Interview: Why ABB/Hitachi have entered a $11bn Power Grids Business joint-venture
Venu Nuguri, senior group VP. Power Grids Business, South Asia, MEA from ABB chats with MECN
Venu Nuguri, senior group VP, Power Grids Business, South Asia, MEA, ABB tells MECN that the $11 billion deal ABB had signed with Japan’s Hitachi at the end of last year, will help both companies find business opportunities in new and growing markets.
Can you provide details on the partnership of Power Grid deal – why it happened, what were the reasons and where you stand to gain the most market-wise?
The JV will bring together two highly respected companies in their respective fields and geographies and enhances ABB Power Grids’ position as a global leader in the power sector with a sizeable and complementary presence across global markets. In the fast-changing world of energy infrastructure, with a shifting customer landscape and the need for financing and increased government influence, ABB believes Hitachi is a great partner for Power Grids. As a stable and long-term committed partner, Hitachi can further strengthen the business, providing it with access to new and growing markets. Hitachi will support Power Grids to reach the next stage of its development, building on the solid foundation.
Some major benefits of the JV with Hitachi are access to the Japanese market, which is the third largest economy in the world, financing- Hitachi is well positioned to fund customer projects such as infrastructure investments, and Power Grids benefitting from Hitachi’s position as a though leader in smart cities and mobility.
How will this affect your market share in the MENA region?
We currently have double digit market share across all major markets in the region. The JV will bring in new market opportunities considering sizeable and complementary presence of the two highly reputable companies. Apart from technology, project experience and vast basis of customers, Power Grids’ seasoned workforce with domain knowledge and technical skills will ensure that we remain a trusted partner for our customers. Overall strategic direction will continue in pursuit of sustainable and profitable growth and we aim to continue gaining market share across GCC region as well.
What is your focus on renewable energy and what sort of leverage will the deal give you in this market sphere?
Due to this increasing penetration of renewables, the grid will have to be prepared for the associated issues, the next generation grid will have to ensure safe, reliable and quality power. Ranging from major interconnections to Microgrids, we have successfully delivered our products and ser-vices globally. Our offerings also ensure that we have the right capability to augment the future grid with an ecosystem of distributed energy capabilities, digital solutions and services to maximize customer value. Correspondingly, with our comprehensive range of products and solutions, we are ideally placed to cater to all the stakeholders.
But with this, our combined product portfolio covers the energy value chain from generation to distribution and beyond and will enable the new JV to play a pivotal role in the energy revolution.
Can you discuss what the outlook for the renewable energy market will be – the opportunities, the challenges and the potential for future growth
While the region has substantial oil and gas reserves, rising populations and economic diversification have led to larger energy demand. Primary energy demand in the region is expected to continue to rise at an annual rate of almost 2 per cent percent through 2035. Renewables, though a comparatively recent entrant to the GCC energy landscape, hold huge potential to lower fuel prices, cut back carbon emissions and optimize environmental footprint.
As mentioned, with increasing renewable penetration, it is expected that the grid will experience instantaneous variations in renewable power in the system. Consequently, significant grid investments and technologies are required to address these challenges. There are great opportunities in interconnecting regional grids. There will also be huge opportunities from digitalizing the grids. The transparency and flexibility offered by a fully digitalised grid will be a key to manage the increased complexity resulting from these developments and is therefore an important facilitator for future energy policies.
