ABB has unveiled its plan to become the leading global supplier in energy storage solutions and recently announced an alliance with China’s BYD. Speaking to pv magazine, Otto Preiss, the Group Senior Vice President and Head of Business Unit Power Conversion, explains how the power conversion business aligns with ABB’s overall strategy, where the electricity market is heading and the synergies between its battery, inverter and e-mobility businesses.
pv magazine: In what way do you think the power conversion business at ABB reflects the transition of the electricity and energy sector as we know it?
Otto Preiss: The power conversion business stands for power electronics-based products and solutions going into renewables-based power generation, electric transportation, high current industrial applications and UPS [uninterruptable power supply].
When we talk about the renewables part of it, we quickly talk about distributed power generation. As a result, we see the transition of the utility sector as one in which there is increased focus on distributed generation and smart grids. We also see the combination of local generation and storage with electric mobility charging cars in an economic and efficient way.
The whole transformation process that we see on the utility side which is moving from central towards distributed architectures is affected by the topics [covered by the power conversions business unit]: renewable-based power generation, storage and local area storage and the more pervasive use of e-mobility, including mass transportation coming with growing urbanization. It’s all going hand in hand.
Is it coincidental that the business unit reflects this changing real world energy environment?
This business unit was created two years ago. We wanted to have a market focused organization considering the growth opportunities while benefiting from some of the power electronics backend synergies like sourcing and technology leverage.
If you look across the application portfolio that I just mentioned, at the core youll find converters and inverters, i.e., power electronics from 1 kW up to several megawatts. All these products have the following in common: semiconductors, cooling technology, topologies, controlling and understanding of the specific application and the grid.
When you look at an integrated system like you’re talking about, how will that impact on the delivery of energy to consumers on a macro scale?
At a high level, consumers will see a mix and have a choice of locally vs. centrally produced electricity. A concrete example is the emergence of micro-grids. With distributed generation, the first ambition level is to strive for grid parity. Secondly, consumers will be looking into self-sufficiency; using as much of the electricity you generate for your own consumption, not buying it from the grid, and providing electricity back into the grid when economically meaningful.
Today, we see grid parity increasingly reached with solar, so it becomes economically viable. In the U.S., for example, there are companies that are providing consumers with a power purchase agreement service. Thus, consumers have a predictable rate for their electricity over time that is lower than what they would normally pay for electricity from the grid.
But can you confidently say that a dynamic integrated system like you describe won’t be more costly than the more-linear, centralized electricity system we have today?
I would stay away from any generalized message. The economics is very much case dependent. For instance, one needs to consider the location where you are consuming or want to consume the power. Hence, we need to take the discussion down one level, look at the local reality and then discuss the cost in this context.
Statistics show that while [grid parity] localities were scarce a few years back, they are now growing. Today, there is an increasing number of countries or regions of countries where local power generation and local control of the grid pays off.
At the ABB Capital Markets Day we heard about the potential of places like Africa and India as these are such cost competitive spheres for decentralized power, but what about developed locations?
Let’s go back to the microgrid discussion. A microgrid is largely supplied by distributed generation including renewable power generation paired with grid-stabilizing technologies like ABB’s Powerstore and an automation platform to cope with the generation pattern according to the load need. On top you might have self-sufficiency. In places like India and Africa, the need for more power or power at all, often also in remote areas, is the main driver for microgrid growth. In developed, mature markets like the U.S., self-sufficiency and grid independence as well as compliance with CO2 emission requirements are the main drivers.
If you look at this microgrid topic, where do you have a big market today and growth?
It is mainly in the U.S. and in Asia; two regions with totally different drivers for growth. In the U.S. and in more developed countries, as mentioned, you want to become less dependent on the grid disturbances and the grid quality. In the U.S., micro-grids are found among others in governmental institutions and campuses defense bases, medical campuses, etc. which do not want to take a risk to stay without power after severe weather events, like snow storms, that might cause power outages for hours and days. In these situations you cannot afford not to have power and you can also not afford to have a UPS that must run for days. Therefore, you will need good backup power generation and grid control that will provide self-sufficient off-grid operation for a certain period of time. So in the U.S. and developed countries, self-sufficiency and compliance with the C02 requirements are the main drivers for microgrids, including local power generation.
When we look at Asia with India, China and Asia Pacific, but also Africa one of the most important needs they have is power. Today, there are still 1.3 billion people without access to electricity and only 40% have internet access. Social welfare really only comes with electricity, that is why electricity demand is growing strongly.