Industrial gas major Linde has talked up the benefit of its small on-site projects pipeline to its business.
In the latest earnings call, CEO Sanjiv Lamba said the company’s smaller-scale facilities are crucial to company performance, delivering strong returns, faster execution and strong customer relationships through close partnership.
The 59 small on-site contracts Linde has signed in the past year are, said Lamba, “a perfect way of generating new income for this business.”
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Small projects benefit in particular from being quick to deploy. While large projects can take years to build and commission, small on-sites are typically up and running in just nine to 15 months, and have been starting at the rate of more than one per week in recent times, he noted.
“Often with the small on-site, we’re able to de-risk the execution as well, because the institution, or a portion of the civils, is carried out by the customer,” he added.
This approach allows Linde to focus on its core expertise while customers take on some of the remaining groundwork.
And Lamba said the returns on these smaller projects were just as attractive as their larger counterparts.
“Our returns typically for smaller sites are about what we would see on average for some of the large projects,” Lamba noted. This is important for investors to understand, said Lamba, since some might assume that smaller-scale operations would have smaller margins.
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Oxygen and nitrogen production dominates the small on-site portfolio, with Lamba noting their use in industries like paper and pulp and electronics – often attached to decarbonisation efforts.
One project in Orange, Illinois, uses Linde’s proprietary Optimal technology. It helps a customer recover heat, reduce natural gas consumption and increase furnace throughput. “That’s a good example of small on-site,” Lamba said.
And he said the small on-site portfolio could soon include electrolyser-based hydrogen.
