Siemens Energy to invest more in renewables, CEO says
Exclusive: clean energy currently accounts for about 35% of the company’s business
Siemens Energy plans to increase its investment in the renewable energy sector as it prepares to spin off from the German industrial conglomerate later this year.
The company also intends to derive more value from its wind business, Siemens Gamesa, which is being merged with its power and gas unit, new president and chief executive Christian Bruch told The National.
Siemens Energy will spin off on September 28 after a proposal to separate the company was approved by shareholders last week, with 99.4 per cent backing the move.
Siemens Energy had an annual revenue of €28.8 billion (Dh120.9bn), with an order backlog of €77bn as of September 2019. The company had 91,000 employees as of March.
“We are going invest some more money into sustainable technologies and more to further efficiency improvements. But, definitely, I expect our portfolio over the next 10 years to develop to a more sustainable base and to raise the share of renewables and sustainable technology to bigger than it is today,” Mr Bruch said.
Mr Bruch joined Siemens Energy in May as part of a series of managerial changes before the spin-off, which will result in the unit listing separately.
The former chief executive of industrial gas company Linde sees opportunity amid the coronavirus pandemic and clean stimulus initiatives to grow its renewable energy offering, which currently accounts for about 35 per cent of its business.
“Between transmission and wind, you have more than 50 per cent revenue of the company in this field. And the other, let us say less than 50 per cent, is between oil and gas, generation and so forth. It is definitely our intention now, with the transformation of the energy market, we will transform our company,” he said.
Electricity interconnectivity is a sub-sector the company intends to grow. Siemens Energy recently began work on a high-voltage, direct current link between the UK and Denmark, which will supply around 1.4 gigawatts of energy.
The 765 kilometre Viking Link, for which Siemens is building two converter stations, is expected to begin commercial operations by the end of 2023.
While electricity grids remain fairly robust within the EU and surrounding regions, Siemens Energy is considering more work in the developing world where it plans to build high-voltage, direct current networks to transmit power over long distances.
“Some of the developing world [countries] will become an energy supplier or an energy exporter because some of [them] have good access to energy, solar or wind. And one element which we need to understand is: how do we transport energy out of these countries?”
Producing energy that can be transported could also be done through green hydrogen projects.
“This could be [through] hydrogen or other chemical carriers [such as] ammonia or methanol,” he said, with a caveat that commercial-scale production of hydrogen as a viable energy source is still some years away.
“I do believe it will be one of the key technologies to solve energy problems. But also, to be very clear, it will be very difficult. It is an area of development, but it’s not commercial business yet. I do not see that over the next two, three, four years. It will take some time to make it happen."
A bright spot for development of the flammable gas is the Middle East, he said.
Siemens is running a pilot solar-powered hydrogen electrolysis project at the Mohammed bin Rashid Solar Park in Dubai.
The plant is eventually expected to produce 240 kilograms of green hydrogen a day.
Elsewhere in the region, Siemens Energy continues to carry out work on a $15bn (Dh55bn) overhaul of Iraq’s war-damaged utilities.
“We are continuously executing projects in Iraq. The first plan is now really as quickly as possible [to] add power to the grid. And there is a plan from Siemens on the table on how we can even do this with existing power plants by just improving the power output,” he said.
Last month, Iraq’s electricity ministry signed a contract with Siemens to build a 400 kilovolt substation in Ramadi.
The German industrial giant is building 13 132/33 kilovolt substations as it focuses on electricity transmission and distribution in Basra and the central and southern provinces of the country.
Updated: July 21, 2020 12:26 PM