Viewpoints from the Board Room: Robert Gallo, Voith Hydro

By Elizabeth Ingram

 

Robert (Bob) Gallo has a long history with the Voith family of companies, having joined the group in 1999, but on the paper side. He started with worldwide responsibility for forming fabrics within Voith’s Paper division and went on to be in charge of the entire fabrics business in North and South America, regional president for Voith Paper North America and executive director of the Corporate Service Center North America for Voith Holding Inc. North America.

Gallo made the jump to Voith Hydro in January 2015. He is president and chief executive officer of Voith Hydro in the U.S., which traces its American hydropower manufacturing heritage over 135 years. The company is located in York, Pa., and is a full-line supplier of hydropower equipment and services, including project planning and execution, manufacturing, electrical and mechanical engineering, outage management, modernization and aftermarket business and services. Voith Hydro has a workforce of more than 5,000 employees and a sales volume of more than US$1.6 billion.

Robert Gallo
Robert Gallo

Hydro Review sat down with Gallo at HydroVision International 2015 to discuss his goals for the company and Voith Hydro’s outlook for the hydropower market. Following is a transcript of that discussion.

Q: Why did you decide to move to hydropower from the paper side of Voith?

Gallo: I had been in paper my entire career. But I had always been interested in hydropower, in learning about it. Paper, particularly the graphics paper sector, is not in such strong shape as an industry on a global basis today. Hydropower has a much more prominent role, and Voith has a strong position in that sustainable market.

So far I am very happy with the decision I made!

From a business perspective, the timing was good. For example, there is a reasonable amount of investment in the hydropower industry in terms of refurbishment, and particularly in the U.S. Voith has a solid base of business in this area.

In fact, our U.S. business is more focused toward modernization than it is on supplying equipment for new development. With regard to refurbishment work, we can replace a unit in kind or provide an upgrade, depending on what our customers select. The choice to upgrade moves the work into our technology portfolio, with a goal to add more capacity and improve the environmental footprint of hydropower stations. This may include aerating runners, fish friendly turbines, or oil-free hubs in turbines. More customers are expressing interest in following through on use of this type of technology, which is great for Voith and the hydropower industry.

There are a lot of similarities between hydropower and the paper industry, with large capital investment and aftermarket service opportunities for upgrading. But hydropower is unique. Hydropower, being on waterways, is subject to a lot of governmental rules and regulations. This alone makes hydropower unique relative to other industries I’ve worked in during my career.

One of my early observations is that the Federal Energy Regulatory Commission relicensing process is rather complicated, even dysfunctional perhaps. Everybody in this industry is really wrestling with it. Particular problems include the time it takes and the uncertainty of being five or six years into the process and not having an answer to when or even if a project can get licensed. My concern is that the current regulatory regime leads to less investment in our hydropower assets because of fear of the unknown.

Any work we in the hydro industry can do to streamline the licensing and relicensing process, while not cutting corners on environmental compliance, is essential. It is important that hydropower retains the great role it has as a sustainable, clean energy source. We don’t want to jeopardize that. We need to align and streamline the local, state, regional, and federal government regulations and requirements for the licensing process.

That’s the streamlining I think the industry needs to achieve.

In my first visits to Washington, D.C., I was happy to see that there’s at least acceptance of that reality and some bipartisan work at the federal level in drafting new legislation that would potentially streamline this process. I am very hopeful we continue to see momentum on this legislation.

Q: What are some big picture topics with regard to technology that Voith Hydro is working on now?

Gallo: For large hydropower, projects above 30 MW per unit according to our Voith classification, this would be new large generating units and major refurbishment to large units. We are trying to push the envelope on the power generation to unit efficiency balance.

For a design engineer, this involves maximizing total power output or unit efficiency and environmental considerations. We are achieving new levels of efficiency at a higher power generation limit, and we believe that is going to encourage more interest in upgrading units.

On the small hydro side and particularly on units below 5 MW, recent legislative action in the U.S. has made that market a little more open. Voith is introducing new products, like the StreamDiver, a fully assembled unit we can ship to a site. We also are focused on low-head dams on small waterways and irrigation canals. These units are in the 250 kW up to 1 MW range.

Photo (above): Manufacturing work is under way on one of the generator stators for the 575-MW Conowingo hydropower plant.
Photo: Manufacturing work is under way on one of the generator stators for the 575-MW Conowingo hydropower plant.

We are now seeking the first customer for this StreamDiver technology in the U.S. A pilot project has been operating, and thus proving the technology, in Austria for about three years now.

We are also expanding our portfolio. Voith started as a turbine company. In 2000, Voith Hydro got into generators through a joint venture with Siemens and now we have full generator technology in house. We also expanded into automation and are moving into process control. And we are filling in with balance of plant and electrical equipment. This will position us as a full line supplier to the hydropower industry. We can do manufacturing, installation and commissioning, as well as after start-up support. This helps for more seamless project development.

Q: What’s new in the market for U.S. hydropower?

Gallo: The U.S. market is pretty stable. We see occasional upward blips in activity about every five or six years that arise from investment in new operating units or possibly interest in a pumped storage project.

That stability is almost all related to the aftermarket, or service, business. We have a lot of people employed in field operations, where they respond to planned or emergency outages, getting units up for customers, and doing the work on site. We service that industry with remote plants where we store portable manufacturing equipment. We have offices in York, Pa.; Chattanooga, Tenn.; and Springfield, Ore. We ship out portable machine tools and get units back up and running.

We are focusing on growing all elements of the service business, including field-based work and customers who want us to take units back to our manufacturing facility and upgrade them. This involves enhanced environmental performance, greater output and higher unit efficiencies. Or maybe water conditions have changed and the units require remodeling to deal with this situation.

Q: What is Voith Hydro’s outlook on pumped storage in the U.S.?

Gallo: We don’t see any large activity taking place in the immediate term with respect to pumped storage. We do see a high, renewed level of discussion on potential opportunities, which makes perfect sense. With recent developments in the wind and solar industries, which introduce surges of energy into the transmission grid, we need storage, and the best proven option for that is pumped storage hydro.

At the same time, it is interesting that most of the time in the energy storage discussion you hear about batteries but not pumped storage. We as an industry need to figure out how we get pumped storage hydro better into that storage discussion.

At Voith Hydro, we are optimistic that we are going to see some of these potential pumped storage projects realized in the U.S. in the near to mid-term. But, pumped storage requires large capital investment and doesn’t have the same subsidy or tax breaks that other renewables – like wind – enjoy. This requires a number of companies coming together and forming a consortium to make pumped storage an option in the near term.

A spherical valve is being measured in Voith Hydro’s workshop in York, Pa.
A spherical valve is being measured in Voith Hydro’s workshop in York, Pa.

We are, however, arriving at a situation where we need to find a way to build more pumped storage or stop the proliferation of wind and solar facilities. Wind and solar need baseload power when it’s cloudy or if there’s a little wind. Hydropower, and in particular pumped storage, can help balance these out.

I do believe it’s possible, some time in the future, to have these super batteries people talk about, but they are not at hand right now. Today we know how to do pumped storage hydro. This comes in part from the age of investment, from the 1930s through the 1980s, in America’s power generating infrastructure. We can do it better today based on what we’ve learned and improved since pumped-storage hydro plants are built in many other countries outside the U.S.

Q: Let’s talk about employee retention and training the next generation. I understand Voith has a mentoring program for managers.

Gallo: Yes, Voith has a program to recognize and develop future leaders. Rising high-potential middle and rising senior managers are assigned an experienced senior manager for career coaching and development. The mentor is not the direct supervisor, so the experience sharing and brainstorming can be open and without intimidation, allowing more in-depth discussion. I am honored to have served as a former mentor to several of today’s senior managers in Voith.

Q: Voith also has an apprenticeship program. Tell me about that.

Gallo: We went through a large downsizing about in 2014 because of market conditions. Now we are rehiring and bringing back some of our retirees as paid trainers. And we have more apprentices coming through, on the machine tool operating side and on the welding side. The people who are completing programs at trade schools or coming to us from other industries are not quite to the standard we need. We want to keep all of the talented, experienced people we can and keep our shop full. However, we face a challenge in the U.S. market: the cyclicality of services. While we are limited in what we can do to change this fact, we can ensure a smooth transition and prepare for the future by having a well-trained workforce, in part through a robust apprenticeship program.

Q: Overall, what is Voith’s outlook for the hydropower market in North America?

Gallo: We remain optimistic about hydropower because no other source of renewable energy can boast the same ancillary benefits. When you see an energy-producing dam, it’s likely also providing flood control, irrigation, water storage, navigability and recreational opportunities. It also can serve as baseload generation for other renewables. As the world’s thirst for energy grows and concerns about climate change increase, hydropower will continue to be an affordable and clean option to meet both of these challenges.

Moreover, hydropower has tremendous potential. Only 3% of the more than 80,000 dams in the U.S. produce power, and hydropower’s potential development is 65,000 MW in the U.S. Other parts of the world have even more potential. Far from tapped out, hydropower has much more to offer our energy grid, a fact that members of Congress of both parties recognize and we hope bears fruit in the form of new legislation.

Let’s not forget about the jobs aspect. About 300,000 Americans work in the hydropower industry, and as the National Hydropower Association reports, the hydropower supply chain is at least 2,500 companies located across the U.S. When we expand hydropower, we create jobs in every corner of the country. Boosting hydropower production really is a win-win for the environment and the economy.

Elizabeth Ingram is managing editor of Hydro Review.

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