Anja Frada: 0:03

There is a very strong incentive, like economical incentive to, to invest in renewables today. So what we see is the first step of the path is to invest in renewables. What you need then is to start investing also into the flexibility because the renewables, as we know, they are intermittent, so they are variable. They don't always produce electricity. So in the moments when you don't have the electricity, you need to have the flexible assets that you can utilize

Tom Raftery: 0:32

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Climate Confident podcast. The number one podcast, showcasing best practices in climate emission, reductions and removals. And I'm your host, Tom Raftery. Don't forget to click follow on this podcast in your podcast app of choice, to be sure you don't miss any episodes. Hi everyone. Welcome to episode 122 of the Climate Confident Podcast. My name is Tom Raftery, and before we kick off today's show, I want to take a moment to express my gratitude to all of our amazing supporters. Your support has been instrumental in keeping this podcast going, and I am really grateful for each and every one of you. If you're not already a supporter, I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about climate. Supporting the podcast is easy and affordable. With options starting as low as just three euros, that's less than the cost of a cup of coffee, and your support will make a huge difference in keeping this show going strong. To become a supporter, simply click on the support link in the show notes of this or any episode, or visit tiny url.com/climate pod. Now, without further ado with me on the show today, I have my special guest, Anja. Anja, welcome to the podcast. Would you like to introduce yourself?

Anja Frada: 1:51

Thank you, Tom, and really happy to be here. So, yes, my name is Anja Frada. I'm the COO of Wärtsilä’s Energy business and really happy to be here.

Tom Raftery: 2:01

Thank you. And for people who might be unaware, Anja, can you give us a few words about Wärtsilä?

Anja Frada: 2:07

Yes. with pleasure. So, Wärtsilä is a leading company in innovative technologies and lifecycle solutions, both in the energy and marine sector. So our mission is really to shape the decarbonization of both, both marine and energy. And I represent the energy business and our vision is that we. We envision basically the future to be 100% renewable and, and with our flexible technologies, we also support our customers to achieve their net zero targets.

Tom Raftery: 2:39

Okay. I guess the first question is why, as in Wärtsilä energy is an energy business, ha have you taken this as kind of a, a mission to help your customers decarbonize? Is, is that the, the only aim or have you other aims as well? You know, what, what's the strategy here?

Anja Frada: 2:58

Yeah, I think maybe before I, I answer the question, I would take a step back. So when we look at the energy future, we are moving towards a renewable energy future and, when we look at, the future energy systems, we see that, that the base load energy will come from renewables. But to build, sustainable and secure energy system, you would, you will need flexible assets. And that's really where the core of Wärtsilä Energy business comes in. So we provide the flexibility for, for the future systems, and in that way we can help customers and, and our countries also to decarbonize.

Tom Raftery: 3:35

Okay. And when you say flexible assets, what do you mean when you refer to flexible assets?

Anja Frada: 3:41

So in our portfolio we have flexible engine power plants, that currently run on gas. But we are, putting a lot of effort into our R&D development also to, to develop, solutions which can use sustainable fuels like, hydrogen, or ammonia, or methanol. So that's one part of the portfolio. And the other part of the portfolio is our energy storage, solutions. And then in, in addition to that, we have a digital, platform also, which is a power system optimization, platform that we can offer to our customers. And of course then we support our customers throughout the life cycle of the plants and, technologies. So for 25 years or so.

Tom Raftery: 4:24

Okay, great. So when you refer to your customers, who would your customers typically be? Are we talking it's, it's not residential, obviously, but it's commercial. Are we talking large customers? Small? What kind of size? What kind of portfolios are we talking about?

Anja Frada: 4:40

Yeah, I think we have a super varied, portfolio of customers. We talk about utilities, we talk about industrial customers. But more like the, let's say, grid connected. So bigger, customers clearly, and which are connected to, to the grid or then the industrial customers also, for example, mining. Mining customers are, are part of our customer portfolio.

Tom Raftery: 5:05

Okay. And for those customers, how are you helping them on their decarbonization journey? Is it that you're in helping them install renewables? Is it that you are helping them, shape, demand? You know, what, what, what are kind of strategies or does it depend from customer to customer, region to region, all that kind of thing.

Anja Frada: 5:29

I think what we, where we usually start the journey is, we have an in-house power system modeling team. And, where we start is to really look at the big picture. So as I mentioned, we, we model like the future power systems, where are we today and where do we need to be? And in that way we can plan, the future, our customer's future system. So if they have certain assets today, they want to be net zero by let's say 2050, we can plan that path for them. So which are the assets that they would need to invest in? How, how does their optimal portfolio look like? And then they have, then they have the road, they have the path towards the targets that they set. So usually we start, from, from that discussion. and when the path is clear, then it's easier to start making the investment decision. But of course, it depends a bit from customer to customer. Some of some customers already have the plan in place others don't. So, case by case, but I think this approach is, is very like long term. You look at our customers from a long term perspective to, to really ensure that they build the optimal system for their future and optimal portfolio as well.

Tom Raftery: 6:40

Okay. And do things like battery storage come into it as well?

Anja Frada: 6:45

Yeah, usually I think when we have modeled the different paths, is it for a country or a region or, or a customer, what we see is that the path is very similar for everyone. So what makes most sense is to add a lot of renewables because it's the cheapest way to produce electricity today. So there is a very strong incentive, like economical incentive to, to invest in renewables today. So what we see is the first step of the path is to invest in renewables. What you need then is to start investing also into the flexibility because the renewables, as we know, they are intermittent, so they are variable. They don't always produce electricity. So in the moments when you don't have the electricity, you need to have the flexible assets that you can utilize. So is it then energy storage for a shorter period of time or then, flexible engine power plants that can ramp up when there, for example, is no wind or, or solar, in, in that period of time. When you have done these two steps, so I invested in renewables and then into flexible assets. That's when you can start, divesting or closing down some of the inflexible assets, in the portfolio, like, for example, coal, and which are of course also heavy, heavy in terms of, of emissions. And then you continue with this cycle. And then, uh, what we see towards, let's say end of this decade early 2030's we see that there will be, more availability of the future fuels. So, when the availability of the future fuels will be enough, you can also start converting, gas-based, plants to use also, sustainable fuels. And in that way, actually you can reach a net zero system, and completely decarbonise the portfolio. So I think, the steps are the same, whether we talk about Indonesia or, or the United States, but, but the pace is different based on, on the different countries ambitions also to reach, reach net zero targets.

Tom Raftery: 8:43

Okay. And what about things like shaping demand? Because as you mentioned, renewables are, variable in their energy generation and some in some times in some places. And with different kinds of equipment, it can be possible to shape the demand to better meet the generation. Is that something you're looking at as well?

Anja Frada: 9:07

Yeah, I think when we, when we look at demand side, so of course we look at the power system as a, as a total of course. So what makes most sense to, to build? And I think the, the topic is, very much on the agenda today. So how to, how to build out the future power system in such a way that it makes most sense. So we have different. Differently. There's different incentives for that, but I think the most, most important point at the moment is that we need to get more renewables built. And that will drive the demand then for flexible assets as well. So when the renewables can't, operate only by themselves, we cannot have just renewables. It needs to be coupled with the flexibility. So when, when there's more renewables in the system, that will also drive the demand for the flexibility.

Tom Raftery: 9:57

Okay. What about, interconnects? I, I, I know we didn't discuss this on the intro call, but, it strikes me as, as we're saying this, that if we're, if we're treating nation states as islands, then yeah, we need a lot more flexibility. But as we start to build more interconnects, then the sun is always shining and the wind is always blowing somewhere. There aren't enough interconnects right now, but as we tend, as we, as we interconnect more countries and more grids, then it starts to become less of an issue. No?

Anja Frada: 10:32

Yeah, I think, uh, okay. Here, of course, geographies are large, so it depends on, on where you are. But of course, the grid is also an area that needs to be modernized. And, and here, uh, it's very much depending on the countries and, we can talk about EU as one system, but then when we move, for example, to, to the United States, you can see that they are very disconnected already, the different states as such. So, I think there is quite a lot of work to do, but obviously yes, it's, it's one of the areas that, that we can also utilize. But, but I think when the the distances gets, very far, far away, then, then it can also be some constraints in terms of, of how you, transfer the electricity. So, but I think all in all, yes, the grid modernization is of course, one, one piece of the puzzle as well.

Tom Raftery: 11:22

Sure. Yeah, yeah, yeah, yeah, yeah. True, true. I take your point about the, the distances, but I think, things like the large pipelines they've built in the United States show that, uh, distances need not be an issue. So if they can transport, if they can transport oil over thousands of miles, we can certainly transport electricity a lot more efficiently. But anyway, sorry. I, I, I digress.

Anja Frada: 11:45

Yeah. I think. So, okay. One, one example I could take, which is, very topical here in Finland where I, where I live, but we have, really good, wind conditions in the north of, of Finland. But of course, the, the demand for electricity is not so high in the north of Finland, at least Sure yet. So what what they're also looking at is, uh, you know, how to, how to transport that. Does it make more sense to, to do it, uh, through the grid or do you convert the excess electricity into hydrogen and then you transport it somewhere else where it's needed? So I think this discussion is of course ongoing as well.

Tom Raftery: 12:20

Yeah. Yeah. I think they've similar issue in Germany as well where, uh, there's a lot of wind in the north and a lot of consumption down in Munich and Bavaria in the South. So yeah, it, it's gonna be a common, a common theme. But speaking of renewables, then, for some of your customers, are you actually supplying or building out the renewables for them or just making the recommendations or somewhere in between?

Anja Frada: 12:44

Yeah, we, we mainly made the, the recommendations, towards our customers to, to increase the, the amount of renewables. And then as mentioned, what we really focus on is, is the flexibility part. So that's really our core knowledge and core technology around how, the engine power plants work and, and also the energy storage. And then of course, the software and, and the lifecycle services. So, that's where our focus lies.

Tom Raftery: 13:11

Okay, sure. And you have a, a power system optimization modeling that, that you've done in, in not just companies, but countries, over 50 countries. Can you talk a little bit about that? Because you're, you doing it at a country level, seems to be quite a differentiator. No, I, I can't think of any other companies that have come across that have gone and modeled power systems at the country level for as many countries as you have.

Anja Frada: 13:40

Yeah, I think we have actually almost modeled every country in the world on, on some level of detail or the other. But, I, I fully agree it's, uh, it's a differentiator in, in the industry and I think really one of our core, core competencies as well. And, so what we do, as I mentioned, this is really one of the sort of door openers as well. I mean, we, we talk with ministries around the world and, really there to support, in ensuring that we build the best future energy systems that we can. So taking what we have today, understanding what, where the targets, need to be, and then building it in a cost optimal way so that we ensure that we are doing the right investments, in the right technology, at the right time to, to a, achieve the targets that we set. But this is really, I mean, as mentioned, the key, key differentiator I think between us and, and many other companies and competitors, but very valuable for us as a company because we understand, what the best options look like. So we also understand where the business opportunities of course, are. But then, it's really valuable for our customers and, and also for, for countries and decision makers to understand how to, how to do this in the right way.

Tom Raftery: 15:00

And what, what are the key kind of findings that you have from looking at the power systems across all these countries?

Anja Frada: 15:08

Well, I think the key learning I, I talked about the steps. So I think that's really one of the key learnings is that, it doesn't depend, on, on the country in a way. Like the path is more or less the same. Everyone needs to go through the same steps, but the pace will be different. And of course then it depends a bit also where, what's the starting point and where do you want to go? The conclusions are fairly similar actually in, in many of the modelings. But I think the interesting fact is then, you know, when something happens, for example, the, the, crisis we had in in Europe. We have also modeled, you know, how Europe looks without Russian gas. What makes sense to do for, for Europe in this type of scenario? So, I think the, from like a market intelligence point of view, it's also very interesting facts that, that we get out. And I think actually one other point I would like to highlight is still, we talk a lot about like, innovation and new technologies also for, for the future of, of the energy business. So if we have the right parameters for a, for a new technology, we can actually put that into the model as well to understand what the potential, sort of potential for that technology is. If it meets certain, certain criteria. So actually, it's, it's super interesting.

Tom Raftery: 16:27

Okay. And how hard or easy, I know, I know it's impossible to quantify this, but I mean, you hear people say all the time that we can never have a grid that's a hundred percent renewable. Do you agree?

Anja Frada: 16:45

Well, I, I think we can have grid that is 100% renewable, but, as said, it'll take a bit of time. And of course it'll, it'll require us to, convert, assets that today, like utilize fossil fuels to utilize sustainable fuels. So yes, it's, it is possible. I think usually when we talk about fully renewable grids, we talk about just renewables and storage. And that, I think is, that's not a very, let's say, cost efficient, uh, way of doing it because you need to build out the system in, in a way that doesn't make economical sense. But when you, when you add the flexibility in terms of, of the gas, gas-based plants, which can be converted to future fuels, actually make a much more economical, energy system, which also works in a very reliable way.

Tom Raftery: 17:39

And what are the main challenges to actually getting a 100% renewable grid?

Anja Frada: 17:47

Well, I think, the good thing is that actually most of the pieces of the puzzle are, is already there. Mm-hmm. So, uh, we have, renewables, we have the technologies. Basically what we need now is a lot of renewables deployment. So that's of course the constraint is that we are not doing it at the pace we should. Actually, I think permitting is a big issue on the renewable side. We have a lot of projects stuck in, in permitting. So I think that's a really big bottleneck at the moment. But then, I think we have many good things there already. So I said technology is there. We need to get the renewables on the ground. We need to, we need to invest in, in new flexible capacity. And then the further down the line, we, we, of course, need the renewable fuels as well.

Tom Raftery: 19:46

Okay. In terms of the permitting, is there, and the permitting changes that we need to, to roll out, are there any countries that are doing it better than others? Any shining examples of places where the, the permitting isn't an issue versus others where there are kind of laggards?

Anja Frada: 20:02

I don't have a specific one on the countries as such, but, but I think, uh, we are going in the right direction. I think there is a new directive, also renewable directive in, in eu, so they are purely trying to decrease the time of, of permitting. So it's a step in the right direction. But, but still, I think we are quite far from the targets that where we should be. So, um, I think we are sort of half half of the capacity that we should deploy, on a yearly basis. So we have a long way to go, but, but moving in the right, moving in the right direction.

Tom Raftery: 20:37

Okay. So for countries or organizations that have existing fossil fuel plants or fossil fuel infrastructure in place, what do they do with that? Because you know, there's a risk of it becoming a stranded asset if someone has built a gas fired power plant or a coalfired power plant, even worse in the last five to 10 years. You know, they, they're usually built with an expected lifetime of 30, 40, 50 years. And like I say, if it was built in the last five to 10 years, are they gonna have to write that off now?

Anja Frada: 21:12

I think it depends on, on the plant. I think for example, what we try to do now or is that we invest quite heavily into the sustainable fuels, developments for our products. So we develop currently engines for hydrogen, ammonia, and methanol. Just because of course, first of all, we don't want to decarbonize, our customer's operations. But then also ensure that if our customers invest today, it'll not be a stranded asset. So when the fuels will be available, basically we will also have, an solution how, how we can convert that plant to run on sustainable fuels. But to answer the question, I think it depends a bit on the plant. For a coal plant I see it quite difficult. And, and then I think some of the base load, gas plants as well, but, depends a bit on the technology and, of course we'll all want to make sure that we reduce emissions going forward. So, uh, it might still be a better investment actually to have the the renewables coupled with the flexibility and, and be able to close down some of the inflexible, highly emitting technologies.

Tom Raftery: 22:29

I've seen a few instances in, Australia and one or two other places where when they do shut down coal plants, they sell the facilities to renewables, to some renewable generation organization because you've got all the H V D C, all the transmission infrastructure that can still be utilized, not for the electricity generated from burning coal now, but from having renewables on site. And so it makes a lot, a lot of sense that you know, you're, you're not scrapping the entire asset. You're just, you know, taking out the furnace and putting in a whole renewable space and then transmitting the energy from there through the, through the existing infrastructure. So I think that's another, another way of doing it as well.

Anja Frada: 23:11

Yep. So basically repurposing, the, the sites that you already have. Yeah.

Tom Raftery: 23:17

Exactly. Exactly. On the marine side of your business, I know you're on the energy side of the business, but on the marine side of the business, you probably know a little bit about that as well. Is there much movement there towards, well, I know decarbonization is an aim, but let's say the likes of electrification of marine transport versus shifting to more sustainable fuels. And I, I know you, you know, you're, you're, you're based in Finland, but I've, I've been to Norway and Finland, but they have a lot of ferries in Norway. And they're moving a lot of the ferries, cuz that's, an ideal kind of scenario. A ferry just going from shore to shore, they're moving a lot of those to electric. So we're starting to see a rise in the electrification of at least short term marine traffic. Is that something you guys are seeing there as well?

Anja Frada: 24:05

On the marine side, we see a lot of different alternatives, as you mentioned, like for short like, ferry traffic. Then electrification is an, is an opportunity. I think when we look at the longer routes, then it's clearly more towards methanol. Also in Norway, I think there is a lot of different projects with ammonia. So I think actually there is quite a lot of movement on the marine side, on, on this topic. And I think also because, you know, if you buy a vessel today that vessel you will operate for the next 20 to 25 years. So it's already within sort of the legislative term also of, decarbonizing. So it's a very topical thing for, for our customers on the marine side to think about. Now when they make decisions for their future investments.

Tom Raftery: 24:57

Okay. Cool. Cool. Where to from here for you guys? I mean, what's kind of next for Wärtsilä for the next Wärtsilä Energy for the next 5, 10, 15, 20, 30 years?

Anja Frada: 25:11

Well, I think we see e extreme growth opportunities, of course, in, in both the energy storage side and, and also on, on the engine power plant side. So, I think we, we are gonna, clearly, we have a solid strategy and we are gonna clearly continue on, on that strategy and of course continue with, with the work we are doing, together with our customers, but also with, with countries to ensure that we can reach a net zero future.

Tom Raftery: 25:38

Okay. Cool. We're coming towards the end of the podcast now, Anja, is there any question that I haven't asked that you wish I had or, Any aspect of this we haven't touched on that you think it's important for people to think about?

Anja Frada: 25:51

Well, I think one maybe area, which has also been a lot on the news is the energy market reform in EU especially, which is really looking at, at how the electricity market works. And, maybe on that one I would, I would say, I think it's very important that we look like holistically at the energy system to understand, you know, how should we build it out and what type of investments should we do? And then build also market that, ensures those investments will happen. So now when we look for example, at the flexibility part, I think there clearly is areas where we need to have, better incentives also to, to invest in the in the flexibility part, which will be a really important and crucial, area of the whole energy system. So, as mentioned previously, we don't only talk about renewables, we need to look at the renewables coupled with the flexibility, but we also need to ensure that there is the right, right incentives to do those investments. So that's an area which, which is important for us and, and which we are also driving, driving forward.

Tom Raftery: 27:01

Cool. Great. Anja, if people would like to know more about yourself or Wärtsilä Energy or any of the things we discussed in the podcast today, where would you have me direct them?

Anja Frada: 27:11

Uh, well our website, of course, Wartsila.com. There is a lot of information and then you can of course find all of us on, on LinkedIn.

Tom Raftery: 27:20

Super, super great. Anja, that's been fantastic. Really interesting. Thanks a million for coming on the podcast today.

Anja Frada: 27:26

Thank you.

Tom Raftery: 27:27

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to Tom raftery@outlook.com. Or message me on LinkedIn or Twitter. If you like the show, please, don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.