Andritz Hydro: The Worth of Water
Energy Solutions
Written by Eric Slack   
Andritz Hydro: The Worth of Water
With global demand for hydropower on the rise, acquisitions and investments helped this company become a leading supplier of systems and services for hydropower plants.
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After a history full of acquisitions and mergers, Andritz Hydro has emerged as one of the dominant players in the global hydropower market. The company now has all the tools it needs after a major acquisition last year filled some gaps for Andritz Hydro, a subsidiary of Andritz AG, an Austrian plant engineering group.

“The benefits of being part of a bigger organization come from the diversified portfolio that makes us a credible company with access to financial resources necessary to provide bonding and financial guarantees for our products,” said Keith Pomeroy, president.

Andritz Hydro is a supplier of electro-mechanical systems and services for hydropower plants. This ability to service its customers from water to wire has helped make it a global leader in hydraulic power generation. Its capabilities span the hydropower spectrum, from large hydro and compact hydro to service, rehab, upgrading, modernization, and pumps.

Andritz Hydro: The Worth of Water
Keith Pomeroy, president
The company has more than 165 years of turbine design and manufacturing experience and more than 110 years experience with electrical equipment for power stations. It has installed more than 30,000 turbines or roughly 400,000 MW output. With a supply range of more than 800 MW and a full array of capabilities in service and rehabilitation for upgrades, the company has become one of the planet’s preferred partners at a time when the global market is seeing a dramatic increase in the demand for hydroelectric generating equipment.

Andritz Hydro is headquartered in Vienna, Austria and has truly global roots. Andritz got involved in hydropower as a licensee of Sulzer Brothers, a diversified Swiss high tech corporation that, in 1969, got into hydraulic turbomachinery when it merged with Escher Wyss, another Swiss company founded in 1805. In 1995, Sulzer-Escher Wyss restructured operations, with water turbine and CP propeller activities placed in a division called Sulzer Hydro.

Strategic expansion
Austria’s Voest Alpine Technologies Group (VA Tech) subsequently acquired the division at the turn of the century and merged it with their own century-old hydro business company. Then, in 2006, Andritz acquired VA Tech’s hydro business. But that isn’t the end of the story. Early last year, Andritz acquired GE Energy’s hydropower technology and other assets, including engineering and project management resources, research and development capabilities, and specialized generator component production facilities in Canada.

Prior to the GE acquisition, the company was largely a European/Asian-focused business. GE Energy’s hydropower primary center of gravity was North America with strong interests in Brazil as well. From a strategic market point of view, it represented a significant profile increase in the North and South American markets for Andritz Hydro, which also has a joint venture in Brazil with Inepar do Brasil.

The two companies’ technologies were complimentary. Previously, the units Andritz Hydro pursued tended to be around 450 MW per unit in size, and generally of a higher speed and higher head range. GE’s dominant strength tended to be big low speed machines, which are characteristic of markets outside Europe. “Technologically, we expanded our product range into the very large machines and big low     speed generators, in addition to increasing our geographic coverage,” Pomeroy said.

The focus for Andritz Hydro now is to consolidate and integrate its assets with the company’s long-term sights set on becoming the number one player in the global hydro market. Another benefit of the GE acquisition included increasing the company’s stable of hydraulic test labs to 14.

“In terms of the physical facilities to support R&D efforts,we now have the largest number of them,” said Pomeroy. “Our R&D programs are driven by where we see weaknesses in products, requirements of developing projects, and gaps in the market we can go after.”

Market changes
Global demand for hydroelectric generating equipment, due in part to environmental concerns and desires to harness domestic power sources, is increasing. Although countries like India and China remain the driving forces behind demand, many countries are looking to take advantage of substantial untapped hydroelectric potential. In Canada, utilities are starting to look at major hydro projects as a clean, domestic generation source.

Infrastructure projects are also likely to be a part of economic stimulus attempts in North America. Hydropower projects would create significant construction sites, generating jobs for thousands. Those projects would leave behind many operational jobs as well as a renewable generation resource with about 50 years of life before needing major overhauls. Older pieces of hydropower infrastructure are currently in need of upgrades, which will bring in additional rehab projects for Andritz Hydro.

“We knew that markets were trending up in terms of activity level, and the additional GE capability opened up the door for us on some projects in terms of product range, notably with major Canadian utilities,” Pomeroy said. “And since we have now more than doubled the number of employees in North America, we possess both the breadth of know-how and engineering manpower capacity, and that will help us capture projects in North America.”

With only a handful of companies capable of competing in hydropower on a global level, Andritz Hydro is concerned about maintaining and expanding marketshare. Pomeroy said that is largely dependent on reputation, so successful execution of its project backlog is a must. “The most powerful selling point in this business is pointing to operational references that are similar to what you are trying to sell. Because the industry is small, mistakes are widely known, so executing that backlog with excellence is hugely important,” he said.

With engineering capabilities established, the principal challenge to execution is actually on the supply chain side. Because of the trend of outsourcing manufacturing to lower cost labor countries, manufacturing quality and delivery schedules need to be closely monitored. Lastly, managing the quality and risks associated with erecting its products on-site, often in remote areas even in developed countries, requires a staff that is second to none in a challenging industry.

“You don’t have the same kind of engineering challenges in hydropower you would find in gas turbines or nuclear power, so it has become a bit of a niche at the university level. We have to identify relatively young talent and develop them internally so we can continue to grow,” Pomeroy concluded.
 
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