Not planning to enter energy storage business in India: Göran Richardsson, Energy Business Director - South Asia, Wärtsilä

Time of India

26-05-2025

Mumbai: Finland-based marine power and energy giant, Wärtsilä, is betting on flexible balancing power plants to support
India
's renewable integration, as battery storage remains commercially unviable amid an underdeveloped market. In an exclusive interview with
ETEnergyWorld
, Göran Richardsson, Energy Business Director –
South Asia
, talks about the company's India strategy, ongoing partner discussions, and plans to scale sales of smaller plants to meet rising grid stability demands.
He also highlights why the company is still holding back its entry in the battery storage market in India. Edited excerpts:
Could you quickly take us through the key areas of operations for Wärtsilä globally and specifically in India?
Wärtsilä offers balancing power plants, utilising natural gas as a transition fuel, to help integrate renewable energy sources into the grid more effectively. These power plants are designed to be flexible, providing quick response to grid fluctuations, and balancing renewable energy generation. They are future-proof and can run on sustainable fuels, once they become available – enabling 100 per cent renewable energy systems. We also have another important area, which is battery energy storage system solutions. These are not the small units you might find in houses or cars, but large, utility-scale battery plants.
Additionally, we are very active in the marine business, providing engines and propulsion systems for large shipping industries and companies. We've been active in the marine business since the 1940s or 1950s.
Our company, Wärtsilä, is about 190 years old. We originally began as a sawmill company in the wood industry in 1834. Over time, we grew through shipyards and other businesses. Today, our core business is energy and marine and the lifecycle solutions that we provide for both these businesses.
Looking at India specifically, we focus on most of these businesses here as well. We've been active in the energy sector since the early 1980s. Over the years, we've delivered about 4 GW of power plants in India. In the beginning, most of these plants were for industries because, in the 80s and 90s, the power grid in India was not well developed, so industries had their own captive power plants.
We have a large services organisation catering to both the energy and marine sectors. Additionally, India has a large IT organization, providing global support for Wärtsilä.
We also have a manufacturing facility in Khopoli, near Mumbai. This facility produces auxiliary units for power generation, restores propulsion systems, repairs propellers for the marine side, handles water jet equipment, and provides electrical panels for power plant projects.
You have mentioned that Wärtsilä is focusing on the marine and energy sectors. Are you planning to diversify into any new areas in India in the coming years?
If we look at the power generation side, in India, Wärtsilä has traditionally focused on land-based power generation for utilities and industries. However, our Marine business has grown quite a lot in India recently.
Looking ahead at the energy sector in India, the power grids and transmission lines today are much more developed. Many industries are now connected to the grid and no longer require their own captive plants. So, our focus in India is more towards working with utilities, which operate across India.
We are particularly focusing on balancing plants, which help integrate renewables into the grid. These balancing plants are designed to quickly start up and stabilize the grid when there are fluctuations in renewable power generation - when the sun doesn't shine or the wind doesn't blow.
In the coming years, this is where we are focusing our efforts in India, helping utilities integrate and balance renewables to ensure grid stability.
What will be your focus area in India in the coming years?
India is planning to integrate a significant amount of renewables, and this means there will be a need for flexible solutions that can balance the intermittency of wind and solar power. These balancing plants, which have fast start-up times, can cater to the temporary drops in renewable energy generation. We provide solutions to help stabilize the grid and integrate renewables efficiently.
What is your outlook on the overall business perspective in India?
We see a huge market potential in India, as the country will need gigawatts of fast- response balancing plants. We are not talking about 10 megawatts or 100 megawatts but gigawatts of capacity.
We're working with state utilities and other stakeholders to advocate for this solution. We are also doing power system modeling in India to demonstrate how fast-response units can help build optimized power systems and respond to the needs of different states. Some states are already facing challenges due to high renewable penetration, while others are yet to experience such issues.
Eventually, all states in India will feel the impact of renewable fluctuations, and this is where our solutions will play a significant role. We're actively working with stakeholders, conducting seminars, and running modeling exercises to support the integration of these solutions.
Why hasn't Wärtsilä entered the battery segment in India yet? Is it due to cost or supply chain issues?
The main issue isn't cost or supply chain. It's more about the lack of a liberalized energy market in India, where investors can make money from such investments. This market mechanism isn't really available in India right now.
In places like Australia, where we are very active in the battery energy storage segment, a private investor can invest in battery storage projects because the market is deregulated. Investors can make a profit from these assets by providing grid services, such as storing energy during low-cost periods and selling it during high-cost periods. In India, we don't have that kind of revenue model at the moment.
Without a revenue model, it's hard to make battery assets commercially viable in India. You don't get paid for capacity, and there are no high rates for supplying power from batteries to the grid. That's the biggest obstacle today.
We are focused on markets that have a proper market mechanism that allows for private investment. Eventually, I hope India will develop such mechanisms, and if they do, we will consider entering the battery energy storage market.
Can you clarify whether Wärtsilä plans to enter the battery business in India?
We are actively monitoring the situation in India regarding battery energy storage. While we are not currently focused on entering the market, we are having ongoing discussions with potential partners. We need to see changes in the market mechanisms that would make investments in batteries commercially viable. India is on our radar, and we are revising our list of focus countries regularly. For now, we are actively monitoring opportunities, but we are not planning to enter the energy storage business in India yet.
What is your investment outlook for India in the coming years? Are there any upcoming projects or new market opportunities?
We are working with state utilities, especially in renewable-rich states, to advocate for flexible balancing power plants. However, I can't go into deeper details about specific projects at this time as they are confidential.
Our work is focused on advocacy and groundwork with stakeholders, as these projects take time to develop. These projects may eventually go to tender, but before that happens, we need years of groundwork and discussions. Building relationships and collaborating with stakeholders can take five to ten years before we start seeing tenders.
On a more traditional power generation front, we are still working on smaller plants and continue to see business in India. We recently completed a project with
Oil India
, and we expect to sell more of these smaller plants in the near future.
What are the key challenges you face while setting up projects in India or in forming partnerships and collaborations?
One of the key obstacles we encounter is the focus on unit prices when discussing power solutions. As soon as we mention balancing plants or reciprocating engines, the first question we usually get is about the unit price of electricity generated. However, this is not the right question to ask, especially for balancing plants that may only operate for 1,000 or 2,000 hours a year. When plants are only running for a limited number of hours, the cost of producing electricity will naturally be higher, but that doesn't reflect the full value of the solution.
We need to approach this from a portfolio perspective. For example, in a state with a mix of coal, hydro, and renewables, the integration of renewable energy can become more efficient with balancing plants. The cheapest way to produce electricity today is with renewables, and balancing plants help in integrating an increasing amount of renewables and providing the support needed to keep the grid stable and reliable.
However, many in India are still focused on the unit cost of individual technologies, which makes it difficult to advocate for solutions that are high cost per unit but help integrate renewables in a more affordable and efficient way.
Another issue is the slow pace of change. The market mechanism needs to evolve to encourage private investment in power generation. Without this, we may continue relying on state utilities, which limits investment opportunities.
Why isn't the industry talking about integrating renewable energy to reduce costs, even though it's a major issue?
Traditionally, India has had a regulated market where tariffs are fixed. The entire model is built around that structure. Historically, the focus has always been on the unit cost of production. That way of thinking takes years to break.
Many people who don't believe in the renewable solution often use the argument that the unit cost is too high, which serves as an easy justification to dismiss the idea. It's a kind of defense mechanism — a way to avoid opening up the possibility of what renewables could actually bring to a state.
When you're fixed into this traditional tariff system set by state utilities, your mindset is locked into it. But as soon as you allow a private market to enter — if a mechanism exists for that — then the competition becomes broader and tougher. That would also require those in the system to change themselves.
As long as the system remains rigid, there's no push to rethink things — except in some states where renewable integration is already so high that it causes grid problems: Issues with stability, curtailment, blackouts, etc. When those pains are felt, then you start thinking about what can be done.
Could there be deeper reasons why neither government nor private sector are addressing this issue?
It would lead to a series of other issues and, eventually, the need to redo everything — all the existing plans and structures. That could be one reason no one is touching this, not even the government or the private sector.
It's not only a commercial issue.
For example, in India, if someone were to propose shutting down all coal plants in favor of renewables and balancing plants, that would be a huge political decision. It would impact millions of workers - those in mining, in coal supply chains, and in power generation units.
So, is it partly a lack of political will?
These are tough decisions. But what I think is often missed in the political conversation is the job creation potential that renewables bring — from installation to maintenance and other services.
In my personal view, it's not that we're losing jobs; we're creating new types of jobs.
There's also a global push to transition to renewables without any fossil fuels. I see that trend globally — not just in India — where people advocate for a complete shift to renewables, which I personally support. But it's unrealistic to think it can happen overnight.
You need a transition period.
For example, in our case, we advocate for balancing solutions that currently use natural gas but will be able to run on sustainable fuels when they become available. So for the transition, you still need natural gas.
However, in India, there's resistance to increasing
LNG
imports, which creates another layer of challenge.
How do you address the concern around using fossil fuels like LNG during the transition period?
Our current technology is future-proof. It's designed to run not only on LNG now but also on future fuels that are carbon-neutral or carbon-free — like
hydrogen
, ammonia, ethanol, and methanol.
So, while we may need to use LNG for a few more years, when hydrogen production increases in India, we can easily switch to it. Hydrogen has no carbon component — it's a totally clean, green fuel. It can be produced using renewable sources like solar or wind.
This is something we are constantly advocating. We keep emphasizing that a transition period is necessary.
During that time, burning LNG may be unavoidable — but once hydrogen becomes available at scale, we can switch, enabling a fully decarbonised energy system.