Reducing energy cost and decarbonisation can go hand-in-hand for businesses, the head of Siemens’ new Energy Solutions division in the UK says.
The Germany-headquartered company has launched Siemens Energy Solutions in a number of territories worldwide. The idea is that modelling a commercial or industrial customer’s energy profile using a ‘digital toolchain’ can enable Siemens to offer complete solutions that will help reduce energy costs overall by between 20% to 40%, while also reducing negative environmental impact. Siemens Energy Solutions’ UK head, Faye Bowser, spoke with Andy Colthorpe.
We know Siemens well in the energy industry as a technology and engineering solutions provider. This seems more like an energy-as-a-service proposition.
The whole company has fundamentally changed, recognising the big shift there is in the market: we know globally there’s the absolute necessity to decarbonise, we’re also seeing a lot of shifts around demographics and where people are living - and their lifestyles.
The urban population is growing, technology is developing and need for energy is increasing. Whilst all of that’s happening, we’re putting an ever-growing amount of pressure on the environment, and on our future.
We leverage the breadth of our technology solutions but we really see it as an enabler to deliver the outcomes that our customers are looking for. That’s quite often reducing their operating cost, reducing their environmental impact, increasing their empowerment. We take a technology agnostic approach, we don’t go in to a customer and say this piece of technology will solve all of your problems, it’s saying: “Tell us what you’re trying to achieve and this solution will be designed around that need.”
How closely linked is the drive towards low carbon solutions and reducing energy costs? Also, with a view to net zero targets over the long-term, how necessary will it be to start thinking about these things sooner rather than later?
It’s an energy transition but there’s a lot that you can do now - there’s a lot of technology already that can help customers get to a point where they’re reducing their carbon impact.
I think that there’s been in the past a bit of a myth that if you decarbonise it’s going to cost you a lot more money. We’ve seen now globally that actually be decoupled. If you look at the economic growth of the UK over the last 10 years and how much we’ve decarbonised, it’s showing we can do that and we can be competitive. The price of renewables has been reducing, the incentive for customers to make a change has been increasing.
It’s legislated that the UK has to be net zero by 2050, but at Siemens we’ve set a target to be net zero by 2030. We’ve already reduced emissions at our buildings and sites by 50%, so we know it’s possible, we know the technologies can be deployed at scale and we know that it can make companies more competitive.
You have to sort of think beyond the price of energy as well. There’s a lot of benefits around being more of a part of the energy system, so you’re not just consuming - you can look at different times of day, how you can produce energy, how you can access new revenue streams by having that flexibility.
I think it also helps in terms of innovation, in terms of employee attraction, it helps to future-proof your organisation because it just has to be a given, now, if you want a future as a company then you need to decarbonise, it’s just essential.
Is it also important to enable customers to go in a low carbon direction without them having to make big capital investments?
You can see there’s so much unlocked potential with energy intensive users. A project can be identified and designed by such an industry but it’s not implemented. Quite often that’s because - if someone is in food and beverages sector for example - they say, well, I’m not in the energy industry, I’m not an energy expert, it’s not my core business.
Their priority in that market will prevail and when they’re looking to deploy capital there’ll be a discussion about what they invest in, how to make themselves more competitive. When you’re looking at some sort of onsite solution, it can be quite a complex transition.
The service model puts that risk of developing the system back into the energy industry, into a trusted pair of hands. If they tell us what they need, we can design, build, operate, own it, maintain it. All the customer would get is the benefit and the outcome.
We take them along this journey using our digital toolchain, so we offer a lot of transparency, they see their consumption, we put in what their future objectives will be, we design different systems and show them a digital twin of their site, so we can show what’s possible as a whole solution and then take that through and offer continuous transparency across our platforms so you’re constantly optimising it.
It’s down to us as a service provider to be incentivised to sell the right things: we want to sell savings, not power because if we’re incentivised to sell more power, we’ll produce more power, whereas with a service model to deliver savings, that works to our advantage.
How do industrial energy costs work in the UK and what are you therefore able to offer your customers? And what sort of customers are you looking for?
We’ve seen in the UK energy costs are increasing and they’re due to increase. How the bill is made up has been changing. About 40% of the bill is the energy cost itself and you pay for things like network infrastructure, on transmission and distribution (T&D) level, policy costs and taxes. There’s a real mix on how your bill is made up and that will fluctuate depending on the time you’re using energy as well.
Typically we’ve seen with the right mix of flexible, decentralised and renewable systems, you can reduce energy costs from anywhere between 20% to 40% and we do [also] focus more around flexibility.
If we future-proof, not only are you reducing your costs in the near-term but you’re also giving yourself the ability to play an active role within the energy market by accessing those new revenue streams and the UK market is actually quite a mature market for things like demand side response. There are some good aggregators, and good models to help end users tap into that flexibility.
Of course, decarbonisation isn’t just about electrical load, it involves a lot of things including generation, storage, efficiency, heating, transport. What are the sorts of approaches Siemens Energy Solutions might take on some of those?
There’s already been a huge shift and a huge amount of progress around power, and for the UK, we are saying there is a huge challenge and a mountain to climb for decarbonising heat.
Whether we’re talking about the options like green gas, district heating networks, electrification, it really depends on the location and the history of how that energy is being used.
With businesses that are using a lot of energy, it’s easy to know what your energy consumption is, but then being able to draw some conclusions on how to improve it, that’s where the challenge is. The first thing is, if you’re looking to reduce cost and carbon is to use less, so we would normally start with an angle to say, let’s look at optimising your existing infrastructure and make the most of the assets you have. And there is a long way to go for the UK market around energy efficiency.
So we start there, with part of our proposition called ‘Reduce’, then we look at what you can ‘Produce’ onsite, so, we can look and see if they’ve got space to install onshore wind turbines or solar panels and some storage with that and that goes through the final part of our proposition: you will still have a connection to the grid and use some energy from the grid, so also how you ‘Procure’, the remainder.
You mentioned that digitisation and a digital toolchain is a big part of what you do: presumably that goes for the solution and managing it once implemented as well as for modelling and simulation, beforehand?
If someone uses a lot of energy they can go into our energy configurator tool, put in their location, the existing infrastructure and it’s a calculator that shows you what the potential is for reducing cost and carbon and increasing resilience.
As you put in more detail the tools become more sophisticated. You can do a lot to build that digital twin and you’re always utilising machine learning to continuously optimise it.
From what I’ve seen I think we’re the only tech company with this whole end-to-end solution in tech and this digital toolchain. The world has moved on from using things like Excel sheets to see what’s possible, to actually saying these are custom-built and proven software platforms.
Within our performance contracts, what we model in our platform we would then give contractual commitments to say if we’ve simulated this and told you it will give you this much savings, we will guarantee it and they can hold us accountable for those models.
Globally we’ve helped customers avoid £3 billion in costs and about a billion of that is under that guarantee out to 2050, we’ve reduced around 14.2 million tonnes of CO2, we design, simulate, we have a contract that holds us accountable and it proves the accuracy of the modelling that we did with that digital toolchain.