SIEMENS

Today, prizes and awards, even in the field of technology, are a dime a dozen. But the Innovation Prize of German Business, which has been awarded annually since 1980, has managed to retain its cachet, not least because it is the oldest award of its kind anywhere in the world.

The inspiration behind the award was the recognition that the growing scarcity of raw materials means that the only way to remain competitive in global markets is to engage in constant research and innovation. In addition to computer technology and medical engineering — two of the major topics common to prizewinners over the years — recurrent themes have been solutions to boost energy efficiency and intelligent ways of using raw materials.

Never before has the need for efficient technology been as critical as it is today. Alongside renewable sources of energy, the main weapon in the fight to contain climate change at a manageable level is greater efficiency in the generation, transmission, and consumption of power. At the same time, growth in world population and rising levels of purchasing power in many countries threaten to cause shortages of raw materials.

The think tank Global Footprint Network estimates that we are already using natural resources at a rate that is 50 percent higher than these can regenerate. If this trend continues we would need two to three earths to support us by 2050. In other words, increased efficiency, recycling, a circular economy, and consumption geared toward conserving resources are needed today more urgently than ever before.

The good news is that opportunities to boost efficiency are at hand practically everywhere. What’s more, such solutions are extremely attractive for everyone concerned. Those who manage to reduce their use of energy or resources, whether at home or in an industrial environment, without cutting performance or output not only help preserve the environment but are also rewarded in the form of reduced expenses and a higher level of competitiveness.

Environmental technology has long since shed its image as expensive and inessential. Siemens posted revenues of €30 billion in fiscal year 2011 from sales of the exceptionally efficient products and solutions in its Environmental Portfolio. What’s more, this market has a substantially larger potential. In fact, the World Business Council for Sustainable Development (WBCSD) estimates that business opportunities in the environmental sector will total as much as $6.3 trillion a year by 2050.

Making Buildings More Efficient. Much of this expected business volume will be generated by improvements made to the energy efficiency of buildings, which are currently responsible for around 40 percent of all energy use worldwide and thus for 20 percent of worldwide greenhouse gas emissions. “The best way to save energy is to not use it in the first place. And one of the best ways of doing this is to develop energy-efficient buildings,” says Kurt Bettenhausen, who heads the Siemens Corporate Technology (CT) Research Center in Princeton, New Jersey.

Many of the technologies required for this purpose are available today, including intelligent facility automation and energy management systems. In an interview with Pictures of the Future, Prof. Ernest J. Moniz, an energy expert at the Massachusetts Institute of Technology (MIT) and a member of President Barack Obama’s Council of Advisors for Science and Technology (PCAST), explained exactly what savings can be made with such technologies: “The National Academy of Sciences published a study in 2008 showing that just the modernization of today’s stock of real estate would reduce total energy use in the U.S. by around one fifth by 2020.” In the future, moreover, buildings will not only use less energy, but will also help relieve strains on the power grid. Software will fine tune power demand in thousands of buildings in response to changes in the price of electricity, thus reducing collective demand in real-time. This will help to flatten peaks in overall demand — a cost-efficient means of stabilizing the power distribution grid.

According to Bettenhausen, more research is required to make national economies as sustainable as possible. “I’m thinking primarily of areas such as energy storage and the capture, sequestration, and usage of CO₂ as a raw material,” he says. The re-use of carbon dioxide could be of particular interest to industry. Siemens, for instance, is researching the use of algae to convert CO₂ into biomass — thereby generating a raw material for biofuels, bioplastics, or animal feed — and it is also investigating ways of using CO₂ in chemical processes.

Elsewhere in industry, R&D activities are focused on ways of boosting energy efficiency. Electric motors offer by far the richest potential for savings here, since they account for around 60 percent of the electricity consumed by European industry. In China, the proportion is as high as 80 percent. The use of efficient motors and smart control technology can reduce power demand in this area by as much as 60 percent. Normally, this kind of investment will pay for itself within two years, following which the customer begins to profit from the substantial reductions in energy consumption.

Other effective ways of reducing energy use and associated costs include, for example, the installation of sophisticated energy management systems, smart software for enhancing entire production processes, and technologies to improve the exploitation of waste heat in industrial facilities.

“At present, around half of the primary energy used for industrial processes and power generation is lost as waste heat,” explains Dr. Martin Tackenberg, a specialist in thermal management at CT in Erlangen. “We are now running a project to identify and develop a range of processes to make much better economic and environmental use of this wasted energy. Our goal is to bring down such losses to a maximum of around 40 percent by 2020. That would translate into enormous savings in energy and costs.”

At the same time, industry needs to look at methods of production that reduce its use of other resources. This will not only save money but also reduce exposure to the risks associated with the increasing scarcity of raw materials. According to a German government agency that focuses on the efficiency of materials, introduction of the very latest processes designed to conserve and recover resources would save companies in Germany around €100 billion a year. That’s reason enough for companies such as Siemens to be developing new methods to make the most of valuable raw materials.

On the other hand, industry already possesses numerous methods for boosting the efficiency of industrial processes. What really counts, however, is to ensure that these methods are put into widespread use. Globally oriented companies such as Siemens, which operates in 190 countries, have a major role to play in this regard. “Thanks to our expertise and our global network, we can take the knowledge we have acquired in one region and apply it in other markets,” explains Bettenhausen. Irrespective of whether such know-how has been acquired in India, China, Germany, or the U.S., senior figures like Bettenhausen intend to pool and harness such knowledge to an ever-increasing extent.

“We are setting up a facility in the U.S. where we will investigate all the best practices developed by Siemens employees around the world. We’re calling it the Affordable Urban Living Lab. This is where our researchers will be able to build and test their prototypes under realistic conditions. No matter whether we’re talking about automation, building systems, or energy efficiency, the goal will always be to gather information, process that information, and convert the results into measures that are specifically designed to improve efficiency,” Bettenhausen explains.

From Coal to Gas. In tandem with business, governments around the world are now starting to show a more responsible attitude toward the planet. Included is China, which is now the world’s largest energy user and emitter of carbon dioxide. Furthermore, the International Energy Agency (IEA) predicts that by 2035 China will be using around 70 percent more energy than the U.S. The country is already suffering from the environmental results of its massive economic growth over recent decades. According to the World Wide Fund for Nature (WWF), 16 of the world’s 20 dirtiest cities in 2008 were in China. To meet the country’s needs as sustainably as possible, the Chinese government has now resolved to uncouple economic growth from the consumption of resources and to systematically promote renewable energy sources and enhanced energy efficiency.

In the U.S. too, where electricity consumption per capita is almost twice that of Europe, there are increased efforts to improve efficiency. The government’s Industrial Technologies Program, for example, offers companies financial incentives to install energy-efficient technology. At the same time, the country is steadily converting its coal-fired power plants to natural gas, a much cleaner fuel, which can be used in highly efficient combined-cycle power plants to produce electricity. “In the current decade alone, plants with a combined output of between 60,000 and 90,000 megawatts could be converted to natural gas,” says MIT energy expert Moniz.

And more gas-powered generating capacity is on the way, much of it involving turbines made by Siemens. Operating with a steam turbine in a combined cycle, a gas turbine from Siemens has set a new world efficiency record, with 60.75 percent of the energy contained in the natural gas fuel being converted into electricity at an output of 578 megawatts — enough to supply a major city the size of Berlin.

At present, the average efficiency of combined-cycle power plants in the U.S. is less than 40 percent. In other words, replacing these with the most efficient turbines from Siemens would reduce gas demand by one third. As of 2013, six of these turbines will be operating in Florida, where upgrades to the state’s power plants will yield the operator, Florida Power & Light, net savings of almost $1 billion over the full life cycle of the turbines.

This is another example of how a cleaner environment and a stronger economy can — and, in the future, must — go hand in hand. Many experts agree that this kind of sustainable model is the only possible option for future economic growth.

Technologies such as those in Siemens’ new gas turbine are now leading the way. The jury of the Innovation Prize of German Business was of a similar opinion, and in February 2012 it presented the honor to this record-breaking development.