Interview: Siemens CEO Peter Löscher on green energy

Siemens is one of Europe's largest industrial conglomerates, making everything from medical devices to gas turbines. It is also a leader in the sustainable energy and green technology industry. In fact, in fiscal 2010, Siemens generated 28 billion euros, or more than one third of its total revenues, from green products and solutions.

By 2014, it hopes to increase green energy revenues to 40 billion euros.

IBTimes speaks to Siemens CEO Peter Löscher about the future of renewable energy, the megatrends affecting it, and how his company is positioning itself in this industry.

IBT: There is wind power, solar energy, bioenergy, hydropower, and geothermal energy. What are your thoughts, comments, and predictions for these various technologies? And what is Siemens' involvement in them?

Peter Löscher: By 2030, renewables are expected to account for 40 percent of worldwide investments in the power plant market. The share of renewables for power generation, excluding water, will grow from 3 percent in 2008 to 17 percent by 2030.

Roughly 52 percent of this total will be contributed by wind power. Solar power will not reach the same market share so fast, but will enjoy even stronger growth rates as solar has an immense potential: the world's desert regions receive more energy in six hours than the world consumes in a year. Siemens can build entire solar farms and we are [the] technology leader in the solar thermal business.

Furthermore, by 2020, experts anticipate double-digit growth rates for the ocean power market. That's why Siemens recently acquired a stake in Britain's Marine Current Turbines, [which] generates electricity by utilizing water flows such as tidal currents. This technology is, in effect, similar to an underwater wind turbine...

IBT: The Boston Consulting Group recently said cities in emerging markets represent the world's single largest commercial growth opportunity. How is Siemens positioning for this?

Peter Löscher: Recent studies count more than 700 fast-growing cities with more than 500,000 inhabitants. By 2030, this number will have increased up to 1,000 in total.

Siemens is well-positioned in order to help cities in these markets coping with their challenges. We've been active in [some of these markets] for 100 years and more.

Cities are already a major growth driver for us. For example prior to EXPO 2010 [World's Fair], Shanghai's infrastructure had been upgraded. Siemens supplied solutions worth more than one billion euros. About 90 percent of this amount was related to green products.

Over the next five years, Shanghai will invest another 200 billion euros in its infrastructure. So there will be plenty of chances for Siemens again. But not only in emerging countries but throughout the world, solutions from Siemens are already making life in cities more comfortable and greener.

IBT: Is it difficult to convince governments of developing countries to invest in renewable energy?

Peter Löscher: Many countries in [the] emerging markets countries are already heavily investing in renewable energy.

I will give you one example: experts predict that China could soon become the world's largest wind energy market. We just opened a new production for rotor blades in Shanghai and we will add another factory for wind energy in 2011.

When it comes to solar thermal power plants we expect the global market to grow from two billion euros today to 13 to 16 billion euros by 2020 -- and we see great potential for this technology in China, too, as well as in India, North Africa and the Middle East region with its Desertec* initiative. By 2020 alone, Morocco plans to install 2,000 megawatts of solar power.

So many of the countries do not need to be convinced -- they are already acting. And we at Siemens just need to take the business opportunities.

IBT: Governments have jumped on the renewable technology bandwagon to some degree, but what more should they do?

Peter Löscher: It is not so much about regulation but it is much more about the question of how to motivate people to invest in green tech.

And a very good motivation is saving money.

On the one hand you need an efficient, eco-friendly energy supply which uses a minimum of natural resources. On the other hand you need to reduce energy consumption. Both are good for the environment and good for the wallet.

The New York Times Building in Manhattan demonstrates that in a rather compelling way. An automatic building management system from Siemens controls the air conditioning, water cooling, heating and power generation functions. It takes into account not only the internal and external temperature, but also building occupancy, the angle of incident sunlight, and the present capacity of the combined heat and power and solar plant. A network of hundreds of sensors throughout the complex determines all of this information in real time. What is remarkable is that intelligent building technologies like this can cut energy consumption by up to 40 percent.

[In another example,] it took us almost ten years to develop our biggest gas turbine which is as heavy as the Airbus 380. We just sold [one] for the first time to a customer in the U.S. and managed to crack the U.S. market.

It is not only the largest ever built but also the most energy-efficient. The combined-cycle plant has a record-breaking efficiency of over 60 percent. This will lead to a significant cost reductions for our first customer as well -- as he needs less gas to fire the turbines. Our US customer has a positive net saving effect of about one billion US dollars over the whole life-cycle of the six new turbines we sold to him.

IBT: What do you want supporting industries to do to complement Siemens' renewable energy drive for the benefit of societies? What are your thoughts on battery technology? If the portability and storability of energy proves to be an obstacle to the renewable energy movement, do you see Siemens entering this field?

Peter Löscher: We are going to enter a new era of electricity where wind and solar power will feed our cars with energy. And electric cars could be used as a gigantic power storage. These cars could recharge their batteries when winds are strong, primarily at night. Conversely, during periods of calm, they could resupply the grid at higher prices.

Siemens is developing rapid charging functions for the cars' batteries so that a car can be completely recharged in roughly six minutes. But the battery technology itself is not in our focus yet -- there are others in this business field which are doing much better than we could.

IBT: What do you think about the allegation that many green energy products depend on rare earth metals?

Peter Löscher: Although our researchers and developers are continuously working with new materials, only a few of our products -- mainly in the health care sector -- depend on rare earth metals.

So we are relatively independent concerning those developments. In our energy sector we bet on our innovation power -- not using rare earth materials in our most important products.

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*This initiative seeks to promote the idea of using solar power plants in various desert regions to generate and transmit energy worldwide.