Interview with Peter Magauer, Speaker of the Management Board, Andritz Hydro, Ravensburg, Germany
SenGermany: Mr. Magauer, we are delighted that you will speak on the occasion of the 3rd German-Senegalese Economic Summit on 4 November 2016 in Duisburg. From October 10 to 12, you attended the international conference and trade fair "Hydro 2016" in Montreux (Switzerland), where you spoke - amongst others - with experts from Africa and Senegal. Can you give us more detailed information in that respect?
Peter Magauer: Yes, of course. But first of all, I am happy about the invitation to your 3rd German-Senegalese Economic Summit, since Africa has moved in the center of interest for us. We are one of the leading suppliers to hydroelectric power plants, we manufacture turbines and generators along with all accessories. Here, at the Ravensburg location, we manage with our staff the turbine manufacturing as a very important part of production, starting from the project planning through engineering up to finishing and assembly.
SenGermany: Was the production in Ravensburg a main topic in Montreux?
Peter Magauer: The conference in Montreux is technically oriented. I myself have a technical background, I am gladly concerned with technology and love to communicate with technical experts. The HYDRO Conference, this time in Montreux, is the biggest regular conference exclusively dealing with hydropower. This year, 1400 participants were counted, who are all engaged in the hydropower sector. The stakeholders include university institutes, just as customers who build and operate hydropower plants, system suppliers like us, or suppliers of component parts, which always guarantees a lively and interesting exchange of information. This conference also attracts African visitors, who indeed appreciate that mix of solid high-quality technology coupled with contacts and networks.
SenGermany: In which African countries are you primarily active?
Peter Magauer: In the last few years, our activities in Africa rather concentrated on the areas further to the south or east. The biggest contract comes from Angola: a 2100 MW power plant, where we supply the turbines. In the Democratic Republic of the Congo, we modernize the power plant II of Inga. In East Africa, we have several contracts for smaller plants. Right now we have a team in Ruanda negotiating an important contract there, and we are confident that we will sign the contract in the near future. As you see, this region keeps us all on edge.
SenGermany: You speak of Southern and Eastern Africa. Is West Africa a white spot on your Africa map?
Peter Magauer: West Africa is not entirely foreign to us. But the focal point of our projects is not or not so closely located there. We modernize the plant of Manantali in Mali close to the border with Senegal, where we react to the changed conditions in the mode of production, and modify the machines accordingly.
Hydro-electric dam of Manantali (Republic of Mali) with turbines made by Andritz Hydro (Ravensburg, Germany)
SenGermany: Can you provide more detailed explanations, did you face malfunctions in Manantali?
Peter Magauer: The plant was functioning smoothly. What has changed, are the dimensional criteria or the criteria prescribing how the plant must be built and operated. When we received the contract in the nineties, the typical operating method was run of river, with constant operation and little regulating controls. To that effect, these Kaplan machines were dimensioned with a very high drop height, thus with relatively high pressure on the Kaplan blades. In this case seven blades must be fitted into small spaces, so that the dimensioning criteria play a major role. We therefore mounted the bearings in a way that they easily withstand the normal static stress and bear up against the mode of operation described in the call for tenders. There was no problem with the machines, as long as they were conventionally operated with few load changes.
SenGermany: What is the reason for these repairs, at the moment?
Peter Magauer: Due to the additional construction of new renewable energies and the cuts in reserve capacities, the dynamics have changed in the network. The hydropower plants have increasingly the task of regulating the network and keeping it at a stable level, so as to maintain a constant frequency and well functioning devices in the long run. This makes it possible to minimize the risk of power failures. Hence, the task of hydropower plants has in numerous cases been shifted from simply producing energy to regulating and stabilizing the network. This, however, can only be accomplished with the same plants, if some details are changed. When the first impeller suffered serious damage, we investigated the matter and proposed measures on how to adjust the construction by dimensioning essential parts of the machines differently.
SenGermany: How long will it take to carry out these improvement works?
Peter Magauer: There is a time schedule for the entire exchange. What is normally not done when it comes to this kind of reconstruction, is to see all machines through on an expedited basis. A new construction typically calls for an interval of three months. Every three months a machine goes into operation. Here, this happens twice a year; sometimes with one machine per year. For Manantali we suggested two machines per year, since the plans provide for rapid reconstruction. We have already installed two of them. Three are still missing and it will certainly take two additional years for the works to be finished.
Upper turbine cover of a Kaplan turbine (Manantali, Republic of Mali)
SenGermany: When did you start with reconstruction works?
Peter Magauer: Around two years ago. Please note that we first had to analyze the actual situation and create a design, based on precise calculations. Thereafter we ordered the material, which is a special casting made of stainless steel with an extremely high resistance. Depending on the size of the parts, it takes as long as eight to ten months before we get the needed part, which is then welded, processed and assembled. It takes another half year to finish these works, and two months for the parts to arrive on site, where the assembly work will again extend over five to six months. The entire contract period typically provided for this type of machine is three years, whereby an important question always arising in connection with reconstruction is how long the machine is out of use. In large systems this timeframe can be around one year, during which no electricity is produced.
SenGermany: How many employees are currently employed by your company on site?
Peter Magauer: We have three to four own employees on site, and we always cooperate with an installation partner who supplies the manpower: fitters, welders and electricians. Moreover we employ local staff, if possible. It is always our principle to have a look at the qualification of the local personnel. We normally offer a training program for bigger plants. In Angola, for example, a training center built by a construction company is part of the project. We organize three-year training courses along with procurement of professional qualification, so as to enable our customer to supply more well-trained specialists.
The training shop inside the plant of Andritz hydro in Ravensburg
SenGermany: Are currently also training employees in Mali?
Peter Magauer: In Mali we have a smaller job, where little training is required for operating the plant. We can of course offer training programs, which we sometimes do in the form of our company's own services, or within the scope of very large contracts.
SenGermany: Let us come back to Hydro 2016 in Montreux, the most important Europe-wide event for hydropower. Did you find the time for talking to experts from Senegal?
Peter Magauer: Yes, absolutely! Not least because of my interest in the technology, with a view to our markets and our customers. Of particular interest are several African customers, amongst others from OMVS (the Senegal River Basin Development Organization) and OMVG (the Gambia River Basin Development Organization), those two rivers in West Africa where multinational companies are engaged in the business, and where several projects appear on the horizon.
SenGermany: What competitors do you meet on the African market?
Peter Magauer: In Africa, we as Europeans have the problem or the challenge that China holds a dominant position in this region. And China often comes with package solutions: Financing, construction and machines. What we also often hear from our customers is that things go better or worse, and that the adherence to time schedules often leaves much to be desired. In Ravensburg, we have been building turbines for 160 years now: from early 1856 to date we have been manufacturers of hydroelectric turbines and our workforce consists of 460 employees, who know the business from the ground up, almost half of them engineers. New countries like China do not have this long tradition of high standards, and their work is not based on this breadth of experience.
SenGermany: Fair enough, but you say the Chinese come with package solutions. Which means that, in China, the state is behind the business. In your case the business is not backed by either the German or the Austrian government. Can you compete with the Chinese under these conditions?
Peter Magauer: Not always, but we can point to examples where things work out well. We also increasingly get support from the German government. The concept of support may seem a little farfetched, but the way of looking at Africa has changed. Until a few years ago, we could primarily expect from the German government - when I think of the Federal Ministry for Economic Cooperation and Development, for example - activities in the social sphere and in the field of decentralized agriculture. While these activities are important, topics like infrastructure, energy and transport have in my opinion been neglected. I recently often travelled to African countries and, no matter where you stay in Cairo, Luanda or Kinshasa, the cities are suffocating in extremely dense traffic. In Luanda you see diesel generators at every street corner, which serve to produce electricity in the first place. The waste removal works only partially. There is a particular backlog in the field of water and wastewater management, with six million people living there. This is a problem we simply ignored or underestimated in Germany for many years. I feel that the topic of refugees and migration only now teaches us that we must indeed make efforts to develop the infrastructure.
SenGermany: What would you recommend to the German government?
Peter Magauer: We should undertake more European projects, logically under German leadership. For this purpose Germany can be the locomotive, and we have good partners in France, of course in Austria as well, since we always take the Austrian generator along when we manufacture the turbine here in Germany. There are certainly much more possibilities for various alliances within Europe. I wish to see more of them, which would really put us in a better position as European alternative vis-à-vis the Chinese.
A turbine rotor made for the hydro-electric dam of Guri II supplies 50% of Venezuela with electricity
SenGermany: How about Euler Hermes?
Peter Magauer: That is what I wanted to say. Step by step, we see a good development. In the last few years the list has been supplemented by an increasing number of countries for whom Euler Hermes is ready to give an export risk guarantee, and precisely Senegal is a good example here. About a month ago, Euler Hermes publicly announced that the Ivory Coast and Ruanda are now also eligible. Senegal had already been named on that list a few months ago. When we manufacture machines to a certain extent in Germany, so that a major part of the work is upheld in Germany, we can apply for a Hermes guarantee covering the machines, and should also be able to obtain this cover for Senegal. In such event a bank could for instance finance, within the scope of an overall funding, the part corresponding to our equipment, which can be highly attractive for the customer.
SenGermany: A German bank?
Peter Magauer: Yes, it will be a German bank or a bank with a German branch. The problem is not the money per se. There is more than enough money available. And our projects are actually a great opportunity to invest money on a long-term basis. A hydropower plant is always a very high investment with a long repayment period. The investment is only refunded after 15, 20, 25, sometimes even 30 years. But our machines are designed for a service life going beyond 40 up to 50 years. A modernization takes place after expiration of these 50 years, for instance with new impellers being installed; thereafter the machines will be operated for another 50 years. Once the investment has been refunded, the operating costs are very low, so that the old depreciated hydropower plants are the best source of income for our customers.
SenGermany: You mentioned several projects in Africa looming on the horizon. Which are the new projects identified by you in West Africa?
Peter Magauer: We realize, for example, that in Guinea the two initial construction projects have been implemented by Chinese companies. We made no offer on that occasion, since we were not in a position to provide an attractive alternative. Even if Andritz Hydro is one of the leading companies for turbines and even if we can offer all pieces of equipment with our other Andritz companies, we cannot cover the field of construction. And about two thirds of a plant, sometimes up to 70 or even 80 percent, constitute construction works. This is a different field of work, which requires in-house expertise and know-how. There are factors like geology, which are beyond our control. For an overall project it would at least be necessary to bring the construction and the equipment together. A designer, who coordinates the entire project, is likewise needed, just as a financing bank. These are four parties to be involved. The advantage for China is that everything is centrally managed and controlled, which makes it easier for the Chinese to offer a tailor-made comprehensive package.
SenGermany: Does that mean that you have no chance against China?
Peter Magauer: In some cases we join forces with a construction company. For example, we work as subcontractor for a French, Austrian or German construction company. But this can be very laborious. There are more construction companies in other countries than suppliers, and for this way of collaboration it is extremely difficult to select the right construction partner. I already raised this issue on many occasions, including talks with African State Presidents. I suggested that, in terms of the economic efficiency of a project, it might be more reasonable to approach a project with two separate packages: the machines and the construction work. There are mechanisms for this purpose, with the aim of defining common time schedules, interface lists, agreements etc. to the greatest possible extent, so as to later merge these two packages into a coordinated overall structure for implementation purposes.
SenGermany: Which German construction enterprises are worth considering for such large-scale projects from your point of view?
Peter Magauer: Unfortunately we experienced a thinning of construction companies in Germany, which is the reason why we very often approach non-German companies within Europe, all the more so as we can then cooperate for financing purposes for instance with a French company, which is in a position to use Coface. We then get Euler Hermes as coverage of the turbines, and the Austrian ÖKB bank for the electrical side.
SenGermany: At the outset you also mentioned new challenges for your company, respectively entirely new demands on those who build hydropower plants. Since more renewable energies are applied on a global scale, new requirements are imposed on your company. Can you explain this challenge in more detail?
Peter Magauer: When we start dimensioning a turbine, we must always be familiar with the underlying criteria. The classic criteria are: the output and the drop height. What is always more important is the area of application, and especially the question: how much time is spent with partial load? If the network is intended to be regulated, a machine with a capacity of 100 MW is not operated with 100 or 90 MW, but frequently also with 50 MW. And a Francis machine operated at 50 percent output rumbles pretty well. This can cause damage to the machine, unless the matter is considered from the very beginning. When you switch off the machine and start it again one single time, the lifetime consumed is substantially longer than hundreds of hours of operation. It is important to know in advance how often that happens. Today we are able to calculate the load on the components used for this dynamic mode of operation in advance, and if such calculations are possible, we can also design the components in a way that they persist for 50 years.
A Francis turbine made by Andritz-hydro for the hydro-electric dam of Inga II in the Democratic Republic of Congo
SenGermany: During a meeting with Mr. Michael Wehinger, the person responsible for West Africa at the KfW bank, he spoke about the combination of hydropower plants, wind and solar energy. Where do you see potential for your company in this context?
Peter Magauer: I speak for Andritz and for me personally, when I say that in my opinion future energy scenarios will predominantly be based on renewable energies. In this context I regard the hydropower as a logical pillar in the field of renewable energies, an ideal match with wind and solar energy, since the hydropower is well adjustable especially in cases where certain storage options are available. In Africa, for example, we are running some projects where the hydropower is combined with photovoltaics. These are attractive conditions indeed, since solar energy is used during the day and the water is left in the reservoir. In the evening, when the demand is likely to increase and the sun goes down, the plant is operated with the water turbines.
SenGermany: You have a technical background. Can you briefly describe your professional career?
Peter Magauer: I studied Mechanical Engineering in Graz and, since 1982, I have been employed by the company which is named Andritz today. Several companies merged under this name. I have been engaged in the sale of technical equipment at this group of companies since 1987. Only the name has changed. From 1982 through 1997 I worked at Voest Alpine VA-Tech in Linz, Austria. In those days we were excellent manufacturers of turbines with a low drop height, but we failed to excel when turbines with a high drop height were concerned. Then we purchased a Swiss company in Vevey on the shores of Lake Geneva, which was the number two in Switzerland and was in good command of a high dropping height. Number one was Escher-Wyss in Zurich. In 1997 I went to Vevey, in order to bring the subsidiary and the parent company closer together, and also to bring the know-how on low-pressure technology from Austria to Switzerland, and on high-pressure technology from Switzerland to Austria.
The mechanical engineer Peter Magauer in front of his office in Ravensburg
SenGermany: Since when have you been working in Germany?
Peter Magauer: I started my work at Andritz Hydro in Ravensburg in the year 2000, in consequence of the next merger of companies. In 1999/2000 the Austrian parent company purchased the enterprise Sulzer-Escher Wyss. Until then, Escher Wyss had been one of our main competitors, but joined us at the time. In those days already, the most important location of Escher Wyss for large plants was here in Ravensburg. Even though a lot of activities took place in Switzerland, especially our expertise concerning large-scale plants was located here in Germany. What was likewise very important in those days, was our workshop. Hence, for the purpose of bringing the companies together by merger into the new group, I was asked to go to Ravensburg, also because I had always been active in the field of large-scale plants, whereas in Switzerland the area of specialization was rather intended to be the service segment and minor projects.
SenGermany: Which are the competitors in your industry?
Peter Magauer: When you look at the global market for hydraulic plants, you will notice that our branch of industry is rather small as compared to other industries. Just to specify an order of magnitude: Around five billion Euros per year, sometimes a little more, are granted worldwide in the field of turbines and generators, also because the machines have such a long service life. A power plant is constructed, we deliver the machine, and the facility is operated for 50 years. So, there is no huge volume involved. The three leading companies have their headquarters in Europe: Voith, Andritz and Alstom from France, which was taken over by General Electric (GE). GE has the corporate headquarters in the USA, but the hydroplant segment remained in France. But I believe that, more than the others, we maintained our strengths in Europe, so as to provide Europe with good service. We also feel that the know-how and engineering needed for complex projects is still rated high in Europe. While our competitors were more inclined to shift priorities toward Asia, it was our philosophy "to build up Asia, but to keep Europe strong".
SenGermany: You have a branch establishment in China, despite the competition with the Chinese?
Peter Magauer: Yes, correct! We have a company with three locations in China; the place for manufacturing complete systems and performing engineering work is Beijing. We have a production joint venture in Chengdu and also an Andritz firm with a foundry in Foshan. We are well equipped in China, though it must be noted in the context of worldwide projects that the project is very often managed from Europe, with a major part of the components coming from China for cost reasons. However, particularly sophisticated component parts are manufactured here in Germany. This kind of mix makes it possible for us to ensure the best quality with a highly professional handling.
Mr. Magauer, thank you for this Interview.
Interview conducted by Ibrahim Guèye