corporAID: How do you see the effects of the current crisis?
Lange: There are undoubtedly areas of industry that have been severely affected by the crisis, for example tourism or aviation. And there are other areas, such as logistics, that have even benefited from the pandemic. Innio also got through this time well. We did not achieve the growth that we had imagined, but we also did not experience any massive slumps. And we are now registering a need to catch up, so that we were able to revise our numbers upwards.
How do you assess the economic and political framework in Austria?
Lange: We feel very comfortable in Tyrol. We particularly appreciate the high level of training and motivation of our employees. We also work well with the authorities. I would also like to positively mention the Oesterreichische Kontrollbank and the export financing. In this respect, we have very good framework conditions. What we are certainly feeling is the shortage of skilled workers. We train around a hundred people at Innio Jenbacher - around 30 per year - and we are noticing that it is becoming more difficult to find and retain skilled workers. Here the topic of women in the technical profession is becoming more and more important. I would like to see more women join the company, but that's not that easy for a classic mechanical engineering company. And then of course in Tyrol I also have the pleasure of working where others go on vacation.
The pandemic has made the mood more critical about globalization. Does globalization have to be rethought?
Lange: We will not be able to turn back globalization, and that is a good thing. Innio has an export quota of more than 95 percent. We live and benefit from globalization. I've lived and worked in seven countries and I've benefited tremendously from it personally. And in the end, the world as a whole benefits from globalization. In the end, of course, it also resulted in the pandemic accelerating a little. But we will be able to live with these side effects.
How has the pandemic changed your markets? Where do you see Innio's future markets?
Lange: Innio is a pioneer and designer of the energy transition. And this is where the pandemic has certainly raised awareness. We can see that in the EU's Green Deal or recently with Fit for 55, i.e. the announcement that the climate targets will be tightened again. The topic of the energy transition is currently being promoted with investments and subsidies. We are in a fundamental transformation of the energy industry. We are helping to shape this, and in this respect the situation represents an opportunity. A few weeks ago we were the first manufacturer to qualify our product portfolio for the use of hydrogen: Jenbacher gas engines that run on natural gas today will also be able to do this with green hydrogen in the future. Of course, this is only relevant for the European markets. We also have customers in developing countries, for example textile factories in Bangladesh: They don't think about hydrogen as a fuel for gas engines. They are happy when they can reliably get natural gas so that they can operate the factory even when the power grid is unstable. In a country like Bangladesh, the challenges are completely different, and we want to continue serving these customers as well. We can only create a certain level of prosperity if the industry in these countries continues to develop.
Do you also see African countries as future markets?
Lange: Africa accounts for less than five percent of our sales. If you look at the Sustainable Development Goals, you can see that around 750 million people have no access to energy at all, three quarters of these people live in sub-Saharan Africa. There you have a completely different task than we do here in Europe. The main thing is to set up an energy supply at all. At the same time, South Africa, for example, has set itself the goal of greatly reducing the amount of electricity used to generate electricity. And saying goodbye to coal in favor of gas, which will also be renewable in the future, is our sweet spot. Simply switching from coal to gas can reduce CO2- Reduce emissions by up to 75 percent.
What are the specific challenges here?
Lange: First of all: In emerging and developing countries we work with distributors, the end customers are predominantly industrial companies. For them it is a matter of even getting a reliable gas connection and trained employees to operate the gas engine. In addition, they have to take at least a few hundred thousand euros into their hands for a system, which is often a major challenge, especially for such customers - export credit financing is very important at this point. Interestingly, we find that customers in developing countries in particular expect a much more attractive return on investment than in our part of the world, because long-term amortization there is more difficult to achieve in view of the high financing costs and a generally volatile environment.
Your shareholder is a mutual fund. What priority does the topic of sustainability have for Innio?
Lange: Just recently, Larry Fink - the CEO of BlackRock, the largest asset manager in the world - in his "Letter to the CEOs" made the board of directors aware that it would not work without sustainability. One of the main reasons why our shareholder has joined is the fact that we are driving the energy transition. In the long term, I am convinced that the issue of climate protection and economic development go hand in hand. If you look around today, you can see that sustainability is also important for financial investors. In our case it is definitely so.
Which important megatrends are you aware of?
Lange: We have been seeing three megatrends for a number of years. I call them the 3 Ds: decarbonization, decentralization and digitization. In order to become climate neutral by 2050, we will have to make massive efforts over the next few years. In my view, it will be decided by 2030 whether we can achieve this goal. Since we cannot build prosperity on the basis of sacrifice, we have to invest massively in energy efficiency. That basically means: to use the energy sensibly. We also have to expand renewable energies. It happens, but not quickly enough. We not only want to cover all of the existing electricity consumption with renewable energies, but also parts of the heating requirement.
In 2020, solar and wind energy in the order of 200 gigawatts was installed - to achieve the climate targets, it would have to be more than one terawatt every year by 2030. If you let it melt on your tongue: From now until 2030, a solar power plant of the size of the currently largest solar park in the world, which is more than two gigawatts in northwest India, would have to go into operation practically every day. However, these renewables must also be flanked by grid stabilizing elements. You may remember that in January of this year we almost had a blackout in Europe, which was prevented thanks not least to around 4.000 of our gas engines.
With renewables, decentralization is a given by nature, if you look at solar and wind energy systems in comparison to a large nuclear power plant. And digitization also has two dimensions. On the one hand, we are seeing increasing demand, with estimates already assuming up to ten percent of the world's energy requirements for data storage. On the other hand, digitization also leads to savings through greater efficiency.
What is Innio's innovative strength?
Lange: We have always focused on innovation, thereby driving development forward and significantly shaping our industry. We are proud of that. We are not only pioneers when it comes to hydrogen, but also when it comes to the energy efficiency of our engines. Our innovations not only create customer benefits, but ultimately also set us apart from the competition.
How do you see the value culture at Innio?
Lange: What is important is a vision that is closely linked to a value system that is exemplified by management and supported by the workforce. After the transformation to Innio, with more than 150 employees from all over the world, we formulated six central values with which everyone can identify. Here at the Jenbach site alone, we have employees from more than 40 nations. I am proud of that, because from my point of view, innovation can only be achieved if you are open to diversity. I said at the beginning that our team is very motivated - that is one of our most important assets.
What makes a manager successful?
Lange: This includes a good sense of how the markets are developing and what opportunities this will open up. This also includes implementation, i.e. ensuring that the goals set are achieved. And that includes a strong team with whom you communicate well and are passionate about what you do. Ultimately, I want to make my contribution so that we as a team help shape the energy transition and leave behind a better world for future generations. And that motivates me anew every day.
Thank you for the interview.
Carlos Lange is President and CEO of the energy company Innio based in Tyrol. The 50-year-old native of Argentina joined General Electric in 2015 as head of the Distributed Power division, from which the Innio company emerged. Before that, Lange worked at Alstom, Lurgi and MDE Dezentrale Energiesysteme. He studied mechanical engineering and process engineering at the Technical University of Munich.
Flexible energy solutions from gas
Innio is a leading global specialist in gas engines and decentralized energy generation. The company, which was originally founded as Jenbacher Werke in 1959, was renamed GE Jenbacher after it was sold to General Electric in 2003 and was renamed Innio Jenbacher in 2018 when it was taken over by the Advent International investment fund. A total of around 3.500 employees work at the company's headquarters in Jenbach (Tyrol) and at the two other main production sites in Welland (Canada) and Waukesha (USA). The gas engines manufactured under the Jenbacher and Waukesha brands cover a power range from 200 kW to 10 MW. Around 53.000 delivered gas engines generate electricity and heat for companies and municipalities in more than one hundred countries. The company does not publish financial figures.