Steve Edwards - the new chairman, president, and chief executive officer of global engineering, consulting and construction firm Black & Veatch - discusses what he sees coming in the future of the hydropower industry globally and the role he sees Black & Veatch playing in that future.
By Marla J. Barnes
Black & Veatch is a global engineering, consulting and construction company that specializes in infrastructure development in energy, water, telecommunications and environmental markets. Founded in 1915 and headquartered in Kansas, USA, Black & Veatch offers engineering, procurement, design, consulting, asset management, environmental and security consultation services.
HRW - Hydro Review Worldwide recently sat down with Steve Edwards, newly named chairman, president, and chief executive officer of Black & Veatch, to discuss the role the company is playing in the global hydropower industry and the vision he has for Black & Veatch in his new role.
Q: Please share the philosophy of "ONE Black & Veatch" - the initiative to offer your entire suite of services to clients across market sectors - and what that means for hydropower.
Edwards: "ONE Black & Veatch" is an effort to pull the company together and leverage our talents across all the markets we serve - energy, water and telecommunications - instead of seeing them as individual divisions.
We had previously heard clients saying, "I didn't realize Black & Veatch did that." As I travel around the globe visiting our offices, I'll see these concentrations of talent that are doing something I didn't know we had done. It's exciting to work towards leveraging these talents and abilities and offering a broader spectrum solution to our clients.
Q: Hydropower is currently part of your water sector as opposed to the energy sector, but are these divisions going to continue?
Edwards: I don't think they will be called divisions for much longer - they'll be considered businesses. The term "division" infers separation, but that's not what we're about. It's about working together as ONE Black & Veatch.
In a given year, there are a thousand projects that utilize common proccesses and tools, share knowledge across the boundaries, and work together between water, energy and telecommunications. As we increase that going forward, those boundary lines will disappear even more.
Q: Let's talk also about your interest in moving your business to different parts of the world and some of the work you've done to open up those markets, specifically in terms of hydropower. What do you see as the opportunity?
Edwards: We have seen a large number of opportunities in southeast Asia. The company has a long, rich history of energy project development in Indonesia and we plan to pursue hydropower development there as well. We have a good understanding of the clients, the culture and the needs of that particular country. One thing that makes Indonesia unique is all the different islands that are not electrified. Some of those have hydro potential, so that's definitely an opportunity for us. We are currently in the discussion and pursuit phase on these projects, although we do not have an active project going at the moment.
In addition to Indonesia, we have prospects in Malaysia, the Philippines and Thailand. We have a long history in those countries as well.
Q: And do you have offices in Southeast Asia?
Edwards: We have offices in Jakarta, Singapore, Bangkok, Hong Kong, Beijing, Shanghai, Vietnam and Shenzhen.
Q: Can you talk a little bit about your interest in South America?
Edwards: We are doing some work in Chile, and our plans are to use that as a springboard to increase the amount of work we are doing in the region. We are doing the same thing in South Africa and plan to springboard from that success.
In South Africa and Latin America, there are good prospects in hydro. The low carbon footprint and low operating costs make it a good solution where the capacity is there to do it.
Q: There is clearly opportunity for hydro development in the future. What are your thoughts on the challenges of financing, especially new greenfield development of hydro projects?
Edwards: Hydro clearly has a place in the future of power generation. Many of those challenges are obviously high capital costs. Even with low operating costs, hydro development requires someone willing to take a long-term view to yield the benefits from those projects. If it's a good project, we can get the financing. If the utility or developer cannot do it on their own balance sheet, then there are ways to deal with that through public-private partnerships.
As many developing countries have the resources needed for development and it's a good long-term investment that provides decades of service once in place, we think hydro is a viable option in all of the countries and regions previously mentioned, in addition to developed countries like the UK and Canada.
Q: Following up on the financing topic, because Black & Veatch has "out-of-the-box" thinking on this subject, can you share with us some mechanisms or models to obtain financing, as that is such a struggle for developers?
Edwards: I think you will see more public-private partnerships in the future. These will look different than what has been done in the past. Essentially, if there's a good project, there are people willing to invest in infrastructure. They need to understand the risks and returns of such a project, yes, but we can help them understand those.
We can also assist them in working with clients and owners to get the projects to financial close. We know that a number of financial entities with funds available are looking for good investments and can direct clients and owners to them.
We know what kind of returns they're after and also the risk profiles that drive their decisions.
Q: And you see that no matter where you are in the world. Would that be true?
Edwards: There are places we go that I see that. However, there are still places we can't go due to political situations and security issues that might prevent Western companies from being able to operate in that environment.
Q: Regarding the whole water-energy nexus, what is your thought about the nexus between power and water, and what is the importance of recognizing that?
Edwards: Our view is that in order to provide water, you need electricity, and in terms of hydro, the converse is also true. They are dependent on each other. We think because of our large areas of expertise in both that we can help clients understand how to optimize their operations to use that dependency to their advantage.
What we are seeing now is an increased emphasis on water and energy conservation, along with energy efficiency, so it's a good time to leverage our expertise across these two businesses and strategize on how to increase efficiency overall.
Many of our water clients are working on projects that could easily support an energy component, while many of our energy clients are seeing the role water could play in their systems if they were to take advantage of asset management and optimize their networks. There's a lot happening on both sides of the equation.
Q: As you are new to this role in the company, where do you hope to lead Black & Veatch in the future?
Edwards: Our goal is to have a much more balanced portfolio geographically and to maintain some good performance at the company as we do that. We've set some strong objectives for the company to reach $7 billion in revenue by 2020 and to also diversify our markets both geographically and within a business line perspective. We anticipate growth in a number of areas outside our domestic markets, including movement in India and many parts of southeast Asia.
Q: Do you see hydro as a major part of that growth plan for Black & Veatch?
Edwards: I definitely see good growth in hydro. We see potential growth in southeast Asia and Latin America, along with programs like what we are doing with Scottish Water. For details, see http://www.hydroworld.com/articles/2013/10/scottish-water-selects-black-veatch-for-hydroelectric-power-retrofit-program.html.
Marla Barnes is publisher of HRW-Hydro Review Worldwide.