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Hisao Tanaka, President and CEO, Toshiba Corporation

01 Apr 2014

President and CEO of Toshiba Corporation, Hisao Tanaka, joined Toshiba in April 1973 and has diverse experience in procurement and manufacturing, including over 14 years of assignments in countries like the US and the UK. He speaks to Shakeb Ayaz about the challenges of working in the Indian energy sector, government policies and the centrality of thermal sector in the country’s energy basket among others. Excerpts

What are the challenges of working in India’s energy sector?

With rapid economic growth, reliable and economic power supply is becoming a pressing issue for India. Along with the construction of power plants, primarily thermal plants, and transmission and distribution networks, our operations in India will be able to deliver an optimized mix of energy sources. This also includes renewable energy, such as solar power or small hydroelectric plants for dispersed power systems. This is especially true in rural areas where it is difficult to build comprehensive transmission and distribution networks.

How will you compare India with global energy sector?

Being the third biggest energy consuming country, India’s high economic growth is expected to stimulate a massive increase in energy demand, creating a need for secure, reliable and economic power supply. India’s power generation equipment market is expected to see a demand growth of more than 16,000 mw per year in this decade, from 2007 to 2017, according to Eleventh (2007- 2011) and Twelfth (2012-2016) Plans. Coal-fired thermal power plants will account for over 60 per cent of capacity growth, surpassing other energy sources, making attractive market for thermal power business. At the same time, India being a huge country with different environment needing optimized mix of energy source, Toshiba can contribute with its full line-up of energy source from thermal, hydro, nuclear to renewable energy systems. Also, India is a unique market characterized by high population, ethnic diversity, multiple languages and decision-making at the state level. We have to be aware of and respect this when conducting business in cooperation with Indian partners.

What is your view on the government policy?

As a private company, we are not in a position to comment on the specifics of government policy. However, looking at recent developments, we believe that the Indian and Japanese governments are making every effort to cultivate relations that will bring benefit to both countries.

Availability of coal or fuel has become a big issue in India. What do you think can be the solution to this problem?

In the medium term at least, coal-fired thermal plants will remain central to energy generation strategy in India. Given fuel issues, the efficiency of thermal power plants is becoming increasingly critical. Toshiba offers low-cost, low emission thermal power systems and we believe our technology can contribute to solving the issue. Looking further ahead, an optimized energy strategy must be based on establishing a best mix of generation sources, not reliant on a single technology or fuel.

The Indian energy sector is thermal based. How do you see the centrality of the thermal sector in the Indian energy sector?

While there is now a greater potential to widen the energy mix, thermal power will remain central. Considering this, the Indian government recognizes super-critical technology as a major tool for increasing generation capacity and efficiency while reducing emissions of greenhouse gases, and is strongly promoting adoption of the technology among India’s utility companies. Toshiba has established Toshiba JSW Power Systems to respond to the increasing demand to build supercritical turbines and generators in India.

There is a huge hydro potential in India. How can the production be increased through that mode.

We attach a high value to maximizing the efficiency of our hydroelectric power generation systems and they can help to make better use of India’s hydro generation potential. We have contributed in this sector for almost 50 years, since supplying facilities for Umiam 1 in 1965. Today, in cooperation with TPSC India, we offer one-stop solutions covering engineering, manufacturing, procurement, construction and services. In pumped-storage systems, we will make proposals that utilize our industry leading technology, which is already attracting great interest in Japan.

Renewable sector has come up in a big way due to decrease in the cost of solar panels. What is the future of solar energy?

If you look at the global expansion of the solar energy market, it’s clear that its importance as an option in the energy mix has been growing and will increase further. The Indian market is promising. It has been expanding since the announcement of the national solar power mission in 2009, and the annual installed capacity is expected to surpass 1 gw in 2016.

How does Toshiba Corporation plan its investment in India?

We have formulated a comprehensive strategy for expanding our social infrastructure business in Asia and In hydroelectric power generation, we are eager to contribute our comprehensive capabilities to support development. In cooperation with TPSC India, a plant engineering company, we will offer one-stop solutions covering engineering, manufacturing, procurement, commissioning and services. Our integrated capabilities also allow us to offer one-stop solutions for India’s energy grid. Toshiba Transmission & Distribution Systems (India) Pvt. Ltd., reinforced with our know-how from Japan, will offer Toshiba’s latest design, development and production capabilities, and can supply a wide range of T&D products in India and beyond, in the wider global market. Our community solutions systems cover key areas of daily life, including water and environmental systems, building and elevator systems, lightning technologies and air conditioning. In these key business areas, we promote business with highly capable and experienced Indian partners. For instance, we established Toshiba Johnson Elevators (India) Pvt. Ltd. in October 2012 as a joint venture with Johnson Lifts Private Limited, a company with over 50 years of experience and number one share in India. This alliance will strengthen growth and expand our operations in the Indian lift market. Most recently, in December 2013, we agreed on a strategic alliance with UEM India, a provider of EPC services for water and wastewater treatment, operation and maintenance in India and the world market.

How does Toshiba Corporation plan its investment in India?

We have formulated a comprehensive strategy for expanding our social infrastructure business in Asia and In hydroelectric power generation, we are eager to contribute our comprehensive capabilities to support development. In cooperation with TPSC India, a plant engineering company, we will offer one-stop solutions covering engineering, manufacturing, procurement, commissioning and services. Our integrated capabilities also allow us to offer one-stop solutions for India’s energy grid. Toshiba Transmission & Distribution Systems (India) Pvt. Ltd., reinforced with our know-how from Japan, will offer Toshiba’s latest design, development and production capabilities, and can supply a wide range of T&D products in India and beyond, in the wider global market. Our community solutions systems cover key areas of daily life, including water and environmental systems, building and elevator systems, lightning technologies and air conditioning. In these key business areas, we promote business with highly capable and experienced Indian partners. For instance, we established Toshiba Johnson Elevators (India) Pvt. Ltd. in October 2012 as a joint venture with Johnson Lifts Private Limited, a company with over 50 years of experience and number one share in India. This alliance will strengthen growth and expand our operations in the Indian lift market. Most recently, in December 2013, we agreed on a strategic alliance with UEM India, a provider of EPC services for water and wastewater treatment, operation and maintenance in India and the world market.

How does your company plan to expand in India?

For thermal power plants, since the first shipment in 1927, Toshiba has supplied 1914 units, totaling 174 gw, around the world. For hydro power plants, we made the first shipment in 1902 and have since supplied 2,230 turbines and 1,697 generators globally. For nuclear around the world that positions India as a strategic business hub. For Toshiba Group, India is important not only as a market, but also as a strategic export and development base with highly talented people. We position India as a strategic hub for our global business in thermal power, energy transmission and distribution equipment, water and waste water treatment, and software development. In the five years from 2013 to 2017, we will invest over $500 million in India, equivalent to 30 billion rupees, and create employment for over 5,000 people. For 2017, we target sales of $3billion, approximately 180 billion rupees, some seven times the current level. Employment will grow with this expansion. By 2017, we expect to employ about 8,000 people in India, 2.5 times the current figure. Over 70 per cent of sales growth and employment creation will be in infrastructure-related businesses.

What kind of new technology will you be bringing to India?

We have a joint venture with JSW Group, one of India’s leading conglomerates, for a turbine manufacturing plant in Chennai – Toshiba JSW Power Systems Private Ltd. The company manufactures five super-critical turbines and generators ordered by NTPC Ltd and another client. In hydroelectric power generation, we are eager to contribute our comprehensive capabilities to support development. In cooperation with TPSC India, a plant engineering company, we will offer one-stop solutions covering engineering, manufacturing, procurement, commissioning and services. Our integrated capabilities also allow us to offer one-stop solutions for India’s energy grid. Toshiba Transmission & Distribution Systems (India) Pvt. Ltd., reinforced with our know-how from Japan, will offer Toshiba’s latest design, development and production capabilities, and can supply a wide range of T&D products in India and beyond, in the wider global market. Our community solutions systems cover key areas of daily life, including water and environmental systems, building and elevator systems, lightning technologies and airconditioning. In these key business areas, we promote business with highly capable and experienced Indian partners. For instance, we established Toshiba Johnson Elevators (India) Pvt. Ltd. in October 2012 as a joint venture with Johnson Lifts Private Limited, a company with over 50 years of experience and number one share in India. This alliance will strengthen growth and expand our operations in the Indian lift market. Most recently, in December 2013, we agreed on a strategic alliance with UEM India, a provider of EPC services for water and wastewater treatment, operation and maintenance in India and the world market.

How does your company plan to expand in India?

For thermal power plants, since the first shipment in 1927, Toshiba has supplied 1914 units, totaling 174 gw, around the world. For hydro power plants, we made the first shipment in 1902 and have since supplied 2,230 turbines and 1,697 generators globally. For nuclear power, we have orders for 12 units worldwide. Our total installed energy capacity of projects undertaken in India is 5,175 mw for thermal power plants and 2,715 mw for hydro power plants, i.e., a total of 7,890 mw. Some of our key projects in India are: Thermal power: ?? Anpara Thermal power plant / Uttar Pradesh, Ministry of Power – 500 mw steam turbine generator x 2 units. Started operation in October 1994. ?? Mundra Thermal power plant / Tata Power – 800 mw steam turbine generator x 5 units. India’s first super-critical turbines to enter operation. Unit 1 operation started in March 2010, and unit 5 started in March 2013. ?? Kudgi Thermal power plant / NTPC – We won an order for and are currently manufacturing a turbine island (an 800 mw steam turbine and three generators). ?? Meja Thermal power plant / Meja Power Private Ltd. – We won an order for a turbine island (660 mw steam turbine and tow generators) Hydro power: ?? 21 turbine units (2574 mw) and 31 generators (4087 mva). Recent achievements include ?? Purulia water pumping power plant / Wesedcl – 225 mw turbine generator x 4 units. Started operation in 2008. ?? Teesta V Hydro power plant / NHPC – 170 mw turbine generator x 3 units. Started operation in 2008. Toshiba can contribute to Indian’s sustainable growth through reliable power systems and technologies, and we can provide solutions in every field, be it thermal, hydro, nuclear or renewable energy generation.

What is the future of nuclear energy in the world, with countries like Germany and Japan showing signs of moving away from it?

We will give all due consideration to the Japanese government’s policy. At the same time, nuclear energy is still important for many countries to secure a balanced energy mix and especially responding to the dual challenges of securing future energy supplies and achieving reductions in carbon dioxide emissions. There are many countries which are considering or have decided to build new nuclear plants, including the UK and China,

What is the future of nuclear energy in India? What has been the experience of Toshiba Corporation in this field?

As in other counties, nuclear energy is important for India if it is to secure a balanced energy mix. We have the US-based Westinghouse in our group, which has signed a Memorandum of Understanding (MoU) in 2012 with Nuclear Power Corporation (NPC) to negotiate an Early Works Agreement supporting future construction of AP1000 nuclear power plants at the Mithivirdi site in Gujarat. Both Westinghouse and Toshiba’s supply of nuclear technology and equipment in India requires the conclusion of an inter-government nuclear agreement, and we will give due consideration to each government’s policy.