Taking the market’s pulse

Current trends in power generation and water: interview with Markus Bruegmann, head of global sales and marketing for ABB's power generation business.

The international power generation and water industries are going through a period of sustained change. What are the main investment trends?

In answering a question on global investment trends we should always remind ourselves that the world economy is not a single entity. It is highly interconnected and globalized, but growth rates differ widely between regions and countries. For instance, this year Asia will again lead the way with a growth rate of 5.7 percent in gross domestic product (GDP). Not far behind is fast developing and natural resource-rich Africa on 5.2 percent. Eastern Europe and Latin America will have a healthy GDP growth rate of around 3 percent. North America is pulling itself out of the economic crisis, but Europe and Japan are still struggling. All of this impacts the investment market in power generation and water applications. In Asia and Africa investments are strong, whereas at the other end of the scale in Europe, there is little investment to speak of.

How will these GDP growth rates translate into global market trends within the next few years?

According to the International Energy Agency (IEA), there will be a net increase of 1,335 GW of new power generation capacity worldwide by 2020. Half of this new generating capacity will be in Asia. Gas will be the single largest energy type for this new capacity, accounting for about 25 percent of the increase. Coal will continue to be the main fuel type for generating power, but solar photovoltaic and wind will significantly increase their share of the global market.

Investment in water and wastewater treatment is forecast to grow by around 40 percent a year over the next few years. Water scarcity, population increases, urbanization and economic growth are all driving the need for safe and secure access to potable water and better sanitation. Water companies are under pressure to become more efficient and cost effective. There is a growing need to provide water for, and manage the wastewater from, industries like oil and gas and mining and minerals, especially in emerging markets. These are all increasing the demand for water by huge
levels year on year.

What are the regional trends in power and water applications?

In Asia, including China and India, investment in new conventional coal- and gas-fired power plants will predominate, with solar photovoltaic and wind power also increasing significantly. We are seeing the same trend in Africa, but with two important differences: a greater reliance on hydropower and a growing demand for fuel-efficient microgrid applications in areas without access to electricity and in energy-hungry industries like mining. In the Middle East investment in large gas and combined cycle power plants will continue. And in Europe and North America the emphasis will remain on renewables, with little investment in conventional power generation. In water, the overall driver will be the need for a safe and secure supply of clean water and reliable wastewater treatment for cities and industries.

How can ABB help customers meet these trends?

Well, to begin with we are a global market and technology leader in the technologies that power and automate power generation and water treatment applications. We’ve been in the power generation industry since its inception more than 125 years ago and in the water business for more than half a century.

Second, our Symphony® Plus total plant automation platform is designed specifically to meet the needs of the power generation and water industries in all regions, whatever their requirements. Symphony Plus builds on and evolves the 30-year-old Symphony automation platform, which is the most widely used distributed control system in the power and water industries. There are more than 4,500 Symphony installations in these two industries alone. They span the entire spectrum of power and water applications in conventional and renewable power generation, and in water and wastewater treatment.

Third, our market and technology leadership in power and automation technologies means that we can offer customers integrated electrical, control and instrumentation solutions for power and water plants. These complete solutions are optimized to maximize the efficiency and minimize the energy consumption of power and water applications. For EPCs they significantly reduce project risk and minimize the number of vendor interfaces to just one.

Fourth, our application know-how in power generation and water is second to none, and our track record in project execution and health, safety and the environment issues is among the best. Our global footprint – we operate in around 100 countries – means that we have local resources and competence in most markets worldwide. This enables us to efficiently partner EPCs in whichever markets they wish to operate in, and provide service support to end users as well.

And fifth, ABB is a technology company with an annual R&D budget of $1.5 billion for developing new power and automation technologies that enable customers to meet these trends and operate successfully in their markets. In fact, we’ve been at the forefront in developing new and often enabling technologies for applications like wind, solar and virtual power plants. We’ve also adapted our organizational structure to better meet the requirements of a growing category of customers like independent power producers (IPPs) and small EPCs.

You mentioned distribution generation as an important trend. Please explain.

Due to rapid GDP growth in emerging markets there is a growing need for small, scalable distributed power generation systems of between 1 MW and 200 MW generating capacity. These systems use various types of fuel – conventional or renewables - or a combination of the two, as in diesel and solar photovoltaic. Standardized, low-risk, fi nanceable solutions and speed are the key requirements. ABB is uniquely equipped to meet these requirements. We provide standardized, modular, fast-track solutions with rapid delivery and assembly times. Our Symphony Plus SCADA system is developed specifi cally for them, and our Microgrid Plus System integrates high penetration renewable power into a microgrid, while securing grid reliability and reducing fuel consumption (for more on microgrids see pages 6-11).

How does service tie in with global trends?

Service is a mission-critical business for power and water plants. A service provider has to be close to the plant. Our global footprint means that we are always geographically close to our customers. Our customers, however, also require choice. They want a complete offering of services, but they also want the freedom to tailor this offering into a contract that matches their specifi c requirements. This is precisely what our ServiceGrid program of life cycle management and support services delivers. We launched it in North America in 2011, where it has been hugely successful. This year we began to roll it out globally. Signifi cantly, almost 100 percent of customers who signed ServiceGrid contracts in the opening 18 months have opted to renew them. That for me speaks volumes about the value that ServiceGrid delivers to customers.

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