One year after establishing its Romanian Representative Office, Kawasaki Gas Turbine Europe GmbH iterated, this February, its intentions to contribute to the modernization of the cogeneration sectors in the region. We talked, in Bucharest, with two representatives of the company based in Germany, in a dialogue intermediated by Cristian Athanasovici, who will represent Kawasaki Gas Turbines in Romania and the neighboring countries.
Dear Mr. Masahiro Ogata, you are the Managing Director of Kawasaki Gas Turbine Europe GmbH. Please, tell us a few words about the Kawasaki group.
Masahiro Ogata (MO): Kawasaki group is one of the biggest heavy industrial companies in Japan with over 11 billion euro worth in revenues per year. Our portfolio range includes various products from motorcycles to big power plants, and also ships, trains and air crafts. Out motorcycles are the most famous globally, but in Japan the motorcycle market is not so large, so other products of ours are more important there. Japan is a very small country so we are constantly looking for new markets outside of Japan. Kawasaki started more than 120 years ago as a shipbuilding company, and it permanently increased its range of products. Our gas turbine business started as the licensed maintenance business of jet engines since the aircraft business was forbidden by the US after the WW2, and one part of them grew up to the energy business with the own designed gas turbine based on the jet engine technology. In addition, we integrated the reciprocated engine business as one energy business later.
Thomas Himmighofen (TH): Before I came in the position of director of Kawasaki GmbH Europe I was Sales Manager, and before this I was Area Sales manager, including Romania. So I know it for more than 10 years, and we worked very successful, as we sold 7 turbine packages; unfortunately only three of them are functional at the moment. Our most solid argument for looking to increase our activity here is that we have in Romania a very strong partner, even since 2015.
After the Fukushima accident there was a quiet change in the approach on nuclear energy in Japan. I am curious if that meant increased business opportunities for you in Japan. Is that correct?
MO: The government was forced to stop the nuclear plant after the accident you mentioned. Therefore we had more opportunities to sell our generation systems, but on the other hand, the gas price significantly increased as Japan imports 99% of its gas consumption and it reduced the opportunities to realize the power plant.
How is Europe, from your perspective?
TH: Europe is changing very quickly, driven by the climate change and the decisions that have to be taken to deal with this. In Germany, for example, it was very much a sudden change towards renewables, and Germany still has not fulfill the targets for 2020 share of renewables. It depends very much on national regulations, and they tend to change very fast. Two years ago, we thought Poland will never be a market for us, because Poland is 99% based on coal. However, this year, at the COP24 event in Katowice, they had to come out with something on the path to decarbonization, through gas.
Beside decarbonization, some countries also decide to get out from nuclear, which is also of some help. Also, the price of gas is stable in Europe, with a slight tendency to decline. There is also this trend to switch off the huge power plants. It is the case in Germany, which will close its nuclear power plants by 2022. This means around 10 GW in installed capacities which are to be closed in the next three years. In addition, they took the decision to get out of coal before 2038, maybe faster. What happens if you take out huge capacities out of the market and replace them with renewables is that you have this gap which has to be filled with small units, storage, batteries and other technologies like this.
The move out from fossils means, in the first step, to build up small capacities based on gas to fill the gap. Based on our portfolio, we are ready to contribute to this trend.
What do the Western countries do in order to push their national energy agenda – like phasing-out coal or phasing-out nuclear – in a predominant private industry?
TH: It very much depends on the subsidies system introduced by the governments, and this is different in each country. This also means that when the subsidies system is withdrawn, especially the small sized companies are suffering.
Germany is very special because in Germany you suffer if you do not get the support [for renewable], but also you suffer because you have to pay a fee for the electricity you produce for your own, in order to support the renewable sector. In the past, most of the industry was exempt from this fee, but this is not the case anymore. It is also important what the European Community decides when analyzing the competition situation in each specific jurisdiction.
So, the companies are pushed to decide on their own if they are to shut down some specific capacities or not. They have to make their own analyses and feasibility studies, to understand if it is feasible to run a CHP plant, or not. That is where we can help already, with our solutions.
What is your approach to Eastern Europe?
TH: The majority of our past projects all over Europe are industrial CHPs, and we focus ourselves on certain CHP schemes. We have engines and gas turbines, so we screen for industries that need high temperature steam, typically paper, and chemical industries.
The first criteria is whether such industries does exist in these countries. As many companies in Western Europe moved their production facilities in the Eastern Europe, basically these industries do exist. Now, they can buy the electricity from the grid and they can make heat with conventional boilers. Or they can use a CHP. We have to convince them, not that CHP is much more efficient, which is a matter of fact, but that it is feasible, that they can get the payback in a reasonable amount of time for such an investment. That means a case to case approach, and taking into consideration the national subsidy scheme, where it exists, and based on its specific form in each country.
Mr. Cristian Athanasovici, you will be responsible for the increasing Kawasaki Gas Turbines footprint in the region, as a Business Development Manager. Are there any encouraging signals you identified, so far?
Cristian Athanasovici (CA): The characteristics of Romanian and regional markets, among which the old generation fleets in cogeneration segment, and steady development of industry requiring energy independence and control (in terms of power and steam) are strong reasons for Kawasaki Gas Turbine Europe GmbH to strengthen its presence in the region.
MO: One difficulty is that most of the clients in the region have financial problems. So, they are looking for the lowest-cost solution and they need some form of financial support.
TH: At the same time, the demand is here! If you go to an industrial facility and you look at how they manage their energy needs you will see that most of the equipment is old. So, for now, maybe they have access to cheap electricity, but this is a limited solution, in time and in results. Our products are very competitive, we can organize EPC, if it is requested, and in the end we want to come up with a form of financing if that is requested.
CA: Together with our partners, we can provide not only an equipment, but a solution for our clients. A solution for a cogeneration plant can start from pre-feasibility study, design, concept. Then, we build up the power plant and also provide the long term service agreement for maintenance activity. In fact, one of my targets is to grow our local team, in order to be able to cover such maintenance activity from here in Romania, with Romanian people.
Final question, now. Mr. Thomas Himmighofen mentioned in the beginning that Kawasaki sold 7 turbine packages in Romania, but only three are functioning. What is the story with the other four?
CA: Unfortunately, two of them are for district heating in a place that could not be connected to the natural gas grid for 10 years. The other two were bought by a private company interested in running a big mall; the company is in bankruptcy now…
So you lost the maintenance fees you counted on…
CA: The fees are not the most important issue here. We are not happy just to sell the equipment or the solution. For us, each machine that is running is a good business card and good publicity for our future market activity.
This interview firstly appeared in the printed edition of energynomics.ro Magazine, issued in March 2019.
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