The energy transition: 'Realisation of a project to save Planet A'
The route to "net zero" – mapped out by President of the VDE Armin Schnettler and Christian Hille, Global Extended Board Member for Energy.
Mr. Schnettler, Mr. Hille, more and more countries are now setting concrete target dates for achieving net zero CO2 emissions. Do you believe that, around 25 years from now, we will be living in a carbon-neutral world?
Armin Schnettler: My answer is this: we have to manage it! The various nation states have set out their targets – Germany 2045, the EU 2050, China 2060. The global challenge now is to create an "all-electric world". This will be a world powered by sustainably produced electricity – and by green hydrogen for the 50 percent of our consumption that cannot be electrified.
Christian Hille: I don't think everyone has yet understood that we are not talking about a negotiable vision. Just a few years ago, individual nations or industries could still hide behind the pretext that solo efforts don't make any sense in the energy transition. This argument no longer holds water. The data on achieving carbon neutrality is quite clear. The vision of a global energy transition has now developed into a project that is ready to be implemented with a very definite completion date.
Let's run through the scenario: an emissions-free energy sector. What kind of investments are we talking about here?
Christian Hille: There are a lot of figures involved and they all have one thing in common: they are very large. I'll give you an example. The electricity grid in Europe needs to be redesigned because, in the future, wind and solar energy will less frequently be generated in the areas where it will be consumed. This means new high and extra-high voltage lines, new direct connections with direct current. Lower voltage networks will also need to be either built or modified to meet the demands of electromobility. The changes required to the electricity grid in Europe alone will require an estimated investment of more than a trillion euros – that's many billions per nation.
"Countries need to position themselves now in regard to the global competition"
If the whole world sets off on the path to a carbon-neutral future at the same time – where do you think there will be a need for regulation on an international level?
Armin Schnettler: It's still a bit too early to get a picture of the overall situation. Many countries are currently still in the process of defining where they want to get to. Within the EU, the focus is on establishing a common infrastructure, on energy storage and on European integrated networks and gas transmission grids that will also be of relevance for hydrogen. Countries that don't have much suitable space available, for example Japan, will remain energy importing nations and will have to look at how they are going to secure their supplies in the future. Germany and the EU will also continue to be importing nations. However, I am sure that the international energy partnerships that are already in place for the import of oil, coal and gas can also be used for the import of renewable energies – for example, with green hydrogen as a raw material. Countries such as Chile or Australia, on the other hand, have huge potential for the use of photovoltaic systems and wind power. Australia is currently still a major exporter of coal. Here the question arises as to how their model of value creation will look in the future – but there is already a lot being done there.
Christian Hille: I would advise each individual country to formulate a national and thus a globally recognisable strategy now, so that they can position themselves in terms of the worldwide competition. I think there will very likely be a period of friction, because qualified personnel are in short supply and the business models of entire sectors are going to be changing. It will be a very interesting time!
A crucial step in the "project for the realisation of the energy transition" will be the coupling of sectors – meaning that the electricity, heat and mobility sectors will become interconnected. How will this complex interlinking be organised in the future?
Armin Schnettler: "Sector coupling" is nothing new and has already become well-established with the coupling of electricity and heat – in the form of district heating. However, in the future, the number of energy sources and of coupling paths will increase. An example: I have a good day with lots of wind on the European North Sea coast. What do I do with the surplus electricity from the wind turbines? I could use it to generate hydrogen that will then be consumed and potentially later re-electrified. Or I could generate high-temperature heat – in the form of district heat, or in order to reconvert it again when required in a steam power plant. Or I could involve the mobility sector and feed my electricity into their charging infrastructure. In the future, we will constantly be facing decisions such as these. Not really that extraordinary – but it increases the level of complexity when we are trying to find the optimal solution. In order to ensure that this potential is used in the best possible way, we need to model these processes. To do this, we need high-performance simulation environments – also from the point of view of the consumer, as they will of course be hoping for the lowest possible procurement costs.
Christian Hille: The big oil and gas companies will have to undergo major changes – and they will invest in these changes as their current business model will expire in 20 years' time. I see this as an important opportunity for a significantly greater focus on the end customer. Already now, we are witnessing the use of new business models for the storage and management of energy, for example with car manufacturers offering their charging infrastructure and home and storage systems for this purpose, and combining it with photovoltaic systems.
"Major projects won't fail on account of the technology – but rather due to a lack of personnel"
The networking of the energy sector requires the use of new technology and the setting up of a digital infrastructure. How can this succeed – without enormous increases in costs?
Christian Hille: Both the redesign and the subsequent operation of the complex infrastructure required will need to be organised as efficiently as possible. This is an area where I expect huge expansion in terms of the digitisation of processes in order to map out systems in digital form and then optimise them, for example with AI support. In my opinion, a key driving force here will be – as I said before – the shortage of skilled personnel. The focus will be on the realisation of large-scale infrastructure projects with the highly efficient use of personnel.
Armin Schnettler: This is how I see it too: major projects such as the expansion of the electricity grid or the industrial scaling of the hydrogen sector won't fail on account of the technology – but rather due to a shortage of experienced personnel who have the skills to be able to realise the projects. And this is an area where we need to take concerted action – with the optimisation of processes and by training skilled workers.
If the electricity supply is to be organised more efficiently – will electricity prices go down as a result?
Christian Hille: In terms of generation, sustainable energy is significantly cheaper than conventionally produced electricity – in some cases a good deal cheaper if we take into account the building and dismantling costs for coal or nuclear power, for example. However, in the short and medium term, the prices to consumers will depend on national legislation with regard to taxes and levies. The rebuilding of the energy system, which will cost trillions, will have to be financed somehow. I would advise countries not to transfer these costs entirely onto the prices for electricity and hydrogen. This would result in a drop in the acceptance of the energy transition among the general population.
Armin Schnettler: Acceptance is one of the most important resources in this transformation. This is why the state needs to even out any social hardships, and this is something that will happen. After all, there is no alternative to this path, just as there is no "Planet B". At the end of the day, we will all have to step up.
Prof. Armin Schnettler was Head of the Institute for High Voltage Technology at the RWTH Aachen University for almost two decades. In parallel to this and afterwards, he has held various roles at Siemens AG, most recently taking on responsibility for the hydrogen sector as Executive Vice President of New Energy Business at Siemens Energy. He has been President of the German Association for Electrical, Electronic and Information Technologies (VDE) since 2020.