Siemens Energy: How offshore electricity should come to land – Economy

It’s not often that the past and future come together as they do here on the outskirts of this southern Spanish city, where the sun is beating down as early as late April. Two shirtless fishermen stand against a wall, alternately looking at the sea and the deep blue sky, behind them the old palaces of Cadiz, one of the oldest cities in Western Europe. Founded probably around 1000 BC and centuries later one of the most important ports of the Spanish fleet. A trading center, the connection – today one would probably say: hub – between the old and new world, a center for traders, conquerors, pirates and adventurers.

Narrow corridors, narrow floors: a bit like Wolfgang Petersen’s film “Das Boot”

On the other side in the harbor there is now this gigantic yellow block. A technical monster in yellow, a kind of giant battery on legs. Weighing thousands of tons, a cuboid of narrow corridors on several floors, a labyrinth of stairs, cables, switchgear and transformers, pulled up between cranes and old shipyard halls. You should see “Das Boot” by Wolfgang Petersen again to get a feel for the interior of this facility. Anyone who crosses the almost three-kilometer-long, futuristic bridge Puente de la Constitucion de 1812 driving across the sea in the direction of the city, sees the box standing further back in the sand: as a foreign body in front of an Andalusian backdrop, which it took three years to put together here.

But it won’t be here for a long time, this colossus from Cadiz: at some point it will be heaved up, put on a ship, that Iron Lady means, and bring it off the German North Sea coast. There, the giant box will be placed somewhere off Norderney on a massive steel frame with metal poles weighing tons, which will be embedded deep into the seabed. The colossus with the somewhat unusual name “DolWin kappa” could then stay there for around 30 years. 53 meters above sea level, supplying electricity to hundreds of thousands of homes by 2023.

The trick for long distances: alternating current is converted into direct current

Giant blocks like “DolWin kappa” are needed to collect and bundle the energy from the wind farms on the high seas (offshore) and transport it on to land via huge cables. For the most efficient possible transport over long distances, the alternating current is converted into direct current. So if Federal Economics Minister Robert Habeck (Greens) plans to draw at least 80 percent of electricity consumption from renewable energies by 2030, then yellow blocks like the one from Andalusia are needed. Wind farms are a pretty complicated thing per se. So-called converter stations, which transmit the electricity and bring it ashore, are something completely different.

Open detailed view

If the port of Cádiz stood for the departure to the American continent hundreds of years ago, the “DolWin kappa” platform now stands for a completely different departure: that of the energy transition. And right in the middle of this great transformation: a large German energy technology group.

Managers who look “concernedly at Ukraine”.

And so on this day two managers are sitting in a hotel on the outskirts of the old town of Cadiz. One is called Tim Holt and is the board member for energy transmission at Siemens Energy, the other Tim Meyerjürgens, manager at the network operator Tennet. The two are partners in the construction of the station, which is being built together with the Spanish company Dragados. And they say they are “looking at Ukraine with concern.”

Open detailed view

In normal times, one could have discussed the phase-out of coal and nuclear power for a very long time at this point, and the need for a speedy energy transition. But war has been raging in Europe for two months now, and Economics Minister Habeck says dependence on Russian gas is still 35 percent. You can hardly find that now, not so long ago Germany still got 55 percent of its natural gas imports from Russia. But 35 percent is still 35 percent.

The managers say that what is happening is “a turning point for Germany”. All of this shows that you have to be independent. Offshore wind power will “play a crucial role” in becoming independent of fossil fuels. Siemens energy manager Holt brought another message with him, albeit an uncomfortable one: everyone would soon have to “get used to paying higher prices for electricity.” Because the changeover is not available for free. It all sounds reasonable in theory, but in practice it’s not that easy.

Not just because higher electricity prices are always unpopular. The energy transition bureaucracy is not always easy to convey. Approvals, approval procedures, planning approval procedures, ordinances – acceptance is the catch here, and the question here, as is so often the case: Can large infrastructure projects be carried out in Germany at all? As an offshore manager, you’re basically in a very good position: the further out to sea a wind farm is, the further away the wind turbines rotate, the greater the public’s acceptance: wind power is great, as long as it’s not on a hill across from your own garden. Or, as Siemens Energy Manager Holt puts it: “When a bird is killed by a wind turbine, you see it immediately.”

Siemens Energy needs its own energy transition

Coal is no longer wanted, neither is nuclear power, gas from Russia has long since lost its innocence – so what to do? Make it faster, say the managers from Germany. You can still see approval procedures that lasted ten years. “If we don’t manage to do that, then the energy transition will fail,” says Holt. A clear statement. However, not only society has to make it now – Siemens Energy itself too. Because the group has to succeed on a small scale what society has to be able to do as a whole: the energy transition.

Open detailed view

Actually, the market is manageable: Siemens Energy is the market leader in these projects on the technological side, then there is also the Japanese Hitachi group, as well as the eternal US rival General Electric. However, according to the company, Chinese suppliers have long since positioned themselves. Not an easy situation for European partners and planners: The stations are considered critical infrastructure, so you have to think carefully about who you are building your energy systems with.

Few players, and yet everything is very complex, business is business: For Siemens Energy, it is not entirely unimportant what happens next. Because what is built in the port off southern Spain also determines the future of the company. The group has seven of these offshore converter platforms in use, and three more are in the works. Many more are planned worldwide.

Ironically, the wind business is not going well

For the listed company, which until recently belonged to the Siemens group, it is an interesting future market. Initially it was said that the company was in the red with its converter stations, but in the meantime the construction of the large-scale plants is said to be profitable and to be further expanded, despite the long approval and testing times. What is currently burdening the group above all: the business with renewable energies of all things. Traditionally, Siemens Energy comes from the old coal, oil and gas business – in other words, those fossil sectors that will and will have to play an increasingly minor role sooner or later.

Ironically, the Spanish wind energy subsidiary Siemens Gamesa, in which the Germans hold a good two-thirds, has had problems for a long time. Profit warnings, management changes, forecasts not fulfilled – the problems of the wind power subsidiary from Spain repeatedly affect the entire group. Supply bottlenecks due to the corona pandemic and the war in Ukraine are only part of the problem. Much of what is currently going wrong at Gamesa is homemade and is also attributed by insiders to cultural differences between Spanish and German management. Some think that Siemens Energy should perhaps take over the subsidiary completely in order to get the problems under control. But this would cost the company billions. This bitter note has stuck with the company for months now: the energy transition is everywhere, but Germany’s largest energy technology provider Siemens Energy is finding it difficult to turn its wind energy subsidiary into a profitable business.

That’s why this giant yellow battery that’s standing in front of Cádiz is not entirely unimportant for the group. It’s important to get energy from A to B, says CEO Holt. Which in any case speaks for a bad business model. Out in the wind farms, electricity is of no use if you need it on land.