Investing in Renewables and Flexible Gas is Key for Decarbonisation, says Wartsila VP

Wartsila VP

Quick Summary

In this thrilling podcast interview, we spoke to Kenneth Engblom. In the rich conversation we had, we cover multiple topics of great importance to him:

  • Professional journey
  • Wartsila in Africa
  • Decarbonization Strategy
  • Uniting the Energy Industry towards Clean Energy
  • COP 27
  • Personal heroes

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TT: Good morning. Good afternoon, everybody. Every day we bring you industry leaders that will educate you on what’s happening in our sector and also tell you what is coming. And I can tell you, you’re going to learn a lot because I have an amazing gentleman. He’s travelled the world and is working for one of those iconic companies. I have Mr Kenneth Engblom. How are you doing?

KE: Thank you very much. It’s a pleasure to be here today.

TT: I’m delighted because I had a chance to speak to one of your colleagues, Wale Yusuff. He is the country director for Wartsila in Nigeria. We had a very exciting conversation. And I can see obviously, you’re going to also learn a lot more about yourself and I’m particularly interested because when I was looking at your CV, first of all, I want maybe need to spend two hours on experience that you’ve had. After all, you’ve been to so many places. You’ve been to India and have certainly been to Finland. Your previous work suggests you have been to the US too.

KE: Yes. I’ve been in the business for quite some time. If you start from now, today I’m heading the Africa-Europe energy business investment, with energy business. We do a few things from how we market and sell our power plants to how we build them, and how we then do the lifecycle support. I have the two continents – Africa and Europe in my responsibility area. I just joined Wartsila here at the end of last year. Before that, I was four years with ABB Hitachi, responsible for transformer sales and marketing. But then before that, I had different positions in Wartsila over the years everything from project management, R&D, engineering and sales. I was even having the marketing department there for a few years for energy. I was stationed in India and the US and shorter period in Australia.  Africa, I have not much experience with so far but I look forward to start working more closely with our African customers.

TT: It’s not going to be a challenge for you right!? If somebody can go from engineering to marketing consultant. That is a big jump by the way. I could probably relate to that because I started my career as an engineer, to now running a business. You had to learn all the facets of the marketing part of it. I can understand the job that you had to make.

Let me come back a little bit to your career, especially the company you work for. You worked for 19 years Wartsila, occupying different functions, right? And then you’re left for ABB, and then Hitachi and you came back. Why don’t you come back? What is making Wartsila so special that makes you stick there?

KE: It’s a really exciting company. We have so many things going on. And then what I really like in Wartsila is the way we sell total solutions. How we work with governments, ministers to understand their grades and support them all the way so there’s a full scope in Wartsila. I really like that. And also how we can do full EPCs and also if customers choose so we can just supply equipment. We have a broad portfolio of everything from equipment deliveries. That gets a company with a lot of different things to do. So, if you don’t like the energy field, you can always work for our marine side which is also equally interesting.

TT: How many countries are in now? I know you’re looking across Europe and Africa, which I think are certainly the most interesting continents. I was wondering how wide is a company that is present in 77 countries around the world.

KE: Wartsila is present in 70 countries and our total installed base is about 7GW. We have power plants in over 100 countries. We have been in Africa since 1975. We built the first power plant in Tanzania, I think it was for Tanzania radio, you know in 1975 it was built by the team from Finland and you were communicating with Telex. Okay, you had like one sentence “We order one piece of power plant” that we said “yes, thank you very much when do you want it to be delivered?” so it was quite amazing how you could communicate in those days and get things done. Of course, some visits to the site also but anyway, if you compare today with all the emails and everything but social media, yeah, so maybe we communicate too much today. I don’t know. It started in 1975. And then after that, today, we have 600 installations. In 7.4 gigawatts were installed now in Africa. 1/3 of those are then done. We have an O&M agreement to run the power plant for customers. And in 25 of these countries that we are, the electricity produced from the rest of the plants corresponds to 1/4 of the electricity production in Africa. We are quite a big player in Africa. Right now, we have 650 people there: Our hubs are in Nairobi, Kenya, South Africa and in Senegal.

TT: We certainly have more than 230 gigawatts of power that is produced across the continent as a full continent. Out of this power, three quarters that come from fossil fuel. I was wondering if that is the same split with Power Solutions that Wartsila is producing in Africa? Just out of interest?

KE: Yeah, we used to then in the early days. It was mainly heavy fuel oil plants, as that was the only available fuel in many places and, over the years, we had more and more engines running with diesel. We were customers started asking for dual-fuel engines, meaning that they can run on heavy fuel but then transferred to gas when gas becomes available, and now more and more gas is available all over Africa. But there are still of course areas where the dual-fuel capabilities are very valuable. It’s three fuels because you can also change from heavy fuel to diesel and then from diesel to gas and you can do this all-in-one run. You don’t need to change anything on the engines the engines are built to do this. There are three fuels so that’s been a great asset in a market that is developing quickly and the fuel side changing.

And then what is happening around the World, even in Africa, is the decarbonization. More and more of our fossil fuel assets, maybe coal power plants are being exchanged for lower carbon fuels and renewables, especially renewables. We are now supporting the integration of renewables into Africa.

TT: Excellent. Thank you for actually bringing this up because that was going to be my next question. Because you’ve been quite vocal, right and also, the company. You’ve talked about the smart flexibility approach that the continent can adopt right to push renewable energy on a massive scale. And you’re also saying that this can save money along the way. I think it is compelling. I’m excited. I want to hear more about that. I want to make sure that I understand exactly what you mean. So, would you mind maybe elaborating on that, please?

KE: Sure. That sounds almost too good to be true but what we have done this modelling of the grid systems in Senegal and Nigeria, in Africa and of course in many other places around the world as well. In those two specific places in Africa where we have modelled the grid in Africa, we have looked what happens if you then put wind and solar into the system. If you only put wind and solar into the system, of course, you lower the cost in a way because there is no fuel cost with this. You have of course installation costs but then, in the long run, you’re saving money because you have no fuel costs, but you’re also building unreliability to the system because the sun doesn’t always shine, the wind doesn’t always blow. So, in order to really benefit from this, you need to have some flexibility there in the background that kicks in during those periods where there is nothing produced from the renewables. This model shows them that if you replace coal by putting in renewable together with flexible gas, that is the key to lowering the fuel cost without losing any reliability of the system.

TT: Excellent. That’s very interesting. Removing coal and replacing that with renewables and using flexible gas. That’s very, very interesting. When you’re talking about flexible gas, where in the world has this combination been used and proven?

KE: Right, we have several plants now even in Africa, which are being developed with this in mind: to bring the flexibility to support renewables. Renewables in Africa are not so much yet. So, you don’t yet see the problems with the instability of of the sun and the wind, but the more you put into a system the more you will create this problem unless you have something to balance. In the US, for example we have several plants now that we call wind chasers where they are used actually to produce power during the peak period where the wind is down. It’s also not only renewables it’s also in the evening when people get home from work. They turn on the air conditioning, the television the cooking and you know the sun has been setting. You have also a peak of load there in the evening. So that’s a typical time also when the flexible gas engine starts up, in the evening when people get home from work because the sun is down and the wind doesn’t necessarily blow and even if it blows, you would need so much power there during that peak. In Australia we also have a plant doing the same thing. And in Germany, we have these plants where they are combined with CHP. So, there you have both producing power at the peak periods and also then bringing hot water for heating.

TT: Excellent that’s fantastic. So, I can see gas has a major role in that strategy. So, you must be quite pleased with the decision from the EU to rebrand gas as a sustainable fuel.

KE: We were a bit worried there as you know, the first revision there was not gas in it; but then after the second revision, I think people realized that you need to have something to back up the renewables. So finally, now in the final EU taxonomy it is there. So it’s now clear to me that renewables and gas together is the way for a low carbon society. It’s also mentioned that the gas will be used with other fuels. Over the years when low carbon fuels like green hydrogen are available, you will then slowly start blending it with them.

In there is we already have or technology capable to do that. Every time you can already blend in. Of course, we’re working on increasing the blending to target is 100% hydrogen. Of course on the marine side, they do ammonia. Basically they put hydrogen together with nitrogen to create ammonia and if the hydrogen is created by renewables, it’s also CO2 free. You can also use methanol so that there are many blends you can do with hydrogen. So, no one knows really how what the final solution is. It’s of course in the process but our ranges anyway are capable of taking this character fuels into account.

TT: That’s excellent. That’s great news that reminds me the example of vaccine for COVID-19. When vaccine were discovered, what we had was vaccine formula, but there was always going to be the issue of how they were going to be manufactured at scale just to spread it across the world. In this scenario, yes, you’re right so there are more and more talks about hydrogen as a future path and it is good to see that in there too, you are ahead of the curve.

I know bringing the whole industry, the whole society towards decarbonizing, a pathway where we can all work together and make sure that we can limit the increase the temperature to one the 1.5 degC by the end of the century, as we say, requires the massive, massive amount of effort and awareness. As a guru of marketing that you are now, I was wondering, how do you galvanize efforts to bring the industry together to march towards that cleaner society? What is the company doing, especially your Department?

KE: Good question. In Europe, we are quite active. We participate in a lot of the EU Commissions, discussions through these special purpose companies that combine the interest of the gas turbines and engine portfolios and address the issue of how we want to see the future developing. So, there we do. We also then work directly with, countries with ministers, energy ministers, and always open them to discuss and share our ideas. As I mentioned earlier, we have these Plexus models we use to model a country’s grid system. This has been very much appreciated by many government ministers as it helps them to get a good view from the industry on how we see the future for a choosing grids. Obviously they always have the final say and we understand that there are always many other things to think about. Some countries might have they have a lot of people working in the coal industry. So, we understand that the speed of implementation is different depending on the country, but at least we try to present what it could look like if we have no limitations on those other things.

TT: I mean, it’s always helpful to at least start visualizing these solutions. We need industry players to be able to help so that stakeholders have an idea of what we’re talking about. Let me move on. We have two more questions for you. COP 27 will be in Africa; You were probably very involved last year because COP 26 was in Europe. According to you, how should the continent prepare for such major events and what would you say your expectation are all leading up to this gathering that we’ll be having towards the end of the year?

KE: In COP26 there was some progress again. Like I said, before, I think a lot of the politicians and ministers know what needs to happen. I think global warming has been more and more accepted. Now we need to do something. So, the question is, of course, how?, how do we get there in the least painful way because people will be asked to change their lives. Now, we produce electricity with fossil fuels and as I said earlier the coal industry, they have a very big workforce. They need to find ways to do it and convert it into something else. It takes time these things, even if you know what you need to do. But I think every year it gets more urgent. And of course, we hope in COP 27, we will have more concrete actions. We need the government to make the incentives it creates an investment climate to invest in flexible gas, because if you only pay for the electricity, or you don’t pay for the flexibility no one will build the flexibility.

They can only build solar panels and wind and then you will have the reliability and the blackouts in the system. It’s education that the decision-makers need to understand how a grid works, and then electricity cannot be stored in the power lines. Electricity has to be consumed when it’s generated. One thing of course is a battery that’s been quite popular now lately. We have also battery energy storage in our portfolio. We sell battery storage as well. But the problem is that it’s very expensive. It’s much more expensive than that to produce power with gas. So, you can do it for small amounts of kilowatt-hours. You can maybe shift the peak an hour or two hours. But when you need to generate you know for a whole day or shift the thing from morning to evening. Then it’s still expensive today but it’s a good fine-tuning of the grid to make it more stable so we have both products in our portfolio and we are selling both today.

TT: I love what you said; that we shouldn’t just plan for a generation but we should also pay for the flexibility. Allow me to ask you the last question. And let’s go back a little bit on a lighter note. I just wanted to know do you have a personal hero? Who is he or she and why did you choose why is that person your hero?

KE: There are maybe a few. I don’t have a specific one but Brene Brown is one of them. Talking about psychological safety you need to have built an organization where people there speak up and have different opinions and say how they see things. Secondly, you have Simon Sinek who is also one of the advocates of psychological safety.

TT: Excellent. That was a brilliant conversation I had with you and I could see you were part of an iconic company, doing fantastic work and educating the industry as to how we all work and march toward this clean world where we can use more renewable energy and decarbonize. It has been a pleasure for me and I am hoping that maybe at COP 27 I get the pleasure of properly shaking your hand.

KE: Absolutely.

TT: For the time being I thank you for your time and wish you a good day and the rest of your week.

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