Siemens Energy North American President Rich Voorberg marveled at the speed of the energy transition as he sat down with us at POWERGEN International in February.
“I look at the power industry, and everything’s changed,” he said.
Voorberg said widespread incentives in the Inflation Reduction Act (IRA) aimed at driving the transition have changed the game, including for his own company.
For example, driven by the legislation’s ten-year production tax credit for hydrogen, interest in Siemens Energy’s 18-megawatt electrolyzers is at an all-time high.
He noted: “We went from having customers talking to us about a single unit, maybe half a unit, to customers saying, ‘how quickly can I get 100 of your electrolyzers delivered?’”
Despite this optimism, the world is behind on its energy transition targets, and the challenges are becoming greater than ever and more urgent.
Siemens Energy recently surveyed nearly 2,000 experts on energy transition readiness in different regions around the world. While North America led the pack in the Energy Transition Index, the survey proved that globally we have a long way to go to move the needle.
Huge investments are needed across the five regions to put the world on a firm path to net zero, according to the Global Energy Transition Readiness report.
Voorberg spoke of the ‘Energy Trilemma’: ensuring the right balance between energy affordability, reliability and sustainability.
Affordability is being able to respond to global economic challenges such as high inflation, raw material shortages and price increases responsibly. Reliability means being a reliable partner and fulfilling commitments so all communities have access to energy when and where they need it. Sustainability equates to driving the energy transition and responsibly meeting the increased demand for electricity.
But no one can do this alone. Voorberg noted collaboration is key, especially as different regions in the world are at different places in the transition. He said companies like Siemens Energy, together with government, the broader energy industry, finance companies and the tech sector are in a position to take action and move the energy transition forward.
Further, Voorberg added there is no quick fix or perfect solution.
“People want to look for that silver bullet, it’s human nature,” he said. “There is no silver bullet.”
Siemens Energy believes it’s time to act now, and this means working on five action areas:
- Expanding renewable power – Only possible if countries worldwide create the necessary framework and remove regulatory hurdles.
- Improving energy efficiency technology – Requires increasing electrification of industrial processes and transportation, two areas where innovation can play a vital role
- Strengthening grid stability – Increasing the share of renewables and increasing electrification requires more robust grids that can be expanded beyond national boarders, connecting supply and demand across regions or even continents.
- Modifying existing infrastructure – It will be necessary to use current infrastructure built around conventional technologies to ensure a balance between the security of supply and sustainability (avoid stranded assets).
- Managing the supply chain – Regions need access to large amounts of materials, including minerals, which requires careful management of the supply chain.
“Now’s the time. Let’s stop talking about it,” said Voorberg. “Let’s go do something.”
Specific to North America, we asked Voorberg what he believes are some of the top challenges to meet decarbonization targets.
“Infrastructure is a problem,” he said. “And whether it be pipelines for hydrogen, not enough of them being able to get permitted, or you’re talking about transmission.”
Voorberg said he is concerned about the long lead times for renewable energy projects to be permitted, as the sector has grown exponentially.
“One of my biggest fears is that we have all this great renewable power we’re building, and it’s going to get stranded, because we don’t have enough transmission to bring the renewable power to where the people need it,” he said. “That’s something we at Siemens Energy are driving toward.”
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