Request you to kindly drop in all your mails/queries to support@infraline.com or call us at
+91-120-6799125 (D); +91-120-6799100 (B)

Michel Augonnet, Senior Vice-President, Commercial Solutions, Alstom Grid

03 Feb 2014

The transmission and distribution (T&D) sector in India is at long last getting the attention it deserves. Michel Augonnet, Senior Vice-President, Commercial Solutions, Alstom Grid talks to Shakeb Ayaz about how his company is contributing in the development of India’s national grid. Excerpts.

What is the main challenge working in Indian T&D sector?

The main challenge is to get paid on time for the work that we do. Lack of liquidity and funding are major challenges. The second challenge from the manufacturing point of view is that supply chain and infrastructure are rather weak in India. The size of the country demands a strong engineering and industrial base. Third issue is finding good quality of sub-supplies and sub-contractors at the site. Safety is also a major issue for our operations in India. Alstom has a very strong and strict Environment Health and Safety (EHS) policy for which we need competent service providers and contractors. Alstom spends lot of time and efforts in educating customers, suppliers and contractors to follow the global EHS standards in India.

What kind of cooperation do you expect from the Central government and various state governments for the projects in general, ground support base and policy issues?

India needs to quickly implement fund flow in the power and T&D sectors via reforms in SEBs. It also has to develop a strong manufacturing base at par with international standards. India should protect companies which invest and manufacture locally against foreign companies which dump their products manufactured outside India, into the Indian market. Else it would destroy the industrial base. I hope that the Indian government understands that, to be part of India, the company has to be a part of the industrial tissue with a strong manufacturing base in the country. India is our biggest base in terms of manufacturing, localization, design and project management team. We consider ourselves ‘Indians’ in India. We want to develop that way for India and from India.

What is your experience working with state electricity boards (SEBs) in India? Are there structural problems?

The financing of the energy sector is insufficient in India. Electricity tariff is too low, SEBs are in deficit, payment to their suppliers is delayed and they do not have adequate funds to invest in T&D infrastructure. Therefore there are not enough opportunities for suppliers like us. This also impacts private power operators who today have embarked on very heavy investments for power plants and cannot get paid in time for the electricity supplied to SEBs. It has a ripple effect on us, as we are also not getting paid for our work, thus slowing down the execution of the work that we are performing. The structural issue in India is also about the funding of the energy sector. Land availability and environmental clearances are other structural issues for SEBs, IPPs and Power Grid.

The government has stepped up efforts for restructuring of state discoms through a financial restructuring package (FRP). What is your view on this process?

It is a welcome idea as the SEBs would be able to find the money for investment in the T&D grids. It will also revive the financial situation of IPPs. But for it to be a success, the implementation of the FRP has to be quick. We see that four or five states have embarked on the tariff and debt restructuring process. It’s a good start but it is only the beginning. We have not seen much effect as of now. When it comes to the generation side, a lot has to be done before these IPPs become viable again and the investors seek their money back for being able to continue and proceed.

Every state in India is unique. Do you think one FRP model can fulfill the requirements of all states? There are demands that there should be a unique FRP for every state, especially from the APPs.

The speed of implementation may be different for different states as some states may be more rural, where the cost of power is a big issue. The gap, between what the people are paying and what they should be paying, is huge. So tariff is a big issue and challenge. The social aspect of availability of electricity has a far reaching effect on the economy. The FRP model won’t have an impact from day one but in major states which are economically strong the reforms will solve that part of the issue. It’s very important as reforms would allow SEBs to modernize their T&D infrastructure. Today India has huge number of diesel generators to ensure 24/7 power supply. This is a waste of capital and also leads to pollution.

How will your technology and new equipment cut down generation and transmission losses?

The design of extra high voltage transmission is one of the best ways to reduce transmission losses. Then there are schemes related to technical and network management, the systems that grid code in the form of reducing the frequency band and imposing a huge financial penalty in case of power overdrawal by states.

What is the international status of Alstom Grid as a transmission and distribution company?

With sales of around 4 billion euros, Alstom Grid is among the top three global players in the electrical transmission sector with a 10 per cent market share. We have technology centres and 40 R&D centres in 12 countries. With 88 manufacturing and engineering sites, Alstom Grid equips more than 90 per cent of power utilities across the globe. We manufacture a range of equipment covering the high and ultra-high voltage up to 1,200 kV (ac) and 1,000 kV (dc) like power transformers, gas-insulated switchgear, generator circuit breakers, air-insulated switchgears, turnkey high voltage substations (onshore and offshore), grid interconnection for all types of generation, high voltage direct current (HVDC) systems and flexible ac transmission systems and reactive power compensations solutions.

Which countries is Alstom Grid present in?

We are present across 70 countries which include Germany, Brazil, France, the UK, China, Indonesia and Australia. In these countries we have our own manufacturing bases. India is a very important country for us and we have the largest volume here. We get 15 per cent of our total global sales from India. We manufacture our product locally and also import from Europe, India, China to countries where we don’t have our own manufacturing facility.

How does the company rate its performance in India?

In India we are market leaders for the fifth year in a row. We command 19 per cent market share which explains it is we have developed, typically enable to use the network capacity much closer to its limits. By using wide area monitoring and other state-of-the-art load despatching systems and other technologies, we can run the network very close to its limits. Thanks to modern network management system installed by Power Grid, India could recover from July 2012 blackout in six hours when in the US it took three days. The problem was restored quickly because the grid network in India had strong RLDCs and national load despatch centres. We have a key role in the performance of the network in India and thereby improving the efficiency of the network in terms of losses, availability and efficiency.

Do you feel that the situation has really changed after the grid failure of 2012?

Power Grid, ministry of power and CEA are implementing new schemes to make the network safer. India is enhancing the transmission grid security via two specific projects to be installed in the grid in the next three to four years. National authorities have also decided to go for imbibing new technologies – such as wide area monitoring systems using high technology phasor measurement units. PowerGrid is also installing NTAMC project which would help close and remote monitoring of 192 large substations of the national grid. The Indian authorities are also implementing stricter grid code in the form of reducing the frequency band and imposing a huge financial penalty in case of power overdrawal by states.

What is the international status of Alstom Grid as a transmission and distribution company?

With sales of around 4 billion euros, Alstom Grid is among the top three global players in the electrical transmission sector with a 10 per cent market share. We have technology centres and 40 R&D centres in 12 countries. With 88 manufacturing and engineering sites, Alstom Grid equips more than 90 per cent of power utilities across the globe. We manufacture a range of equipment covering the high and ultra-high voltage up to 1,200 kV (ac) and 1,000 kV (dc) like power transformers, gas-insulated switchgear, generator circuit breakers, air-insulated switchgears, turnkey high voltage substations (onshore and offshore), grid interconnection for all types of generation, high voltage direct current (HVDC) systems and flexible ac transmission systems and reactive power compensations solutions.

Which countries is Alstom Grid present in?

We are present across 70 countries which include Germany, Brazil, France, the UK, China, Indonesia and Australia. In these countries we have our own manufacturing bases. India is a very important country for us and we have the largest volume here. We get 15 per cent of our total global sales from India. We manufacture our product locally and also import from Europe, India, China to countries where we don’t have our own manufacturing facility.

How does the company rate its performance in India?

In India we are market leaders for the fifth year in a row. We command 19 per cent market share which explains it is the biggest volume for the company. We always took the initiative to be local and we manufacture the whole range of Alstom products and solutions in India. All these products are available in India for the local market and are also exported to other countries from here. We are a listed company on Indian stock exchanges which is also a specificity of our Indian operations. We are equally strong in AC as well as in DC technologies. In AC we have achieved a unique position in India by supplying our technology to 29 out of the 50 substations at 765 kV - which would become the backbone of India’s transmission grid during the 12th Plan. We have strong ties with national grid suppliers and state electricity boards while also serving the power generation sector in India like NTPC, Adani, GMR, Lanco and Essar. We handle our grid business from India for the India region which includes Bangladesh, Bhutan, Nepal and Sri Lanka.

Some equipment may not be suited for Indian conditions. Do you manufacture special equipment for the Indian market?

We do adapt the design to suit the Indian conditions but the standards worldwide are the same. It’s basically the IEC standards that are used to ensure the quality and compatibility of our products. For example, Power Grid has some specific requirements in EHV and UHV categories. India is amongst the very few countries in the world that uses extra high voltage 765 kVAC and eventually plans to go for 1200 kVAC. So we have adapted our global designs to suit Indian requirements.

What are the company’s future plans in India?

The future plan in India is to continue to follow the market and contribute to the development of the national grid. In 2009, we expanded our manufacturing capacity in Padappai in Tamil Nadu for manufacturing state-of-the-art switchgears, circuit breakers, gasinsulated substation and disconnectors. At Padappai, we built India’s first GIS manufacturing facility with world class industrial and quality standards. The company is the first manufacturer to localize 400 kV and 765 kVAC circuit breakers in India. It is also the first manufacturing site for gas-insulated sub-station for up to 420 kV in India. We have supplied more than 500 GIS bays to India, 50 per cent of which have been manufactured in Padappai at Chennai. We have supplied significant number of circuit breakers ranging from 66kV to 765 kV in India. We have been the first company in India to localize and manufacture India’s first 765 kVAC circuit breakers and 765 kVAC disconnectors.

So Alstom does not use Chinese equipment due to its alleged cheap quality?

We do have a manufacturing base in China and we sell our equipment there. In India, we produce the equipment indigenously in the country. As a company when we manufacture equipment in India, or in China or in France, we maintain the same standards of manufacturing. Equipment produced by Alstom in India and in China are of the same quality. It’s just like the automobile industry: a BMW in India, China or Germany has the same quality. We maintain same level of quality in different markets.