Igniting the hydrogen ecosystemApril 9, 2021
Dietmar Siersdorfer, Siemens Energy’s Middle East and UAE managing director, talks to The Energy Year about the company’s role in the region’s energy transition, its activities and plans in green hydrogen, and the importance of building resilient and regionally connected grids. Siemens Energy provides more than 40% of the UAE’s power generation.
What overall impact did you see from the pandemic?
Overall, Covid-19 has been the biggest disruption in the market I’ve ever seen. The IEA announced that there was a 20% decrease in the global demand for electricity. Nevertheless, it drove the changes that we were all looking at for quite some time. We are now focusing more on renewables and what we are calling the energy transition. It’s a matter of how can we make our current systems more robust and how can we make them greener and more sustainable.
How do you assess the region’s performance within the energy transition?
I see great moves in every country’s continuing efforts to reduce CO2 and increase efficiency. The UAE wants the emission-free share in its energy mix to be 50% by 2050. Saudi Arabia’s new target is to reach 50% renewable energy by 2030. Similarly, Qatar wants to reach 20% from solar generation by 2030. Kuwait is also looking at 15% renewable energy by 2030. Oman has announced 10% by 2025.
For its part, Egypt is set up well with the mega-projects we have done there. They have one of the most modern and efficient electricity systems in the world and they are also pushing green initiatives. Minister of Renewable Energy and Electricity Dr. Mohamed Shaker announced that they want to have a 30% share of renewables in their grid by next year and are pushing this to 42% by 2035.
How will this new energy paradigm affect the region?
If you look at 2030, based on current governmental plans, there will be a reduction of 354 million barrels in the global annual oil consumption – a 23% decrease. That is a positive change for the climate and a big change for energy generation. It forces this region to look for new businesses to continue to be a worldwide leader and provider of electricity and energy. It is not all related to Covid, but we are seeing a big drive from the pandemic, and from digitalisation, moving us in this direction.
Siemens Energy was established in the middle of the pandemic. Tell us about this decision.
It was a difficult time and there was much debate within the company over whether we should move forward with this change because there was a lot of uncertainty. But so much work had gone into it that we decided we had to push through. Today, I can see how well the company is positioned. We had a fabulous start with our stock price and with how we are perceived. Our mission is to electrify societies – especially in this region, where we’ve shown our ability. We did it in Egypt and are currently doing it in Iraq.
What are Siemens Energy’s competitive advantages in helping to drive the energy transition in the region?
We are a leading energy technology company and aim to be a leader in the energy transition. We have a long legacy in the Middle East, stretching back over 150 years. The UAE is a key player and we are looking at all the countries in the region. They are all at different stages in their energy transition. In order to help them, we need to develop and adapt concepts, depending on where they are in the transition. That is what Siemens Energy stands for and we have established it globally.
We are also very happy that we are in a growing market. The energy industry hasn’t always been discussed positively, but the electricity market is growing. It’s not a fast-growing market, maybe around 2% or 2.5% per year, but there are a lot of changes. Use of the older technologies – fossil and less clean energies – is now transitioning into renewables. There is the momentum.
Siemens Energy now has Siemens Gamesa Renewable Energy, which is one of the largest wind companies in the world. We have a huge amount of wind turbines all over the world. We are one of the leaders in producing green energy. From a portfolio perspective, we have the renewable generation and the gas turbines, which we feel will be the bridge fuel over the next few years. Today, gas turbines are running with natural gas but ours are also capable of running on hydrogen. If it is green hydrogen, then it is completely green electricity. Today, they can take up to 60% hydrogen but by 2030, this will be up to 100%.
How did the hydrogen partnership with Mubadala come about and how is it shaping up?
Just before the pandemic, Mr. Musabbeh Al Kaabi [Mubadala’s CEO of UAE investments] and I were in talks to start a platform for green hydrogen. It is an early technology but it needs to be further developed. Economies like the UAE want to diversify away from hydrocarbons, and they can move to a new field or stay in the field and work to become an energy and technology exporter in the future. Hydrogen is that opportunity.
Our partnership is focused on green hydrogen. We are working on how to ignite this ecosystem. In the future, we hope it will be a successful industry in the country. Mubadala has a successful track record, they have industry building in their genes.
Together with their subsidiary Masdar, we discussed a pilot plant to build a hydrolyser, which generates hydrogen that you can use for different applications such as transportation on the road, the marine sector and to generate aviation fuels with a synthetic base. Synthetic fuels are at the top. That is what we are going for.
This is the demonstrator plant in Masdar City?
Yes. Right now, we are clear about how to generate electricity and the hydrogen, but we are looking at what piece of technology we are going to use to make the synthetic fuels. There are different routes – with methanol or ethanol. We are evaluating with our partners to decide the best way and the best yield. It is ongoing and we are hoping to work throughout the summer to set up the plant.
In parallel, we are looking for funding. We are working with Masdar, the German government and the UAE government to see how we can fund it. Germany has a big interest in collaborating with the UAE on a supply basis. The UAE in particular is blessed with the sun and low-price electricity, which is great for generating affordable green hydrogen. Germany is looking to import fuels for the future because they cannot meet the demand on their own. It is important to build a partnership and market where that exchange happens. That is the ecosystem we strive to create.
That is also why we have Lufthansa and Etihad as partners, as offtakers of the fuel. In the future, there will be more airlines.
This is not the first hydrogen plant Siemens has been involved in, correct?
It isn’t. Siemens started a hydrogen plant in Dubai two years ago, close to the Mohammed bin Rashid Al Maktoum Solar Park, that will be integrated soon. We are in the process of setting up the final operation and there will be a handoff ceremony. It will be the first green hydrogen plant in the region. It is very exciting. It shows that the UAE is looking ahead to new technologies in all avenues and ideas. They are not followers; they are leaders.
How can Siemens contribute to upgrading the region’s transmission grids to cope with further decentralisation triggered by renewable energies?
At the moment, we have seen a strong desire to connect the countries’ grids to each other. There is the GCC grid, but I think there is more to be done.
I think it is important to build interconnections across countries, welcome microgrids as solutions for some countries, and undertake general grid expansion. The grid is the internet of electricity. As we develop renewables, we need to be clear on how to develop and build a resilient grid. A resilient grid is dependent on fluctuating electricity resources of the future like wind and solar.
Today, some sources can wane in minutes. If a cloud comes, your solar electricity drops. We have to make the grid resilient against voltage and frequency dips. It’s not easy. The more renewable resources you have, the more challenging it gets. It’s not a problem now, but the more countries move in this direction, the more you have to develop it. We saw it in Germany. Going to 40% or 50% doesn’t make a huge impact, but when you go beyond 50% of electricity generation in renewables, there must be special mechanisms in place.