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Siemens: Europe can save €45bn by optimising renewable energy generation

Siemens – which is hosting six Round Table discussions around the globe to discuss levers for optimising energy systems worldwide – says if regional characteristics were given higher priority when investments were made in renewable energy installations, Europe could save billions of Euros. The European energy system is inefficient to the point of damaging the continent's competitiveness, it adds.

The company estimates that building and expanding renewable energy installations in the wrong locations is costing Europe around €45bn in unnecessary investment - the preliminary findings come via an ongoing study Siemens is conducting with the Technical University of Munich to examine energy systems worldwide. Significantly, the €45bn figure includes associated extension of the power grid.

In Germany alone, the potential savings are possible on a magnitude of 4-5 times the annual investment in solar and wind power plant construction, the firm says. The crux, according to Siemens, lies in the choice of location: installations must be built at the sites in Europe that offer the highest power yields.

"In Europe, just the new photovoltaic capacity alone to be built by 2030 amounts to about 138 gigawatts. If these facilities were erected at the sunniest sites, we could save 39 gigawatts of solar equipment – for the same power yield,” said Michael Süß, member of the Corporate Executive Committee of Siemens AG and CEO of Siemens’ Energy Sector. “The choice of site is crucial to the efficiency and economy of wind power, as well."

Elsewhere, in Norway for example, favorable topology means the nation can rely almost exclusively on hydropower, says Siemens. At the same time it is a major producer of natural gas, most of which it exports. By contrast, very little of its abundant hydropower is presently exported via long-distance transmission lines, despite the great demand for imbalance (i.e. balancing) energy in many countries of Europe.

In the UK and Germany, both of which intend to hugely expand their offshore wind power generation over the next decades, wide fluctuations in power generation due to changing weather conditions “dictate that large-scale energy storage or high-capacity exchange arrangements with other countries be put in place”, the company adds.

Overall, Siemens says it has spotlighted four main levers for optimising energy systems worldwide that can be more or less effective depending on the regional characteristics of the power grids and the power plant fleet:

  1. Local optimisation of renewable power installations: This means exploiting regional power generation potentials to the full, and involves finding the best sites for solar installations, hydropower storage facilities and wind power farms, and expanding the grids to match.

  2. Enhancing the efficiency of the power system as a whole: For instance, the average efficiency of coal-fired power plants in Europe is only 38%, whereas modern plants can reach up to 46%. Installing more efficient electrical equipment in industry and households would cut CO2 emissions and costs even further.

  3. Improvements in the power plant mix: Switching from coal fuel to gas-fired power plants would considerably reduce the volumes of carbon dioxide emitted by conventional power generation. This alone implies an annual CO2 savings potential of 365mn tons in Europe. That is equivalent to half of all emissions in Germany.

  4. More use of electric power for energy needs: Instead of generating power locally at low efficiency and burning oil and natural gas to heat buildings, power could be generated more efficiently in large-scale power plants, and high-efficiency electrical heating systems could be used in thermally insulated houses – at least in regions with broad-scale power grid coverage.

Siemens is discussing the results of the study in a six-stage discussion tour to conclude with the World Energy Congress (WEC) in Daegu, South Korea in October 2013. The first Round Table, focusing on the European energy system, is taking place at the 1st European Energy Congress in Brussels. Further interim findings covering Asia, the USA, China and the Middle East are to be presented and discussed on June 4 in Moscow, on July 9 in Juno Beach, Florida, on August 1 in Beijing and on September 4 in Abu Dhabi. A preliminary overall global analysis is to be presented in Daegu, South Korea, on October 15. 

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