UME: ABB recently completed the divestment of Power Grids to Hitachi. What does this mean for the future of the company?
Mustapha: We are in the midst of an energy revolution. Decarbonisation, digitalisation and decentralisation are changing the way that businesses and individuals generate, consume, share and purchase energy. In the coming years many countries will be forced to transform their grid and energy landscape as they move to reduce dependency on coal and fossil-based generation whilst at the same time managing the emergence of renewables and integrating them into their networks.
These changes to the energy landscape will generate two kind of business, one that is focused on the transmission infrastructure of the grid where big investment and financing is being led by the governments or state companies, and the second related to the distribution of the energy to improve the quality of the service closer to the end customers.
The divestment presents new opportunities for ABB that will bring us ever closer to the end customers on the distribution side of the network and enabling us to focus on creating and adding value through digital solutions and increased sustainable productivity.
UME: Following the divestment, what will be your key priorities in the Middle East and how will your clients in the region benefit from this new development?
Mustapha: In the Middle East the pressure to transform the grid is not as big as in Europe for instance, but the necessity to produce cleaner, more efficient energy is a priority. As ABB Electrification, we see increasing investment in renewable generation and a change in the behaviour of the consumers. The distribution network of the future will be even more reliable and decentralized.
This will require intensive monitoring of the network, consumption points and assets. ABB’s new generation of products is designed for a distribution network able to be monitored in real time from the substation to home devices. In the future this will be necessary to balance the demand and the production of the network, including energy storage.
UME: What are the current investment opportunities and trends in the Utility market, and how is this di-vestment aligned to them?
Mustapha: As the world becomes more digitally enabled and consumer behaviour shifts towards environmental sustainability, we see many opportunities arising. Looking at what we do in electrification, ABB now has a greater focus on the distribution of energy in areas like renewable energy, microgrids, e-mobility, data centres and building more sustainable cities.
UME: What are some of the existing market challenges that you think will be addressed by the new changes?
Mustapha: One of the key challenges would be to integrate the increasing renewable and decentralized generation sources whilst ensuring grid stability. A high level of renewables in the energy system requires reliable back-up capacity. As the topology of most grid designs is based on a centralized generation, the more cities move to a decentralized system, the more utilities need to invest and change the topology of the system in order to provide a reliable supply of energy.
The challenge can be solved from a different perspective, increasing the interconnection capacity of the grid or investing in energy management/storage to balance the demand and the supply. This will mean a stronger focus on digitalization and digitally enabled products, specifically in the low-voltage and medium-voltage part of the network, which ABB is driving with a broad variety of digital solutions, with ABB Ability™.
UME: How do you see the utility market evolving over the next five years?
Mustapha: If we have a look at the transformation in the utility sector happening in Europe, we can anticipate that some of those trends will also arrive in the next five years in the Middle East.
Ten years ago, most of the utility sector used to have a largely integrated model including conventional generation, renewable, transmission, distribution and supply.
But the energy landscape is very diverse and transient. While the Distribution utilities are moving to specialisation, we also see the increase of pure supply utilities, dedicated to the dealing of energy. Or even some direct sell of energy between privates via blockchain.
The other big trends that we see are the traditional oil companies entering the utility business. As such, most of the traditional utilities are now trans-forming themselves and their business models to become more agile, with both European utilities and Chinese investors accelerating the transformation in the Middle East. The speed of change will depend on the regulation authorities.
UME: Electric vehicles (EVs) are fast gaining traction globally and in the Middle East. What is ABB’s approach to the EV business?
Mustapha: ABB is a global market leader in e-mobility charging solutions. We are developing our market share well in Europe, Asia Pacific and US; and with last year’s Chargedot acquisition we now have a position in China. Our focus is not only on developing innovative new charging technologies, but also on electrification of the industrial and commercial fleets and how to adapt the load of the vehicle to the availability of energy in the grid.
In the region, we have helped install the first EV charging infrastructure across various countries. Even recently, we signed a contract to supply fast chargers to a residential compound in Saudi Arabia.
UME: How do you see the future of the grid business in the Middle East and the potential of renewable energies?
Mustapha: The two big challenges that renewable investments are facing around the world are the dependency on subsidies and the need of reliable back-up capabilities in case of a relevant increase in renewable sources. In the Middle East, renewables can exist without the help of subsidies and the strong availability of combined cycle power plants and now Nuclear makes the network more reliable.
The Middle East has a high potential for renewable sources of energy. For many years, renewable energy has been perceived as a competitor to fossil fuels, however now we see oil companies around the world entering the renew-able business with investment in solar and wind projects.
UME: What impact will this divestment have on the future of renewable energy in the Middle East?
Mustapha: In the Middle East both companies will remain quite complementary. While the Joint Venture with Hitachi is focused on creating the new infrastructure to the interconnection of renewables to the transmission network, ABB will continue to concentrate on solutions across the full electricity distribution value chain including the integration of decentralized generation sources such as solar plants, wind turbines and energy storage systems.
We are supplying many global players in solar and wind with our products and components and further developing solutions for the interconnection within the solar or wind facilities.
UME: How do you see the future of energy management/storage in the Middle East?
Mustapha: The need for reliable energy management/storage solutions will increase with the dependency and growth of renewables. The balance of demand and supply is absolutely critical. There are two main ways of get-ting the balance. One of these is via an interconnection with big centres of demand, or in a more distributed way with energy storage solutions which ABB is focused on as part of our microgrid solution with advanced storage space. Not only has battery technology improved significantly in the past years, but we also see opportunities for alternatives such as hydrogen-based technologies in the future.
In August, ABB signed a Memorandum of Understanding with hydrogen technologies specialist Hydrogène de France (HDF) to closely collaborate and look into the assembly and production of the fuel cell power plant for marine applications.
UME: How is ABB supporting the digitalisation of the Utility sector?
Mustapha: ABB has always been a leader in substation protection and control. We are moving ahead to adapt and position ourselves to the new challenges of the utilities: integration of renewable, microgrid, energy storage, power conditioning and power quality.
To achieve this, ABB is investing in the development of a new generation of products capable of connecting with the cloud and other devices. We are also taking advantage of ABB Ability™ which combines ABB’s entire digital portfolio, bringing together over four decades of industrial digital leadership, advanced connectivity and the latest digital technologies to integrate our products into the solutions that the utilities are requiring from us.
From advanced diagnostics that prevent unplanned downtime to the control of individual coal-fired boilers all the way to power plant fleets and to cybersecurity solutions, ABB Ability™ enables utility providers to know more, do more and do better, together.
UME: With increased digitalisation comes an increase in cyberattacks. How can ABB help utilities to boost cybersecurity?
Mustapha: This is one of the challenges that businesses are facing today, and it requires a strong cooperation at all levels. ABB provides the defence-in-depth security required for digital solutions in mission-critical applications and industries. Cybersecurity means much more than just protection against cybercrime.
The value of data should be protected as well as the connections. Customers should not be required to forfeit safety, value, or control in order to realize the benefits of digitization, and ABB Ability™ closes the loop between these needs with an innovative, multi-layered approach to security.
UME: What is ABB’s approach to electrification post the PG Hitachi carve out?
Mustapha: ABB will continue to be a principle player in the energy transition so we can continue to transform and enable safe, smart and sustainable business and communities. We are focusing on a more decentralized, efficient and reliable distribution of energy. Our focus in the Electrification business will continue to be on the development of digitally enabled sustainable products and the development of software solutions that support the utilities to reduce their operations cost and help them transform and build a new era in energy.
The article was publish on Oct 06, 2020 by Utilities Middle East.
