Digital transformation and investment opportunities in Asia: An interview with Paddy Padmanathan, President & CEO, ACWA Power

Paddy-Padmanathan
Paddy Padmanathan
President & CEO
By ACWA Power | 10 April 2019

Paddy Padmanathan of ACWA Power shares his views on investment opportunities in the region and the role of new digital technologies in accelerating energy transformation.


  1. ACWA Power has a strong presence in the Middle East and Africa. What investment opportunities does ACWA Power see in Asia?

    Electricity and potable water are essentials not only to economic development but, in today’s world, to sustain life itself. While only two out of 10 people in Asia lack electricity supply, which is a relatively better situation than in say, Africa, the reliability, adequacy, and carbon content of that electricity requires significant attention. This offers considerable opportunity. Indeed, all projections by agencies such as the World Bank, International Energy Agency (IEA), and the World Economic Forum show that Asia will require more than half the total investments needed for the power sector across the world over the next three decades.

    While this is an ambitious challenge, we now know that in addition to implementing new capacity expansion and reconfiguring the energy mix, we also need to drive cost down to make electricity adequate, reliable, and affordable. At the same time, we must minimise adverse environmental impact, which implicitly means minimising if not eliminating emissions of carbon and other harmful particulates during the generation activity.

    ACWA Power’s mission is to reliably deliver electricity and, where required, water in bulk on long-term offtake contracts at low cost. We do so with a focus on social and environmental stewardship. We have acquired a considerable volume of experience in living this mission in a dozen countries, and so we are confident of being able to add value to a wider geography as we expand our footprint.

    In 14 years, we have built a portfolio of 30+ GW of gas, PV, CSP, wind, and coal-fired power generation capacity. We also have just under five million cuM/day of desalinated water production capacity using RO, MSF, and MED technologies. We are now reliably delivering at levels of 20 to 40 per cent of electricity generated and desalinated water produced in several countries. ACWA Power looks forward to contributing to the economic and social development of the new countries which we would welcome expanding into.

  2. How is ACWA Power supporting the world’s transition towards a more sustainable future?

    Rather than seeking to focus on the market price of electricity, we focus on optimal technical configuration; preparation of detailed design at the outset; assessment, compartmentalisation and allocation of risks to parties best capable of managing those risks; and the reduction of costs that contribute to tariff. ACWA Power has placed itself at the heart of energy transition, accelerating deployment of renewable energy by bringing the cost of solar energy to levels at which it is able to compete shoulder to shoulder with fossil fuel alternatives to serve the daytime peak load.

    We have established ourselves as the leading developer of Concentrated Solar Power. This involves collecting the heat of the sun, and storing that heat in molten salt to generate steam, which in turn runs a steam turbine as demand requires. Through this process, we are able to generate reliable dispatchable electricity at price levels that are able to compete with fossil fuel alternatives, even for mid-merit and base load segments in certain geographies. This technology also enables us to mitigate the intermittency of the solar resource, thus accelerating the pace of decarbonising electricity generation.

    Finally, besides the building of power plants and subsequent operations and maintenance, we also utilise the investments we make to maximise local value creation, employment opportunity generation, and community development. These are all essential ingredients for a sustainable future for the communities and the countries that we serve.

  3. With renewables making up 23 per cent of ACWA Power’s portfolio, can you share more about your strategy for this sector?

    As electricity is such a vital component to sustaining life itself, our priority is to increase access at an affordable cost and adequate quantity. While we are proud of our achievements in reducing cost of renewable energy as a technology-neutral, fuel-agnostic company committed to serving our customers, we are equally proud of generating even fossil fuel-based energy when called upon to do so. We use fossil fuels in an as environmentally-responsible manner as we can and ensure that we fulfill our customers’ fuel-mix preferences.

    We will continue to broaden the geography across which we operate and the technologies that we deploy, spanning solar, wind (both onshore and offshore), geothermal, hydro, waste-to-heat, gas, and, selectively, coal. Our focus will be to continue to use human ingenuity, private sector entrepreneurship, and the commitment of our people to reliably deliver electricity and, where required, desalinated water in bulk to creditworthy offtakers at low cost.

  4. How are digital technologies transforming the way ACWA Power does business?

    In our industry, the use of big data and artificial intelligence is still very much in the early stages. However, using the vast amount of data we gather from our power plants every minute they are operating, we are already able to establish digital twins. This allows us to improve performance, reduce unplanned outages, schedule and manage maintenance efficiently, and increase the level of availability of our plants. With a rapidly growing fleet and considerable experience, we are confident and comfortable in embracing new technology to keep reducing cost.

    Beyond power generation and desalinated water production, we stand ready to lead the industry to keep reducing cost and positively impact the world though the adoption of emerging technologies. For example, ACWA Power became the first utility-scale generator to adopt SolarCoin, a cryptocurrency based on blockchain technology, which is very specifically structured to accelerate solar energy deployment. ACWA Power also became a pioneering adopter of the W+ Standard, which measures the impact of projects on women empowerment and increases their access to resources and capital, scaling up solutions to climate change, food security and poverty.

  5. What do you hope to achieve at SIEW 2019?

    The energy transition and capacity expansion offer significant challenges and exciting opportunities. It will be through improving our understanding of the needs, challenges, and opportunities offered by innovation in technology, delivery methodologies, and business models that we will be able to efficiently participate in the sector and maximise delivery of value. Singapore International Energy Week is a well-attended and respected event, where the full spectrum of stakeholders are encouraged to share their insights and to establish relationships and consider partnerships so essential to achieve success. As an entrant to the region, SIEW offers us an excellent platform to introduce ourselves, to gain an understanding of real opportunities, and to build friendships.

    We look forward to showcasing ourselves as a reliable long-term partner committed to delivering electricity in bulk on long-term contracts at the lowest possible price. We are also committed to supporting the socio-economic development of the countries we elect to invest in by not only delivering electrons, but also maximising local content development and employment creation through that process.

About Paddy Padmanathan, President & CEO, ACWA Power

Paddy Padmanathan is a professional Civil Engineer with over 35 years of experience. He has served ACWA Power from 2005 as the company grew from a start-up to a leading international private developer, owner, and operator of power generation and desalinated water production plants. Headquartered in Saudi Arabia, the company has an investment value in excess of US$30 billion and can generate 29+ GW of power and produce 4.3 million m3/day of desalinated water to be delivered on a bulk basis to state utilities and industrial majors on long-term off-take contracts under Public-Private-Partnership, Concession, and Utility Services Outsourcing models.

A graduate of the University of Manchester, Paddy Padmanathan started his career as a consulting engineer delivering infrastructure projects financed by the national treasuries and multilateral financial agencies before moving on to develop privately financed power, water, and wastewater projects in over a dozen countries. A substantial period of his career before ACWA Power was with Black & Veatch, a US-headquartered multinational engineering, procurement, and construction company, where he served as a Vice President and Corporate Officer.

Paddy Padmanathan also serves on the board of directors of several companies all operating in the water and power sectors.

         

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