Structural changes are taking place in the energy market and ENGIE is already leading the way.

As the world moves towards a cleaner energy environment, ENGIE remains a prime mover in making the transition to being one of the largest power & gas producers in the world. 2015 was a pivotal year for the world’s energy stakeholders, as the 2015 United Nations Climate Change Conference (COP21) marked the beginning of structural changes in the way power companies do business. 

At the COP21, nations agreed to targeting zero greenhouse emissions for the second half of the century, which means that power producers have huge changes to make in the way that they build their generation capacity.

ENGIE seeks to drive this movement forward through innovation of power & gas infrastructure technology and increasing of the Asia-Pacific business unit’s emphasis on large-scale renewable generation. At the helm is CEO Jan Flachet, a veteran of the energy sector with experience in Europe, Middle East, Latin America and Asia. Asian Power had the chance to speak to Mr. Flachet about the re-brand of GDF SUEZ, his outlook on the industry and his plans for the future of ENGIE Asia-Pacific.

Asian Power: GDF SUEZ has adopted a new name: ENGIE. What are the Group’s motives for this name change?

Jan Flachet: The world is shifting towards a new energy reality because of developments in technologies, as well as changes in people’s behaviour and attitude: they want to understand, manage, and in some cases, produce their own energy. The energy transition around the world is happening at a fast pace, and ENGIE takes
leadership in this movement. This new reality has prompted our Group to reorganize our businesses and to accelerate innovation, based on digitalisation, decarbonisation,
decentralisation and energy efficiency.

Our name change reflects our Group’s transformation and expresses our corporate ambition: to be the energy transition leader and the benchmark energy player in fast
growing markets. Our new name, ENGIE, is a powerful and easy name, through which we affirm that energy is everyone’s business: employees, shareholders, partners and customers. Collectively, we are the architects of the energy future; we are called upon to act together, to be optimistic, and to seek solutions that will improve people’s lives.

In addition to renaming our corporate name, we are also streamlining and simplifying our brand portfolio. In Thailand, for example, our operational company Glow will henceforth reflect a clearer connection to the Group in its logo. Also, our service businesses in Asia-Pacific, known as Cofely, will adopt the ENGIE brand. In streamlining our brand portfolio, we will increase our visibility towards our external stakeholders, and create a genuine spirit of belonging and unity internally.

Asian Power: How do you see Asia transitioning into the new energy world in view of COP21’s agreement?

Jan Flachet: The COP21 agreement shows that there is a worldwide political consensus for the need to reduce greenhouse gas (GHG) emissions. Asian governments have played an important role in achieving the agreement, such as The Philippines in its leadership role as the chair of the Climate Vulnerable Forum, pushing successfully for the inclusion of a 1.5 degree goal rather than a 2 degree one. Indonesia and Thailand, whose combined GHG emissions represent 70% of ASEAN’s total emissions, have committed to reducing 29% and 20% respectively of their emissions by 2030.

Apart from the political will, there are also important economic drivers for Asia and the Pacific to transition to clean energy. Ongoing economic growth, the strong urbanization trend, a growing middle class and a young population will drive a spectacular increase in the energy demand.Today, cutting GHG emission no longer equals restricting future growth potential.

There will not be just one solution, but a mix of solutions, including solar, geothermal, wind, biomass, gas and decentralised generation. Diversifying the energy mix will be
critical for Asia’s economic growth outlook and the private sector will play a crucial role to implement the energy transition. New, disruptive technologies will positively affect the uptake of large-scale renewable energy solutions, as prices drop below those of traditional channels of supply.

With decentralized generation and storage systems available at increasingly affordable cost, micro grids will become a more frequent feature in rural areas, bypassing the need for large connection infrastructure. In addition, innovation in battery storage has helped overcome intermittency problems that were the main barrier for wide deployment of solar and wind power.

Moreover, the digital revolution will have significant consequences on the control and optimization of energy systems. Whereas micro grids can substitute the need for
costly transmission infrastructure in rural areas, smart grids will replace traditional one-way transmission and distribution grids in urban centers. Distributed generation will complement centralized generation as consumers also become generators. Smart grids will have the potential to optimize the supply and demand in every minute at every location, while shaving peakcapacity demand in this participative energy system.

Asian Power: What are ENGIE’s ambitions for Asia?

Jan Flachet: Our strategy for Asia is in line with our Group’s global ambitions, and focuses on decarbonisation, decentralization, digitalization and energy efficiency. Thanks to our global expertise across the energy and gas value chains, we are well-positioned to develop large-scale power and gas infrastructure, and thus securing the energy supply that is critical to Asia’s economic expansion. Furthermore, the region’s renewable energy potential holds promising prospects, and our technical capabilities and experience can be applied to maximize the output and return on investment. In addition, our energy services businesses have growth opportunities for energy efficiency services as
many Asian countries currently consume more than twice the amount of energy per unit of GDP than the OECD average.

And last but not least, our Group can bring in solutions to megacities that will help them to cope with the impacts of rapid urbanization.

Asian Power: How do you plan to achieve these goals and what do you consider the key success factors?

Jan Flachet: Not only is our business offer changing, so is the way we do business. Through creating stronger roots locally, and becoming a multi-local group, we will enhance our dialogue with our customers and stakeholders, with the aim to cocreate solutions and to design energy solutions for the future.

In an entrepreneurial spirit, we aim to innovate with a digital and energy mix, showcasing the most modern technologies. 

CEO Shrirang B. Karandikar says the company now maintains a round-the-clock power supply in Gaya.

India Power (IPCL), one of the oldest power utilities in India for over 90 years, has been recently active in diversifying its portfolio, with renewable and conventional modes of power generation, transmission, distribution and power trading. One of its significant activities after the Kolkota-based firm’s name was changed from Dishergarh Power Supply Company (DPSC) in 2013, was its takeover of the electricity supply and distribution business of Gaya-Bodhgaya from South Bihar Power Distribution Co. Ltd. (SBPDCL) from 1st June, 2014, and comprising surrounding urban and rural areas amounting to over 1600 sq.km. Surely, it was not an easy task as Bihar is plagued with high distribution losses due to the poor condition of transformers, huge pilferages, and substantial billing and collection losses.

Asian Power has recently caught up with IPCL CEO, Shrirang B. Karandikar to shed light on the challenges that the company currently faces as it takes on this herculean task. He also talked about the direction that he is taking the company to in its bid to diversify portfolio.

IPCL currently operates 100.2 MW of wind assets in Rajasthan, Gujarat and Karnataka, and has also developed a 2 MW grid-connected solar power plant along with West Bengal Green Energy Development Corporation Ltd. in Asansol. In the conventional sector, the company is setting up a 450 MW thermal power plant in Haldia, West Bengal and has also conceived thermal power projects in Bihar and Madhya Pradesh.

With the development of the power plants, IPCL intends to scale its power generation portfolio up to 10,000 MW in the coming years. The company also owns and operates a distribution licence in the region, spread over 618 sq.km. in the coal-rich Asansol-Raniganj belt.

IPCL’s distribution license in Gaya, notoriously one of the worst sectors for a power company to operate in, is now one year old. What have you learnt in this time? How has the situation improved for domestic and industrial customers? 

Our responsibility includes continuous electricity operations and to all consumers, maintenance of the entire area, collection of revenues by issuing energy bills and remitting the agreed cost to SBPDCL on a monthly basis. This is besides complying with all regulations of the Bihar Electricity Regulatory Commission. When we took over, average power supply to the area was in the range of 13-16 hours and this was a major challenge, dealing with dilapidated network conditions.

Secondly, the distribution loss level at takeover was climbing to over 71%. Besides this, there was no specific billing software or business enterprise software available for adequate control and consumer care. Incidentally, our takeover coincided with the onset of the monsoon. Our first task was to maintain the existing network and to ensure an optimum power supply. There is “Pitra – Paksha” mela in Gaya. This is a traditional ritual to remember our forefathers and thousands of people from across India congregate at these rituals in Gaya every year in September and October. In 2014 and 2015, IPCL’s efforts in maintaining power supply was highly appreciated by the people and the administration of Gaya.

During our first year of operation, we were able to maintain power supply to all franchise areas of up to 23.30-24 hours on average. This is highly appreciated by our consumers.

We have also established a 24 hour a day, 365 days a year call centre and consumer care centre for attending to electricity related complaints, billing related complaints and connecting new power supply etc. We understand that people are eager to be provided with better services and are also prepared to pay the relevant charges. We need to strive continuously to extend our reach to all consumers.

One of the biggest issues in the world today is the issue of climate change. At the same time, our current methods of large-scale energy generation use non-renewable resources. How is IPCL preparing for the conversion to renewable sources of energy?

IPCL understands the importance of increasing new renewable energy sources and has been striving relentlessly since 2006 to achieve a balanced mix of renewable and nonrenewable energy resources. We have over 105 MW of wind energy in four major states of India - Rajasthan, Gujarat, Maharashtra and Karnataka. We also have 2 MW of solar plant in Asansol which is already connected to the grid. We are looking forward to contributing to more wind and solar energy in India.

The distribution business in India faces several challenges, especially in non-urban areas. How is IPCL taking on and overcoming these roadblocks?

In non-urban areas in India, people require continuous power to water their fields and for their houses. As regards new power connections to rural areas, IPCL, along with its sister company, Sahaj, have created a network of “Village Level Entrepreneurs” (VLE). VLE are youths of the same village who assist villagers to complete applications for a new connection and register their billing details. This has helped villagers in getting their needs sorted out and we have started this specifically in our distribution franchise area.

What are IPCL’s new undertakings in the distribution business?

IPCL, with its vast experience in the field of power distribution, is in discussions with other Indian states like Rajasthan, Jharkhand and Uttarakhand to acquire new opportunities in the field. Simultaneously we want to increase our base and retain domestic and commercial consumers in our licensed area.

We are also working towards the lowering cost of power to industries in the state of West Bengal where we are based and to help industries to become extremely competitive.

IPCL has more than 96 years of experience in the distribution business, having receiving stations with both DVC & WBSEDCL, and we own more than 20 strategic distribution substations at 33/11 KV, which are distributing power across all industries within 618 sq.km. of the Asansol-Raniganj area.
The company is on the verge of commissioning a 220 KV substation at J.K. Nagar, within the licenced area, to enable State Grid (STU) Connectivity. Supplying power to the critical gaseous underground coal mines of ECL, government hospitals, municipalities, railways and other industries, the distribution license is considered to be the lifeline of industrial growth in the area. It has a demand of over 250 MVA, a reliability factor of over 99.7% and T&D loss figures of around 2.70%.
 

It has ambitious plans that will ride on the coattails of Indonesia’s power plant investment spree.

In the past decade Indonesia has reduced its electricity shortage and lowered the electricity subsidy through tremendous power plant investments. Encouraged by the strategy’s success, it is further ramping up its investments through the 35 GW New Power Plant Programs which will be implemented within the next 5 years.

Asian Power sat down with Mr. Antonius RT Artono, acting president director & director of business development & commerce at PT. Indonesia Power, to talk about Indonesia’s ambitious target and the role his company will play in this potentially game-changing program.

PT. Indonesia Power is a subsidiary of government-owned electricity distribution company, Perusahaan Listrik Negara (PLN). Established in year 1993, the company is aimed at creating power generation business competition together with Independent Power Producers that started to grow at that time in accordance with the electricity regulation in the country.

What are the targets of PT. IP in relation with the 35 GW New Power Plant Program?

The 35 GW Program is not only a big challenge for the company but also a big opportunity to grow and expand the company’s business. The company has targeted 10 GW of new power plant business in the next 10 years, which is more than double that of the existing capacity. Out of this new 10 GW power plants, 6.6 GW capacity is under development at various stages:

200 MW has just completed commisioning, 212 MW is under construction or exploration, 1,850 MW is under procurement stage and the rest of 4,390 MW is under the feasibility stage.

Among this 6.5 GW new capacity, the company has secured power plant locations for 4,890 MW. To realize the targeted 10 GW capacity, the company still needs to pursue the rest of 3.4 GW capacity through partnerships or equity investments. To support the 35 GW power plants, Indonesia has various energy resources either renewable or non-renewable energy.

What are the most pertinent energy challenges Indonesia are facing today and how is your company helping to address these issues?

For such a big 35 GW electricity program, this country cannot just rely on a single energy souce. The country has an abundance of coal, gas, hydro as well as geothermal. This country, like other countries, must avoid utilizing oil as an energy source to generate electricity, as this is the most expensive way to produce electricity.

Utilizing a combination of many energy sources also provides less risk in terms of reliability in energy supply. PT. Indonesia Power will focus on three major energy sources in developing new power plants, namely coal, gas and hydropower plants. We will still consider geothermal power plants as long as the risks are manageable.

We know that Indonesia Power looks after the operation of power plants in Indonesia. Can you tell us more about your operations in this country? What are the latest updates as well as challenges you are facing?

The company is providing O&M services for about 5.3 GW power plants belonging to PLN across the country. Our strategy in providing O&M services is mainly to deliver good power plant performance through duplicating our long-term best practices in operating our own power plants, as well as build asset management systems to ensure the right power plant O&M strategies in the long run.

The most challenging parts in entering this O&M business is building competencies in O&M. To provide competent operators and technicians requires about 2 years of on the job and in-class training (different types of power plants will need different periods of training, in this example, we use coal power). To address this challenge, the company is investing in recruiting and training human resources 2 years prior to the expected power plant operation.

We train staff in our existing power plants and place them under mentorship of experienced operators and technicians.

In addition, as each power plant will always have unique characteristics, then we will deliver our well-trained operators and technicians during the construction and commissioning stages to make sure they become accustomed to the specific power plant. This year the company is recruiting about 500 operators and technicians and will continue for the next 3 years to provide O&M services not just for PLN’s new power plants but also IPP power plants.

What do you consider as Indonesia Power’s biggest achievement to date?

There are many achievements awarded to PT. IP during its company history, but the biggest one is power plant reliability that can reach up to the top 10% of statistical data compared to the North American Electricity Regional Councel (NERC). Every year we measure and compare our operational power plant performance against the stastical data from NERC. We have the Suralaya Coal Power Plant Unit 5,6 & 7 (600 MW size each) that reached the Equivalent Availibility Factor of 95%, 94% and 92% respectively.

Each of them is above the top 10% of NERC at 90.35 %. Availibility is one of important measures of success for a power generation company delivering O&M services. We are very proud of it, and willing continously maintain this high level availibility in the future.

What are Indonesia Power’s plans for the next 5 years?

The company in the future will focusing on five major aspects, but at this time I just want to focus on 3 of them: Growth, operational excellence, and business development excellence.

We expect that within the next 5 years, we can grow up to 5 GW capacity of new power plants. We just completed commissioning 200 MW additional capacity and expect more in the 4th and 5th year. This growth will ensure that the size of the company will increase in terms of assets and capacity as well as revenue and profit. This is very important to the company to maintain company sustainability through the renewal and replacement of old and less efficient assets.

Operational excellence is also a key focus to our company, as this is the way the company will get continuous profit for new investments. This critical factor will also build trust and confidence among our shareholders as well as potential partners.

Last but not least is business development excellence, starting from selecting good and profitable projects, conducting studies, all the way through to engineering & design, procurement, construction, quality control, project management, and commercial operation.