„Decarbonization? For me, hydrogen is the most promising solution“

Uniper boss Andreas Schierenbeck wants his company to make the step from coal to hydrogen economy in order to become carbon-neutral in just 15 years’ time. Siemens Energy Stories spoke with him about strategy, growth potential and the value of collaboration.

 

By Marc Engelhardt

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Mr. Schierenbeck, you want Uniper to emit net zero carbon emissions by 2035. How do you plan to achieve this?

Andreas Schierenbeck: In Germany, we will close down or convert our coal-fired power plants. That means we’ll be able to exit coal by 2025/26 – with the exception of the newly inaugurated, ultra-modern Datteln 4 hard coal-fired power plant. And then we will increasingly use our gas assets. This will already reduce our carbon footprint significantly.

 

Well, the starting position for Uniper cannot exactly be considered ideal.

Actually, we started off with monikers such as “bad bank”, considering we had been given all the dirty assets of E.ON. But we rather saw it as a challenge and questioned ourselves in a strategy process: How do we deal with this? You can’t conduct a sustainable business against the climate and against the will of society. It was clear that we had to do something.

 

Gas plays a central role in your decarbonization strategy. Why is that?

Natural gas, imported via pipelines or LNG terminals, will continue to play a role in the next 20 or 30 years. But if you want to decarbonize even further, you have to use hydrogen. Imagine you’re producing green hydrogen through electrolysis without emitting CO2, then in the future it can be burned in gas power plants in a climate-neutral way to produce electricity and heat. Many of our gas turbines are already capable of burning certain percentage of hydrogen – and if they are upgraded, they will be capable of burning significantly higher amounts of hydrogen.

 

 

In your opinion, what further potential does the hydrogen economy offer?

Green hydrogen will be far too valuable in the early days to be immediately burned again. Instead, it will initially be used to decarbonize other industries whose share of carbon emissions is higher than that of energy suppliers. Transport, industry and buildings, for instance, are responsible for 75 percent of greenhouse gas emissions. And in this domain, a great deal can be achieved through sector coupling using hydrogen.

 

Could this also be a business model for Uniper?

Absolutely, we have been active in this field for a very long time. In 2013, we inaugurated the first power-to-gas plant in Falkenhagen. In Hamburg, we started producing hydrogen for the transport sector in 2015. And, as part of a pilot project for the German government, we will produce green hydrogen in a wind farm, which will then be fed into various gas storage facilities and made available for industrial applications. There are already very ambitious major projects underway in the UK and the Netherlands; Germany must follow suit. If we want to decarbonize our society, hydrogen is the most promising solution for me.

 

But is the electricity from renewables in Germany sufficient to produce enough hydrogen?

Today, Germany imports 70 percent of its primary energy consumption from abroad. I don't think we have enough solar and wind energy in Germany to entirely replace this share. We will have to import hydrogen. But for this scenario, we are uniquely well positioned at Uniper, because we have been trading gas and transporting it via LNG and pipelines for decades. We are the market leader when it comes to gas storage – and under certain conditions hydrogen can be stored in the same facilities.

 

 

“ We make it possible that more renewables can be fed into the grid. Almost all countries in Europe have a capacity market in which secure capacity is remunerated – except Germany. This is something that needs to be reconsidered. ”
Andreas Schierenbeck, CEO, Uniper

What needs to happen for the hydrogen economy to become a reality?

The technology is largely there, but it needs to be scaled up. Demand must be created by prescribing admixtures in the gas network, for example, as has been done for petrol with bioethanol. Then we need a framework that does not penalize the production of green hydrogen with further fees. And of course there must also be start-up financing. The best examples of this are the solar and wind industries. In the beginning, the price per kilowatt hour was at €50 in production, but thanks to investments in the technology, it is now less than 5 cents!

 

 

In the transformation to the hydrogen economy, you are relying heavily on collaboration, for instance, with Siemens Energy. Why?

A large number of our gas turbines are from Siemens. And as we are considering to gradually convert these gas turbines and power plants to hydrogen operation, it’s best to work with the manufacturer. Siemens Energy produces gas turbines that can already process a certain amount of hydrogen today. Siemens Energy manufactures hydrogen generation plants, and they are also deep into the whole issue of renewables. Creative ideas, such as adding an electrolysis plant to every wind farm to produce hydrogen and thus absorb the generation peaks – those would be the first steps toward an industrial concept. Let’s put it this way: We have common business ideas and interests.

 

 

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The same applies to brownfield transformation, i.e. the future use of coal-fired power plant sites. What is your strategy concerning these locations?

In principle, an existing coal-fired power plant site can now find a new lease of life by converting to gas, if possible, and, for instance, operating an already existing district heating network in the area. It could additionally provide electricity for an industrial park and also compressed air, which is needed in the chemical industry – which could potentially create new jobs at the site. We have also floated ideas such as creating special data centers that need autonomous power generation. That would be a good match, also because many of the old power plant sites are close to where the consumers are.

“ You can’t conduct a sustainable business against the climate and against the will of society. ”
Andreas Schierenbeck, CEO, Uniper

It sounds like you are clearly committed to a path of expansion for Uniper?

If we shut down nuclear and coal-fired power stations in Germany, we’ll need new gas-fired power plants: firstly, to close the gap when there is neither wind nor solar power, and then to secure our electricity grid. Feeding 50 or 60 percent renewables into the grid will lead to completely new technical challenges. We saw this in the UK: A blackout occurred just as the country was experiencing its highest wind feed-in ever. There was a thunderstorm; as a consequence, two power stations were shut down and then the grid collapsed. Solar and wind power lack these huge, moving masses, and this means that the frequency is much more unstable. Solving this problem will also be a growth market.

 

How was the problem solved in the UK?

Shortly after the big blackout we sold momentary reserves to generate frequency stability. Another possibility would be to install batteries, for example, in hydroelectric power plants or in other assets to simply provide faster power to stabilize the grid. There are many creative options available. And the way that we position ourselves is to say: We make it possible that more renewables can be fed into the grid. Almost all countries in Europe have what we call a capacity market in which secure capacity is remunerated – except Germany. This is something that needs to be reconsidered.

 

In a nutshell: How has Uniper prepared for the transformation of the energy industry?

We had to reinvent ourselves quickly. Being a spin-off from a large corporation raised questions – where do you see your future and how do you manage your business? At Uniper, this has meant that we developed a new, very flexible, very innovative culture very, very quickly – simply because we had to. We were under pressure, perhaps very much like Elon Musk at SpaceX. Nobody would have believed that you could be so competitive with such few resources. And I think at Uniper our situation was a bit like that, too.

 

Thank you very much for the interview.

 

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Aug 10, 2020

Marc Engelhardt is a freelance business journalist and author and has worked for numerous media such as NZZ, ARD and Die Zeit. 

 

Combined picture credits: Dominik Asbach

In June 2019, Andreas Schierenbeck (54) was appointed as CEO of the international energy utility Uniper, based in Düsseldorf, Germany. Prior to this, the electrical engineering graduate with an additional degree in Advanced Management from Harvard spent five years as Executive Board Chairman of thyssenkrupp Elevator AG, driving the digitalization of the group. Between 1992 and 2012 Schierenbeck worked for Siemens AG in Germany, Switzerland and the US. Uniper is the third largest listed energy supplier in Germany and a European leader in energy generation, trading, and storage. Around 11,500 employees work in over 40 countries, approximately a third of them in Germany. The company was created in 2016 by spinning off conventional power generation (coal, gas, and hydro) and energy trading operations from the E.ON Group, which continued to focus primarily on renewables and network business. Uniper’s declared goal is to become carbon-neutral by 2035.