Striding to New Year 2022 - Cradling the Energy Transition

Highlights of New Year 2022

• In 2021 saw fresh fervor toward sunrise sectors such as electric vehicles (EVs), datacenters and renewables
• Renewable capacity addition is also likely to be ramped up in 2022
• Rail electrification, urban metro and regional transport system will also drive growth, bringing in fresh opportunities for us
• Expect industrial CAPEX to pick up only by the second half of 2022
• Need for greater support and stimulus in the power industry

The year that Was

2021 had been a year on tenterhooks, ricocheting from hope to gloom to a flat wait-and-see state. India, in a Whack-a-Mole mode, was setting records administering vaccines to its vast population and just as fast new Covid variants – Kappa, Delta, Omicron – were appearing to strain existing relief measures.

Normalcy only emerged in pockets and a significant population continued to operate remotely, hopeful the vital power infrastructure would support in the new normal. Fact is, nothing can function without power. Not even national aspirations and targets.

The New Year 2022

New Year 2022 beckons opportunities in the right direction. The two years of Covid-19-led unprecedented disruption has ushered in a faster adoption of and adaptation to digital power technologies in traditional sectors such as transmission works and rail. It has also brought in fresh fervor toward sunrise sectors such as electric vehicles (EVs), datacenters and renewables -- from the government through productivity-linked incentive schemes and from corporates via investment in green businesses.

Hitachi Energy has had a strong play in metro and rail, power transmission and renewables this year -- we advanced Indian Railways’ mission to achieve net-zero emissions via rail electrification solutions, India’s Power-for-All drive by commissioning one of India's longest UHVDC transmission links from Raigarh to Pugalur, as well as provided our technology for a multitude of solar and hydro projects alongside to datacentre players propelling India’s Energy Transition.

Opportunities Ahead

We are seeing green shoots of recovery in core sectors – mainly government-owned metals and oil and gas industries. With India aiming to hit 500 GW in renewable energy by 2030, the pace of development in sunrise sectors will also pick up. Renewable capacity addition is also likely to be ramped up in 2022, meaning a higher requirement for substations, transmission corridors as well as battery energy storage. Rail electrification, urban metro and regional transport system will also drive growth, bringing in fresh opportunities for us.

Since the focus is high on sunrise industries, there is tremendous potential in technology localization in areas such as remote power monitoring, predictive maintenance, EV charging, green hydrogen and energy storage. We are already seeing interest in models such as Energy-as-a-Service (EaaS), augmented reality power applications and a shift in customers preference from proof-of-concept (PoC) to proof-of-value (PoV). Building the required know-how and skills will underpin all efforts in our pivot to cleaner, greener and smarter energy, depending heavily on partnerships with academia.

Likewise, as ESG gains spotlight, industry-wide collaboration in greening the power infrastructure and investment in sustainable, eco-efficient and industry-agnostic power solutions will help India make steady progress toward its energy goals. It is also a vastly untapped market to establish power quality solutions that globally support the renewable segment, for improving the availability and reliability of hybrid grids.

Challenges to Overcome

Yet challenges ranging from new variants of the Covid-19 virus such as Omicron, high commodity prices, material shortages especially pertaining to semiconductors will likely weigh on market recovery. Businesses may be finding ways to remain competitive in their pricing. This could also strain for some time the market quest for fresh investments in sunrise sectors.

We expect industrial CAPEX to pick up only by the second half of 2022.

Work in Progress

To put our pledges into action, we need the right set of finance, policies, technology, and environment for encouraging companies to go green, to encourage e-mobility in public transport and to build the hydrogen economy. To achieve scale and speed in the adoption of clean technology, digitisation of the entire value chain in the energy sector and grooming related competencies to make the energy transition a reality are required. This will depend on collaboration and knowledge-sharing across the power value chain.

We need greater support and stimulus in the power industry in the new year, including in EV charging infrastructure, and faster decision-making on transformational projects. A reliable framework to facilitate timely payments to various stakeholders in the power value chain, as well as a faster implementation of quality-cum-cost-based selection of manufacturers in critical product procurement could be immediate priorities. Incentivisation to set up new factories in sunrise sectors, especially in rural India, is another area that can strengthen the Make-in-India drive as well as promote employment and talent building.

By N Venu, MD & CEO, India & South Asia, Hitachi Energy

Read more IT news here

Read products news here