Hitachi Energy posted a multifold rise in its profit in Q3FY24 on a low base and a 23% jump in revenue. The company is expecting significant contribution from renewable energy and data centres to its order book, N Venu, MD & CEO, India & South Asia, Hitachi Energy says in an interview with Raghavendra Kamath. Edited excerpts.

What kind of business opportunity do you see in energy transition in the coming years?

There are a lot of tailwinds and converting them into opportunities is important for us. We see opportunities in three or four major buckets. Renewable is a big opportunity (and so is) transmission. And then on the industrial consumption front, (there is) electrification… and in addition to that, in transport, the rail sector is a big thing for us. Almost 15 to 20% of orders come from the rail segment. Data centres and energy storage are also big opportunities.

Many companies have big plans for green hydrogen, but many also say it is expensive and not feasible in India. Your thoughts?

Let me draw a little bit of a parallel between green hydrogen and P (photovoltaic) solar. When we used photovoltaic technology some 15 years ago, it was exactly the same. Photovoltaic prices at that time were at $1 per kWh, today they are at a few cents. So how did we reach that level?

Technology evolution coupled with the volume effect has brought down PV prices to where they are now. Green hydrogen needs a new technology and we need to look at electrolyser supply chains and prices of those kind of things. And our view is that today it is expensive, but as the technology matures and as usage grows, the volume effect comes into picture. Then I am sure this also will be cost-effective over a period of time.

What are your plans for the next three years and how much do you plan to invest?

In the last three or four years, we have invested heavily in India… in terms of new factories, technology centres, innovation centres and also in terms of our people. We opened the power quality factory in Doddabalapur near Bengaluru and the HVDC (high voltage direct current) and control technology unit in Chennai. We have also opened a dry bushings transformer factory in Vadodara. We have been spending almost Rs 100 crore per year on greenfield and brownfield expansions as well as in talent cost. We expect the capex to sustain in coming years.

Despite the rise of renewable energy, coal- based thermal energy has remained the mainstay of India’s power distribution and it is estimated that its share will go up in the coming years. Your views?

With the rise in demand of electricity, our GDP is also rising, the affordability is going up, per capita income also is rising. So there is a huge demand for the electricity and in India, power is generated from both conventional as well as the renewable sources. But major source of power generation is coal, which is almost close to 70% of the total power generation. At the same time we are rapidly adding renewable generation capacity . It is extremely important countries like us to change over in a right way. The ministry and the governments are working towards it in a very phased manner.

Power demand has shot up in the last several months. How do you look at it and how is your company placed to tap that opportunity?

We believe that electricity will be the backbone of the entire energy system, with growing electrification of the transportation industry and buildings sector. There is an accelerated shift from fossil fuels to renewable power generation and bringing that to every household. For example, at Hitachi Energy, all our factories and offices are powered through renewable energy. The moment we have more relaxed demand, it will fuel renewable power plants, transmission projects and so on.