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Executive Interview: Viewpoints from the Board Room: Alstom Hydro North America

Claude Lambert, president and chief executive officer of Alstom Hydro North America, discusses technology, policy and the factors driving the hydropower market.

By Marla Barnes

Claude Lambert

A leading supplier of hydropower equipment, Alstom Hydro’s turbines and generators account for a quarter of the world’s hydropower capacity.

Based in France, Alstom provides turnkey solutions for the construction and operation of hydroelectric plants, in addition to a wide range of services, including maintenance and the retrofit and refurbishment of existing facilities.

Hydro Review interviewed Claude Lambert, president and chief executive officer of Alstom Hydro North America. Lambert discusses hydropower development in the U.S. and Canada and how Alstom is addressing customer needs in each country. The following is a transcript of that discussion.

Q. In North America, we are seeing a commitment to move forward with new hydro developments. Is your company seeing that same commitment and, if so, what do you attribute that to?

Claude Lambert: In North America, two main drivers are affecting the hydro market: first, the aging of the existing hydropower fleet, and second, the need for domestic, reliable, and affordable energy. Therefore, the development of new hydro on existing dams along with the development of pumped storage are trends that we are seeing in requests from our customers.

Q. How would you describe the market for retrofitting the existing fleet of hydropower plants in the U.S. and Canada?

Claude Lambert: We see enormous potential in the North American hydropower plant retrofit market. The average age of the installed units is 41 years and 54 years, in the U.S. and Canada, respectively. Hydro units have an estimated average operating lifetime of 40 years; thus, in the coming years, this aging ‘fleet’ will require maintenance, improvements in reliability, as well as upgrading and updating existing technology in the form of major repairs, rehabilitation, refurbishment or replacement.

Furthermore, the operation of existing units has changed dramatically in recent years, which allows Alstom to increase power on existing units and add peaking capability.

Q. What about redevelopment work? Your contract for the Lower Mattagami project is a good example.

Claude Lambert: This is a good example of redevelopment work that utilizes the best of Alstom’s capabilities. Under the contract that we signed with Kiewitt Alarie Partnership, we will supply three hydro turbine generator sets to the new Smoky Falls Generating Station that will replace the existing station, thus significantly optimizing water utilization and boosting capacity to over 270 MW. The project, in line with Ontario Power Generation’s ambition to expand hydroelectricity generating capacity in Ontario, will provide incremental renewable energy capacity to the province and will supply clean energy to 270,000 homes. Specifically, we will design and supply three new generating units, including propeller turbines, vertical generators, static excitation systems, speed governor systems, and protection and control systems. Alstom will provide a complete turnkey package, including installation and commissioning of the units, which is planned for the end of 2013.

Q. Pumped storage is clearly a priority for Alstom. Where do you see the biggest opportunities for pumped storage in North America? What are the biggest challenges?

Claude Lambert: Indeed, there are many opportunities for pumped storage in North America. This is particularly true in the U.S. where financial incentives, state and federal renewable energy standards, as well as legislation and policies are helping to foster a climate of support for pumped storage technology. In addition, as the U.S. is looking to increase the share of renewable energy such as wind and solar in its energy supply, especially in the western part of the country, pumped storage will become increasingly important as it is the most efficient and flexible means of storing energy on a large scale, providing grid stability and enabling a reduction in emissions.

Today, there are 40 pumped storage projects currently in operation in the U.S. that provide more than 20 GW of capacity to the energy supply system (Inventory of Electric Utility Power Plants in the United States, Energy Information Administration, 2007), representing 16 percent of the U.S.’s renewable capacity (Existing Capacity by Energy Source, Energy Information Administration, 2007). This capacity is set to increase given the 31 GW of capacity from new pumped storage projects proposals that have either received or are awaiting preliminary permits from the Federal Energy Regulatory Commission.

However, as much as the hydropower industry supports and is committed to new pumped storage projects, it is important to remain aware of the challenges that remain ahead. Although many incentives have been put forth to incite investment in and development of pumped storage, the investment climate is still uncertain. Moreover, development timelines from obtaining the necessary permits and approvals to actual construction, for pumped storage projects are long.

At Alstom, the world-leading pumped storage provider, having manufactured more than 20 percent of worldwide running pumped storage units, you can be sure that we will be monitoring pumped storage developments in the U.S. closely.

Q. Alstom has taken a lead in the industry in improving manufacturing efficiencies; could you describe the progress your company has made over the last few years in how work is done in your facilities?

Claude Lambert: Alstom has implemented the Hydro Manufacturing Concept (HMC). The HMC is a philosophy that guides every aspect of manufacturing in Hydro. It is based on the principles of lean manufacturing. Lean manufacturing is proven to reduce lead times and increase productivity by looking at each aspect of production and asking a simple question: does it create value for my customers?

In essence, HMC allows us to improve quality, shorten production cycles, and reduce costs.

Q. Describe some of Alstom’s innovations in peer-to-peer learning.

Claude Lambert: Learning is a cornerstone of Alstom’s people strategy. Our people are at the heart of our business and developing their potential is a priority for the Group. At Alstom, learning is a continuous process enhanced by the strength of our networks. Alstom University was launched in 2007, with the mission of supporting Alstom’s business goals. By instilling a learning culture and community approach, Alstom University’s aim is to ensure that employees have the knowledge, skills, and tools necessary to contribute to both Alstom’s and to their individual successes.

Alstom University uses many means to help support the development of the Group’s employees. These means range from providing worldwide training courses, e-Learning courses, and providing access to employee-generated knowledge videos.

Q. What is your opinion about the opportunities in the Ocean/Tidal/Stream Power market?

Claude Lambert: At Alstom, research and development is a priority. As part of our broader “clean power” strategy to offer the full range of clean generation options, we are always looking to develop new ways to reinforce our renewable energy portfolio - Ocean energy is one example. Tidal in-stream energy converters are relatively similar to hydro turbines or subsea windmills. Alstom has a leading position in both classical hydro and in wind, and thus we have the skills and resources to successfully develop and commercialize this new technology.

In December, Alstom inaugurated the premises of its Hydro Ocean Energy activities in Nantes, France, and deployed a fully dedicated team to further develop tidal technology and commercialization of the company’s tidal products. This inauguration was marked by the reveal of the characteristics of the BELUGA 9, Alstom’s first tidal-electricity turbine device that will undergo its first tests in Canada’s Bay of Fundy in 2012.

The global tidal energy market is estimated between 50 and 100 GW. Tidal technologies are currently still at the early stages of commercialization, but strong interest has already been shown by several governments in developing them further, including Canada. If all suitable tidal sites in the world were equipped with this technology (e.g. UK, France, Ireland, South Korea, New Zealand), they could produce as much as 100 TWh of electricity each year, which is closely equivalent to supply electricity to approximately 20 million western European homes.

Q. Does Alstom place a priority on its efforts to reform energy policy? Describe some of your work in this regard.

Claude Lambert: Alstom is committed to pursuing and supporting public policy initiatives that will drive investment in the development and implementation of a balanced portfolio of clean energy technologies. This would include investments in hydro, where we see opportunities in the U.S. to increase the generation capacity of existing hydro plants through retrofit, thereby enhancing the country’s ability to better utilize this inherently clean resource. Alstom views a balanced portfolio of power generation technologies as the most effective and realistic way to address long-term global energy demand in an environmentally sustainable manner. We therefore are pursuing policy support for multiple technologies including hydro, wind, solar and geothermal, as well as super-efficient coal generation achieved through carbon capture and storage (CCS) technology, which can be leveraged to reduce the environmental impact of the installed base.

Q. How has the American Recovery and Reinvestment Act of 2009 aided Alstom’s work in hydropower?

Claude Lambert: Through the ARRA, Alstom received funding that will enhance our ability to support increased activity in the U.S. hydropower market and throughout North America. This support came in the form of Manufacturing Tax Credits for our newly opened, state-of-the-art turbine manufacturing and service facility in Chattanooga, Tenn. In addition to producing the world’s largest nuclear steam turbines, Chattanooga also has the ability to fabricate turbine components for new and existing hydropower plants. Beyond the hydro market, Alstom also has received stimulus funding for projects that will support our broader clean power strategy, including Manufacturing Tax Credits for our wind turbine production facility in Amarillo, Texas, and an investment in the next phase of our CCS project conducted in partnership with AEP in New Haven, W.V. We see all of these investments as crucial steps towards realizing America’s clean energy future, while also creating high-quality “green” job opportunities for American workers.

Q. In October 2010, Alstom announced plans to cut 4,000 jobs from its Power division in the next 18 months. Yet, Alstom Hydro is not part of this plan. What is the outlook for future hydropower work within Alstom?

Claude Lambert: We have a strong, backlog to execute in Hydro and we will be calling on our worldwide teams to ensure excellence in project management, execution and on time delivery while we continue to meet the quality standards our customers expect from us. We are continuously investing in developing innovative solutions to answer our client’s needs and provide solutions to support the active hydro market.

Q. What is your viewpoint about the future growth of the hydro market in North America?

Claude Lambert: We see enormous potential for the hydro market in North America. Due to increasing demand for domestic, reliable, and affordable energy, we can do much to help customers supply needed clean energy to the grid.

First, we can work on the installed base.

As mentioned earlier, there is huge potential for retrofit due to the ageing of the fleet where we can provide efficient solutions to the existing units with little impact to existing powerhouses.

Second, we can install new units in existing dams. In the U.S., there are 80,000 dams, but only 3 percent of those dams have a generating unit in them. Therefore, we can add energy production capacity to existing sites.

Third, pumped storage will play an important role in the increasing need for storing energy as we add renewable energy to the U.S.

Together, these steps can ensure that we maximize the significant potential of hydropower in North America.

Q. What is Alstom’s clean power strategy and how does hydro support it?

Claude Lambert: Alstom’s Clean Power Today!TM strategy is founded on three principles: (1) a balanced portfolio, (2) efficiency and flexibility, and (3) carbon capture and storage.

Alstom has solutions for every type of energy source and hydro is just one of these solutions.

In terms of hydro, we can retrofit the existing installed base and we can provide new solutions for new projects to improve customers’ operations.

Both avenues help provide renewable energy to meet current and future demand.

Marla Barnes is Publisher and Chief Editor of Hydro Review.

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