Executive Interview: Viewpoints from the Board Room:Black & Veatch

Hydro Review sat down with Daniel W. McCarthy, president and chief executive officer of Black & Veatch Water and a member of Black & Veatch’s board of directors since 2005, to discuss, among other things, the energy-water nexus.

By Marla Barnes

Editor’s Note: Hydro Review introduces this new article series to provide readers with viewpoints from executives running some of North America’s leading hydro companies.

Black & Veatch Corporation is an employee-owned company with more than 100 offices worldwide. Black & Veatch, one of the largest private companies in the U.S., specializes in infrastructure development in energy, water, telecommunications, federal management consulting and environmental markets.

Hydro Review interviewed Daniel W. McCarthy, president and chief executive officer of Black & Veatch Water. What follows is a transcript of that discussion.

Q. Your Hydropower Group at Black & Veatch is part of your Water Division, rather than the Energy Division. Many people, at first glance, find this unusual. Can you explain your company’s philosophy?

Dan McCarthy: A lot of the expertise in building hydro facilities is a crossover between water and energy projects. Building hydraulic structures, including dams, was in our water business. Pumping water was in our water business. We had a certain amount of recovery work we were doing on a small scale. We just decided we’d add the expertise because it was around moving water. I think it’s a good synergy with the other things that we do. That expertise being in one spot makes sense for us drawing the right resources from either business line and has successfully been like that for the last 14 years when the leadership core transferred from Energy.

Daniel W. McCarthy
Daniel W. McCarthy, president and chief executive officer of Black & Veatch Water

Q. One term used frequently is the “water-energy nexus.” As I listen to you explain your company’s organizational structure, it sounds as if you definitely see this connection between water and energy. Do you think this connection will continue to evolve?

Dan McCarthy: With Black & Veatch having its two major business lines in energy and water, respectively, we recognize the complimentary aspects of both, where a lot of our competitors evolved in one or the other. We understand how they work together. I can’t go to a water conference and listen to a conversation before it gets into energy real quick and vice versa. It gets there by the same path. Therefore, our leadership in hydropower is a natural result of Black & Veatch’s strengths, because the expertise needed for these types of projects come from our formidable position in those two markets.

I would like people to think of water as a fuel. It’s a growth engine for the world just as much as energy is a growth engine for the world. When you start to think about water as a fuel, then you start to value water differently.

Q. How would you describe the hydropower market in the state of California?

Dan McCarthy: Somewhere between 20 and 30 percent of the energy generated in California is used to move water around. When people from outside California hear that, they’re astounded. Because of the energy requirements, there is going to be a lot of hydro applications around. One is around improvements in the Delta and what will be the final resolution of trying to move water through the Delta from north to south and all of the environmental mitigation that has to be done in the Delta to protect the wetlands from the saltwater intrusion. That’s going to be a big opportunity for hydro and a showcase for how Black & Veatch’s leadership in Energy and Water can make a difference..

Q. Speaking of opportunities for hydro, what’s the outlook for hydropower work within Black & Veatch?

Dan McCarthy: Hydro is one area that I think is going to be a larger part of our portfolio in the future because we’re already seeing so much emphasis on new run-of-river, new hydro at existing dams, energy recovery and optimization on water conveyance facilities everywhere with renewables integration through pumped storage being considered by various utilities.

There’s a mini-turbine market that’s really taking off. The technology side of the business is helping to drive that with new products that weren’t always there to make the business case for putting these things in. That’s helping to drive a higher level of interest.

We’re seeing a lot more of our wastewater utility clients looking at optimizing their energy use and recovery of energy from either hydropower or biomass sources from wastewater facilities. There are a lot of different ways our water utility clients are looking at hydro.

Q. Are water utilities interested in becoming hydropower producers?

Dan McCarthy: In many cases, water utilities still see their mission as “we provide safe drinking water for the public. Don’t bother me with these other things. It sounds good, but it’s not my mission.” We are beginning to see a trend toward water utilities saying, “It’s a good idea, but we don’t want to do it.”

With that kind of mindset, some opportunity will be there for private sector involvement or local utility involvement. Perhaps it would be better for the utility to make that investment so it can run more efficiently among their fleet of power generation facilities.

Q. Black & Veatch, of course, is a global company, with ongoing work all over the world. However, for hydro, you say you see lots of promise in Canada. Why is that?

Dan McCarthy: The U.S. is constrained in how it can develop its own generation systems because of uncertainty around carbon. While that uncertainty is there, our energy demand is still growing.

The Canadian hydro companies have an opportunity to take advantage of that uncertainty and get some power purchase agreements in place. Not only is it an opportunity to sell energy but to create jobs and build the economic base in Canada.

If you look at the country’s strategic plan around growth, it’s around creating jobs and economic development. I think hydro is probably a good backbone to drive that economic growth.

Q. Do you think Ocean/Tidal/Stream Power is a viable market?

Dan McCarthy: There’s so much technology already proven. There are a myriad of environmental issues around a lot of that, but the technology is there. I think it’s just getting started. I don’t think it’s going to be slowing down anytime soon.

Q. I see you are taking part in significant industry activities, especially in terms of content development and “thought leadership.” For example, you are an advisory group member for the Singapore International Water Week and chair of the Water Environment Federation International Program Committee. What is Black & Veatch’s philosophy about contributions and leadership in terms of content discussions in both the water and energy industries?

Dan McCarthy: We think it’s important that groups get together and talk. What I find most interesting is to hear what other folks think about the issues, especially the consumers of my clients. Most of the time, it’s different than how I would think about it. If I don’t understand how my clients’ customer base is thinking, then how can I help my clients?

Marla Barnes is Publisher and Chief Editor of Hydro Review.

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