SIEMENS

Ulisses Candido da Silva Junior gazes out at the green sea around him. The hills in the northern part of the Brazilian state of Paraná rise like waves and gently slope away as far as the eye can see. Candido da Silva manages the Santo Inácio Sugar Mill, one of five production sites of the Alto Alegre Group. He wipes the sweat from his forehead. “The harvest has begun; in a few days big trucks will start bringing tons of sugar cane,” he says. His mill will turn it into raw sugar and alcohol, which is now used to power almost all Brazilian cars. More than half of the sugarcane produced in Brazil is converted into ethanol, which is then used to refill tanks at Brazilian fuel pumps (see Pictures of the Future, Spring 2009, Brazilian Ethanol: Liquid Solar Energy).

The Alto Alegre company is family-owned, a tradition among many Brazilian sugar mills. But changes are now occurring at a brisk pace; international energy companies are buying their way into the market and building larger and more efficient production sites, and these new plants are increasingly using automation and state-of-the-art technology. Candido da Silva points to the other side of the Paranapanema River, which separates the states of Paraná and São Paulo. A few kilometers away you can see the outlines of another sugar mill. “That mill was bought by a Norwegian company recently. If we don’t grow, that will happen to us too,” says the manager of the Santo Inácio mill.

Whether or not it is sustainable to produce large amounts of fuel from crops is sometimes a subject of heated debate. One thing, at least, is clear: Biofuel is currently being produced in Brazil more efficiently than anywhere else in the world — because of efficient production methods, and not least because of the blazing sun. But comparisons with other countries imply that sugar alone won’t satisfy Brazil’s growing hunger for energy. For the sake of comparison, a U.S. resident today consumes more than six times as much energy as a Brazilian.

Six-Hour Blackout. But Brazil is catching up with U.S. energy demand. The affluence and the demands of the growing middle-class — which is now said to include half of the population — are rising steadily. Using a rule of thumb, observers expect energy demand in emerging markets to increase by about one percentage point more than the rate of economic growth. The Brazilian economy grew by about 7.5 percent in 2010; electricity demand grew by slightly less than eight percent. The electrical grid is already overloaded, and insufficient production capacity is setting the stage for blackouts.

In 2009, for instance, a blackout crippled São Paulo for six hours, resulting in economic losses totaling about $2.5 billion, according to an estimate by Gilberto Schaefer of Siemens Energy in Brazil. One year later, the lights went out in parts of eight states in the northeast of the country. In view of all this, the 333 sugar mills in the states of São Paulo and Paraná can clearly help in the struggle against blackouts. They can produce not just sugar and alcohol but electricity as well — something the mill in Santo Inácio is already doing.

The idea is a perfect example of how to use resources efficiently. It begins with sugar production itself. In several stages, sugar cane is cut, shredded, and crushed. But in the past, the residue that remained after pressing, known as “bagasse,” was considered refuse to be burned under the open sky at the mills. That is no longer the case, however. “We can’t afford to just squander the sugarcane stalks anymore,” says Candido da Silva, pointing to a pile of bagasse as high as a house. He adds: “Now we burn this waste in a controlled way, and using two 35-megawatt steam turbines, we generate electricity that we can feed back into the grid. We get about 170 reals per megawatt-hour.” That’s the equivalent of bout €80.

The company’s initial investment in power generation equipment was amortized within two years through income from electricity sales. The majority of the equipment needed, including a power substation, frequency converter, and process automation for sugar and alcohol production, was supplied by Siemens. Siemens even developed a steam turbine — which is widely used in Brazil — specifically for this application in sugar factories. And it was able to cut the turbine’s price compared to alternative models by 30 percent (see Pictures of the Future, Spring 2009, Sweet Savings).

Sugar Power Plants for São Paulo. One sugar cane-based power plant is great, but how about a network of such plants? Such a setup, which is also known as a virtual power plant, is an idea Siemens engineers are now examining. “If we turn more sugar mills in the state of São Paulo into power producers and link them to the grid, we could provide an additional 4.5 gigawatts,” says Schaefer. For the sake of comparison, São Paulo’s total electricity demand is approximately 30 gigawatts.

The strategy of combining multiple small power plants into clusters has advantages. Most sugar mills produce only about 30 megawatts, and the investments required for connecting them to the grid would be disproportionately high if each mill had to bear them individually.

But if neighboring plants are connected to one another through mini grids, the connection costs for each individual plant are reduced. “If we also integrate small, flexible natural gas power plants and small hydropower plants into the grid, we could raise the amount of power generated by renewable sources to almost nine gigawatts — and it would be close to customers in São Paulo,” adds Schaefer. That would practically rule out the possibility of blackouts caused by overloads, such as the one that occurred in 2009.

Not far from Schaefer’s office in Avenida Mutinga, in northwest São Paulo, Carlos Tiburcio, an employee of Siemens Energy, is working on another idea for stabilizing the power grids in Brazil and other emerging markets. “Of course, you can simply expand the electrical grid, but that takes time; it’s also very expensive,” says Tiburcio.

His cost-saving alternative involves mechanically switched capacitors (MSC) — in simple terms, a cabinet full of capacitors. As soon as these capacitors are switched on or off mechanically, they can absorb or release energy in the blink of an eye. In other words, they can act as buffers for electricity. The MSCs can thus rapidly balance out fluctuations before the latter jeopardize the stability of the grid. The first MSCs from Siemens entered service in the south of Brazil, near Curitiba, in 2011.

MSCs are also a perfect example of so called S.M.A.R.T. (simple, maintenance friendly, affordable, reliable, and timely to market) products, such as the very affordable, locally produced capacitors now being tested in Brazil, that are perfectly matched to the needs of market segments at the basic level. Indeed, to an ever-increasing extent, such products are being developed in emerging economies (see Pictures of the Future, Spring 2011, Products Set to Sizzle).

Specialists at Siemens Corporate Technology in Germany have helped to further optimize MSCs. As a result, higher power ratings are now possible without increasing the capacitors’ dimensions. What’s more, Siemens Management Consulting has helped to formulate a business plan for the production, sale and distribution of MSCs, as well as to develop a project schedule. “For this solution, we’re going to manage all the international business from Brazil,” says Tiburcio.

The Middle East and eventually North America are other possible markets for MSCs. A first order from abroad has already been received. In other words, the MSCs are a Brazilian innovation that is successfully entering the global marketplace.

Dangerous Explosions. Schaefer’s colleagues in Jundiaí, north of São Paulo, are also working to make the Brazilian power supply more efficient. Their solution extends the service life of transformers and reduces maintenance costs. “Energy providers in Brazil have to spend a lot of money on new power plants. So if they can cut maintenance costs and minimize transformer failures, there is more left over to invest in renewable energies,” says David Scaquetti of Siemens Energy. “Transformers rarely break down, but if anything does go wrong, then it goes wrong in a big way,” Scaquetti adds. That can lead not just to power failures, but also to the potential for dangerous explosions, he says.

But such risks, along with the costs associated with manual inspections of individual transformers at fixed maintenance intervals, are rapidly diminishing. Siemens customers can now have their transformers monitored automatically around the clock. Temperature and output measurements, for instance, are sent via Internet to a Siemens server; and an analysis and evaluation of these values is forwarded to the customer twice per day via fax or e-mail. “We’re online doctors for transformers,” says Scaquetti. “We can recommend that customers leave their transformers in service longer than planned if they’re in good shape. But we can also warn them — for example, by telling them that if they don’t do something immediately, there will be problems in the next 30 days.” This solution is now being used to monitor over 120 transformers. The fact that it was devised in Brazil is no coincidence, Scaquetti believes. Energy providers here must operate even more economically than in the U.S. or Europe, he says. They are therefore even more interested in making systematic use of any available opportunity to reduce costs — without sacrificing safety. More and more Brazilians agree that careful use of resources is crucial for the economic development of their country. “Sustentabilidade” — sustainability — has become something of a voguish word used by an increasing number of politicians (see Pictures of the Future, Fall 2010, Rebirth of a Metropolis).

Since new oil reserves were discovered in 2007, however, Brazil must now deal with a seductive abundance too. Located off the coast of Rio de Janeiro is the Tupi oil field, which could hold up to eight billion barrels of oil. But the oil is buried deep underground — in some instances, it is located more than five kilometers below the ocean floor. Reaching it means drilling through several layers of rock and a corrosive layer of salt — an ideal challenge for innovative engineers. As a result, Rio de Janeiro is becoming a global center for research into technologies for the recovery of oil using drilling equipment at the bottom of the sea at extreme depths.

In view of this, in 2012 Siemens will open its own research and development center specializing in this field at the Parque Tecnológico do Rio in Rio de Janeiro, on an island known as Ilha do Fundão, in the middle of Guanabara Bay. Professor Segen Estefen already has his office on the island. He directs COPPETEC, the private-sector branch of the Universidade Federal do Rio de Janeiro. Among other things, COPPETEC facilitates projects between private companies and the university, and is seen as a driving force behind the technology park. “Oil opens up a new path for us,” says Estefen. “But we also have to explore the various branches we encounter on this path. In concrete terms, that means that we have to take the technologies associated with oil extraction and further develop them. The goal must be to turn them into independent future industries. For example, we must push the boundaries forward in the fields of materials technology, smart grid technology, and robotics,” he says.

From the moment the technology park was founded, there was huge interest in its land. “We’ve allocated ten percent of the island to corporate research centers,” says Maurício Guedes, director of the technology park. “That’s 350,000 square meters in all, but we very quickly had more interested parties than available space.” Part of the site is reserved for a high-rise in which small, innovative companies can rent space and grow. “In order to ensure an appropriately diverse, innovative climate, we need areas for both small and large projects,” he says. Siemens is devoting itself to the latter — in Rio de Janeiro and Brazil as a whole.

A Siemens R&D Center in Rio. Between now and 2016, Siemens will invest $600 million in the country. The company’s Rio R&D center alone involves an investment of $50 million. At least 800 people will be employed there, around 150 of whom will be working in research and development within the next three years. Some of these people will come from Chemtech, a fully-owned Siemens subsidiary. Chemtech has been involved in Petrobras projects for many years and was named Brazil’s most innovative company in 2009 (see article “Tapping Pools of Innovation” p. 111).

“At Chemtech, we have a great deal of expertise in software development, in planning refineries, and in supplying equipment for offshore projects,” says company CEO Daniel Moczydlower. “For example, we have supplied instrumentation and monitoring systems for oil platforms.” In the future, his team will form part of an international network of innovation and will work with Siemens in places such as Norway and Houston to develop subsea solutions.

All in all, Siemens’ prospects in Brazil are bright. One major challenge, however, is finding enough people for its new projects. The salaries of researchers and engineers are rising all the time, and their private-sector compensation is already five times higher than the income of doctoral students. Instead of studying for a doctorate, many students therefore go straight to work for companies.

Giovanni Fiorentino, Chairman for Latin America at consulting firm Bain has this to say of the competition for talent in Rio: “It’s a huge challenge because everybody is competing for the same resources.” And he doesn’t mean sugar or oil, but well-trained specialists — who may turn out to be Brazil’s most valuable resource.