Because of the color of its buildings, it’s known as the “red city.” But since late 2016, Marrakesh has become known not just for its brightly colored architecture but also for decarbonization. Morocco’s former imperial city is where the decisions of the Paris Climate Conference were consolidated. It’s where he world community agreed on a rule book to make climate protection transparent and readily comparable among countries, and on regular reviews of national climate protection goals.
Handelsblatt Annual Conference Energy Industry 2017
Envisioning a decarbonized energy mix
Energy systems are undergoing fundamental changes worldwide, and Germany is leading the way. At the 2017 Handelsblatt Annual Conference on the Energy Industry, held in Berlin from January 24 to 26, Roland Busch and Armin Schnettler talked about decarbonization, the transition to a new energy mix as a role model for the rest of the world, and climate change, possibly the greatest challenge facing humanity.
Germany: A Role Model
Germany is a driver of decarbonization. In 2015, renewables accounted for 31.5 percent of its gross electricity consumption. The country’s goals are very ambitious: a complete exit from nuclear energy by 2022, four-fifths of its electricity generation from renewables by 2050, and an 80 percent reduction in greenhouse gases compared to 1990 in the same timeframe.
“A sustainable energy supply system is already technologically feasible,” said Roland Busch, Chief Technology Officer at Siemens. “The important thing now is to structure the complex and multi-dimensional energy system of the future in line with that objective.” He and Armin Schnettler, head of Research in Energy and Electronics at Corporate Technology, had the opportunity to discuss this topic with more than 1,200 experts at the Handelsblatt Annual Conference on the Energy Industry in Berlin.
More Energy from Renewable Sources
Energy systems are changing around the world, as evidenced by the growing share of energy from renewable sources. According to the Renewables 2016 Global Status Report, the amount of electricity generated worldwide from renewables in 2015 increased by 147 gigawatts (GW), with more than 7 GW of this growth in Germany. That means that global installed capacity from renewables is almost 1,900 GW. And that share will continue to grow. The International Energy Agency (IEA) expects additional growth of 825 GW by 2021.
Demand for electricity is also undergoing fundamental changes. “Global energy consumption will continue to grow, driven by emerging economies,” Busch said. The International Energy Outlook 2016 anticipates a 48 percent increase between 2012 and 2040. Worldwide, 1.2 billion people still have no access to electricity. Other major drivers of electricity demand are the digital transformation and the electrification of sectors such as transportation.
While the share of total electricity generation represented by renewables is on the rise, associated production costs are decreasing. “Right now, when we look at building solar farms, the assured price per kilowatt hour has fallen to below the magic level of 3 US cents,” Schnettler noted. The International Renewable Energy Agency (IRENA) expects solar and wind power costs to be cut in half again by 2025. Storage systems have also become substantially cheaper: between 2010 and 2015, their costs dropped by more than 60 percent, to below $350 per kilowatt hour.
The steady reduction in manufacturing costs for PV modules and wind turbines accounts for the fall in associated electricity prices. According to IRENA, these manufacturing costs have decreased by 80 percent since 2009. Advances in technological efficiency are another reason. “In 1980 a wind turbine generated 30 kilowatts, whereas today the most powerful systems can achieve eight megawatts, or 250 times as much,” explained Busch. “And that’s with rotor blades whose diameters have increased more than tenfold in the same timeframe.”
The question of how to reduce greenhouse gases was another key topic at the Handelsblatt Annual Conference. After all, global warming has made itself felt in Germany for some time now. “Climate change is possibly the greatest challenge facing humanity,” Schnettler noted.
By 2020, Germany wants to reduce its greenhouse gas emissions by at least 40 percent compared to 1990. To achieve that, a study by Agora Energiewende suggests that annual savings of 41 million metric tons of CO2 will be necessary by 2020. Although Germany’s Federal Environment Agency estimates that emissions declined by 27 percent between 1990 and 2015, to 908 million metric tons of carbon dioxide equivalent, they have increased again since then. A key generator of emissions is the energy industry and coal-fired electricity generation in particular. “A rigorous reduction, even a partial or total withdrawal from the use of coal, could therefore be necessary if Germany is to achieve its climate objectives,” said Schnettler. This would certainly be affordable, provided that new gas turbines and combined cycle power plants (CCGT) are built.
Whatever the case, a decentralized, low CO2 energy supply system will require some re-thinking. “Energy systems consisting of a small number of large-scale generation plants that are remote from the load centers and several million small, decentralized generating units mean we have to completely re-think how they are controlled,” said Schnettler. “We have to look at the individual generators as complex, complete systems, and connect them in a way that will guarantee security of supply and grid stability.”
It won’t be enough to simply expand wind farms, solar fields and transmission systems, however. The more fluctuating, renewably-generated electricity that flows through the grids, the more flexible they must become, and that can be achieved only through the use of storage technology. Long-term storage systems are becoming particularly important. One option is hydrogen electrolysis, which can be used to convert electricity into forms of energy that can be readily stored, for example hydrogen or chemicals such as ammonia and methanol.
But Germany has a lot of catching up to do specifically when it comes to large-scale storage systems. Whereas large-scale projects are already being planned in Australia and the Middle East, regulatory systems pose a barrier in Germany. “The goal has to be to exempt Power2Gas systems from the levy under the German Renewable Energy Act, for example, since they are not end consumers,” observed Schnettler.
Toward Climate Neutrality at Siemens
Siemens is making a contribution to combating climate change. It aims to be climate neutral by 2030, one of the first major industrial companies to do so. “With this ambitious undertaking and a range of technologies and solutions from our environmental portfolio, we are helping our customers improve their energy efficiency and their steps toward decarbonization,” asserted Busch. Siemens’ German locations achieved savings of 200,000 metric tons of CO2 between fiscal 2014 and 2016. By 2018 Siemens intends to invest an additional €100 million to improve its own energy performance.
Now, more than ever, policy-makers and companies around the world are convinced that climate protection is not just a side show. The next opportunity to emphasize this will be COP23, the 23rd Conference of the Parties to the UN Convention on Climate Change, to be held in Bonn in November 2017.