are willing to match the adoption of EV in India and depending upon that we would scale back or skill up.
We believe, by 2023 there would be a tipping point and when there would be a rush for EVs, we want to be prepared for that. In the meantime, we would like to see how our charging infrastructure operates with different types of cars, with different type of batteries, at different locations, and how our back-end Cloud system is performing so that we are ready for the EV adoption. As of now, in India, we have 40 charging points and one battery swapping station.
What is your vision for Indian market for next 5 years?
Sanjay: I think renewables will continue to grow. Alongside renewables, we will have battery storage coming in next couple of years which will make more sense to renewable, electric mobility would also come in. I would say at some point of time, biomass connected projects would also gain profits.
What is your commitment to the group in terms of business and growth?
Sanjay: With respect to solar, we will continue to look at 250 to 300 MW every year at least in near foreseeable future. In ‘Charge and Drive’, we want to be a meaningful player and similarly in bio-ethanol. So, I think the group expects that in some areas we would continue the growth path, in some, where we may not be the market leaders, we would like to be the thought leaders and bring in the new concept.
Juha: Fortum’s mission is to engage customers and society to drive the change towards a cleaner world and make the ongoing energy transformation sustainable. At Fortum eNext, we will continue to support Indian energy producers to adapt to changing operational and environmental requirements. We are fully committed to build smart and sustainable solutions optimal for Indian markets and regions.