Chris Raine: Balancing act

Alstom Australia and New Zealand president and managing director Chris Raine
Alstom Australia and New Zealand president and managing director Chris Raine

Energy Source & Distribution talks to Alstom Australia and New Zealand president and managing director, Chris Raine about maintaining a balanced portfolio through uncertain times.

The uncertain future of the Carbon Pollution Reduction Scheme and Copenhagen’s disappointing outcome in December 2009 continues to cast a haze of uncertainty on Australia’s energy development. With components in 25 per cent of the world’s power stations and supplying a broad portfolio of power generation infrastructure products, the challenge for Alstom to reduce the world’s carbon emissions is substantial. Despite the challenge, Alstom Australia and New Zealand president and managing director, Chris Raine remains enthusiastic, confident it can be done through a three-pillar approach involving renewables, improved power station efficiencies and carbon capture and storage.

“To me the electricity industry is embarking on a whole new challenge with CO2, and it’s enormously challenging, but it’s also enormously exciting. We haven’t seen engineering issues at the forefront of world debate for a long time,” Mr Raine explained to Energy Source & Distribution.

“It’s a massive change and a massive challenge, it’s an exciting time for people in this industry.”

The ebb and flow of projects influenced by carbon emissions debate has had a direct impact on the company. The challenge of the CPRS influences Alstom’s customers and the company expects further delays with investments around fossil fuels, coal and gas. Without a “silver bullet” solution readily available for solving the world’s energy issues, Alstom is using the three-pillar approach to meet current and future demand.

“There needs to be a balanced portfolio, we’re working very strongly to do that. The first point will include renewables. Back in 2007 we brought a wind turbine business, (and are) in the process of entering the wind market in Australia. Other renewables, particularly hydro, make a big impact. Also there’s a place for geothermal, solar and biomass.”

Despite the uncertainty, Mr Raine said there are still many projects in the pipeline.

“The power generation market is responding to what is going on in the environment. The global financial crisis obviously had an impact as well, particularly for IPPs and so on, people who operate with project finance. Having said that, there is a strong pipeline of projects. What we have seen in 2009, particularly with the establishment of the Renewable Energy Target, there is strong activity in wind in particular, but gas and coal people are waiting to see what happens with CPRS finance.

“All our customers with large investments in fossil fuel generators are making their own statements but they are also waiting to see the final shape of the CPRS, when it happens and in what form. Clearly after the recent days, it is quite unclear. Our customers, the power generators, have really been quite vocal about this subject. It’s for them to speak for themselves, they clearly have concerns.”

As part of an alternative energy mix, Mr Raine believes that while the rest of the world is leveraging nuclear as part of the solution, Australia should at least be discussing nuclear more seriously.

“The demand for nuclear power around the world is very strong. Nuclear is making a resurgence all around the world after many years of being out of favour. With the current concerns of CO2 and energy security it is making a comeback.

“As a personal comment I would say nuclear should be a discussion in Australia. We should be talking about the pros and cons of nuclear power. Why wouldn’t we? It’s being rolled out everywhere elsewhere in the world. We’ve got 40 per cent of the world’s uranium. It’s just logical. It should be argued on its business merits.”

Mr Raine would like to see a logical discussion take place with business considerations dictating whether nuclear should be used or not.

“Obviously there needs to be considerations of the externalities, particularly concerns around waste disposal, safety, proliferation and all the other things people are concerned about, but I think there are answers to most of these questions but they need to be discussed.”

“(These are) global comments, not necessarily specific to Australia. Unfortunately (in Australia) it’s a political issue, it would be much nicer if it was a technical issue or a commercial issue I think.”

The second of Alstom’s pillars is improved production efficiency from all power plants, fossil fuel plants in particular.

“The more efficient our power generation, the less CO2 will be emitted into the atmosphere. Coal and gas are going to continue to take a role. They are obviously CO2 emitters. There are two parts to the story which we work on.”

Alstom’s goal is the ‘holy grail’ of 50 per cent efficient coal-fired power plants.

“It’s a magic number. At the moment we are working in the mid 40s, so the target is to get to 50 per cent. Then for gas-fired combined cycle power plants it’s 60 per cent. That’s a statement to what we are working towards.

“All of the CO2 emissions from the power generation industry today come from installed base around the world, and Australia is no exception. And if you want to do something about CO² intensity, then you better do something about the installed base.”

The CPRS will provide incentives for existing power producers to build new, more efficient power plants, but Mr Raine would like to see the same approach adopted towards improving the efficiency of installed base.

“We have technical solutions that can improve the efficiency of existing power plants, we would like to see a legislated incentive for power generators to improve the efficiency of their existing fleet.”

As part of its portfolio, Alstom has an energy management business which covers a range of products, including power station controls systems.

Alstom signed a contract worth over €100 million with South African utility Eskom to provide the instrumentation and control system for the world’s largest coal-fired power plant, Medupi in South Africa, with the option to install an identical system on Medupi’s sister plant, Kusile. For Australia, this technology could help to optimise new and existing coal-fired power stations for the evolving grid environment as it develops into the ‘Smart Grid’.

Alstom’s third pillar is carbon capture and storage (CCS). While CCS will be an important answer to the issue of carbon, Mr Raine believes that while there is no silver bullet and CCS won’t be the answer in itself, it will still play a crucial role.

“We don’t think that it is possible to reach the IPC goal for 450 PPM without carbon capture and storage,” Mr Raine explains.

Alstom has six operating CCS projects, three in the US and three in Europe. Another four are in the engineering stage and their most recent project, ‘Mountaineer’ in West Virginia, “really is the world’s first large-scale integrated demonstration of a carbon and capture plant”.

“It’s operating as we speak. It’s sequestering 15,000 tonnes of CO² per year using our chilled ammonia process. Another project is TransAlta in Canada, Alberta. It will be a carbon capture and storage plant of a million tonnes, part of the purview of Global Capture and Capture Institute in Canberra.”

Key to the success of these and are other projects hoping to solve the world’s carbon emissions is collaboration within the industry.

“We have important relationships with DOW Chemicals, for the development of advanced solvents for capturing CO². And also the joint arrangement we have with Schlumberger. We have expertise with carbon capture, and they have expertise with carbon sequestration. So we’ve got together to be able to offer a full service across carbon capture and storage.

”These partnerships are the only way to make integrated CCS projects work at commercial scales and help us reach our climate change targets.”

Besides the CPRS, impeding the way unnecessarily for increased energy efficiency across Australia is state and federal energy regulation.

“This is the subject for COAG, they are trying to deal with this issue. A common set of regulations for the power generation industry across the country, aligned as much as possible with international standards should be the goal. Clearly there are issues with the strength of the transmission networks, particularly between some of the states, if we saw some more transmission infrastructure. I think a national approach with the Federal Government co-operating with the states is what we need to see.”

It seems extremely likely to Mr Raine the future will be a carbon constrained world.

“The power generation industry around the world produces about 40 per cent of the greenhouse gas emissions, so inevitably power generation is going to undergo a change. The impact from country to country is going to vary depending on local rules and international

treaties and so on. But, inevitably there is going to have to be change if there is a price or restriction on carbon.”

Mr Raine’s wish list for the new year is simple yet ambitious.

“I would like to see more certainty return to the market to the extent we get a firm position on the CPRS. The market is calling for certainty and as an industry we cannot act on climate change until that happens.