In East Germany, billions are currently being invested in chip factories and renewable energies. Where does the commitment come from? Tesvolt founder Daniel Hannemann about the location advantages and his path to becoming a green industrialist.
Mr. Hannemann, most start-up founders develop software, but you are starting to build a large factory for battery storage in the Lutherstadt Wittenberg. That is very ambitious. How did that happen?
Of course we also make software, but our core business is actually hardware. Huge amounts of storage are needed for the global energy transition to work. On windy and sunny days, renewable energy generates surpluses that can be used very well by “temporarily storing” them. In pumped storage power plants, as hydrogen or in lithium storage, like the ones we produce. We are currently experiencing the beginning of a great storage age. The demand is currently growing by more than 40 percent every year.
Why are you building the factory in Wittenberg and not in Asia, where production would be much cheaper?
Of course, manufacturing in Asia is always the easier way. But we would transfer all of our know-how and risk losing our innovative edge. Our path looks different: The simple battery cells that come from Asia are “married” with our technologies in Wittenberg: They receive an intelligent battery management system that makes them powerful and long-lasting. All of the circuit boards we use are manufactured in Germany. We structure our supply chains in a strongly European manner.
Brandenburg, Mecklenburg-Western Pomerania and Saxony-Anhalt are at the forefront of renewable energies. Is East Germany experiencing a green revolution?
Yes, East Germany is developing into an industrial location of the future in the heart of Europe. Tesla has settled in Brandenburg, the Chinese battery manufacturer CATL has settled in Thuringia, and the US company Intel will build a chip factory in Magdeburg. These are crazy investments. Then there is the downstream added value from suppliers.
We have what the West doesn’t have: large areas.
What makes these locations so attractive?
We have what the West doesn’t have: large areas. Tesla has 400 hectares in Brandenburg, Intel needs a similar area. Such areas will not be preserved in Bavaria or Baden-Württemberg. Added to this is the good infrastructure and the proximity to Poland, the Czech Republic and Slovakia, where skilled workers can still be found. Anyone who moves here will also find affordable apartments.
The US company will receive ten billion euros from the federal government for the chip factory that Intel is planning in Magdeburg. Do you think such high subsidies are right?
We have two big goals in Germany and the European Union: switching to renewable energies, i.e. what we are doing with Tesvolt, and digitalization. Hardware is the foundation for both. That’s why locating the chip industry in Magdeburg and Dresden is absolutely right.
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As a start-up, do you also receive generous subsidies?
Like every company in Saxony-Anhalt, we are entitled to so-called GWR funds when we create new jobs. We did that and received around six million euros in funding as part of the investment amount of 30 million euros. Otherwise, we finance ourselves quite conservatively, we have few investors on board and we work with banks.
I believe that Markus Söder also understands climate change, but he is distracted by the public mood.
Reiner Haseloff, the Prime Minister of Saxony-Anhalt, is himself a physicist. As a student at university, he measured CO2 particles in the atmosphere. He says in one star-Interview: “The climate goals are inviolable”. Does it help a start-up like Tesvolt if politicians have a deep understanding of climate change?
We are very happy that he is our Prime Minister, he also lives here in Wittenberg and we sometimes run into each other. What is important is that politicians are guided by the strategic goals set, rather than that they have studied natural sciences. I believe that Markus Söder also understands climate change, but he is distracted by the public mood. There are hardly any wind turbines in Bavaria. We will operate the Gigafactory in Wittenberg with energy from wind and sun.
The energy transition is unpopular among Germans. Many people resist new wind turbines and don’t buy heat pumps or electric cars. Is the energy transition in danger of failing due to a lack of acceptance?
This is more of a mindset problem. It’s not that people don’t want the energy transition, but they are afraid. Perhaps driven by the AfD and other populists, they fear that the economy is at its end and everything is getting worse and worse. And so right now people are holding their money in their hands and not rushing out to invest in the future.
It’s not that people don’t want the energy transition, but they are afraid.
You sell your battery storage primarily to medium-sized companies, bakers, hoteliers and metal companies. They are obviously ready to take money into their hands. What drives them?
Entrepreneurs want to reduce their operating and energy costs. That’s why they install photovoltaic systems and need strong storage so that they can use the electricity at night when there is no sun. Or to buffer load peaks. When guests in a hotel go to the sauna in the evening, the demand for electricity suddenly increases sharply. We also supply large fish farms in Norway. They swim on the sea and have no electricity connection. So far, the farms have primarily used diesel generators to generate electricity. These are loud and dirty. With our storage, the generator only runs for one hour instead of 24 hours. This also has an ecological impact and the operator saves diesel fuel.
Battery cells require lithium, a raw material that is mainly mined in Chile, China and Australia, often under poor working and environmental conditions. Do companies like Tesvolt have a responsibility to improve grievances?
We can’t control every mine. But we can reduce the proportion of rare earths and increase it with other carrier materials from recycling processes, for example aluminum and nickel. We have our own researchers who are working on this. In the new generation, the lithium content will have shrunk from 30 percent to ten percent. And we will continue to minimize it with our cell suppliers in the plant we are building now.
Many start-ups develop innovative technologies, but only very few make the leap to industrial series production. What do you need for that?
The freedom to believe and dream. If everyone believes in something and stands behind it, then this pull is created. Then you can create something like that. We felt this when planning the Gigafactory. Many people worked on this in addition to their actual tasks. This is how the idea of the “garden bridge” came about: trees grow in it, it is made of recyclable material and will one day connect the two new buildings, production and research. When people really want something and believe in it, great things happen.