Electric Times

Siemens and the History of Energy Technology

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The triumph of electricity would never have taken place without Siemens. Throughout its history, the company’s innovations in heavy-current technology and its collaborations with promising partner firms have enabled Siemens to set the course for the future in the energy sector. Drawing on a long tradition, Siemens has systematically expanded its portfolio and used its pioneering achievements to position itself in the most significant markets. Siemens Energy, the new energy company, will stay the course and open a new chapter in the history of Siemens energy technology.
Background

The age of electricity – Beginnings of heavy-current technology

It is no exaggeration to say that the last third of the 19th century inaugurated a new era in the Industrial Age. The first uses of electricity as a universally applicable form of energy represented a key event in the rise of modern industrial society, with its all-encompassing electrical networks. Though electricity was already playing a role earlier in the century, its involvement was largely limited to electric telegraphy, with little impact for the moment across any broader horizon. But one starting point that might be cited for the age of electricity was the introduction of lighting technology around 1880. By illuminating streets, ports and smaller industrial installations, this established a bridgehead for electric power generation and distribution, and initiated a process of development for ever more extensive systems – from isolated small power plants to complex grids and interconnected power distribution systems that reached beyond municipal boundaries.

 

Electrical machines work by way of the physical interaction between electricity and magnetism. The scientific foundations for applying them had already been laid early in the century. But it was not until 1860 or so that discoveries and inventions made it possible to convert electrical energy into mechanical energy efficiently and cost-effectively, and to distribute it across long distances. That was the real start of the era of heavy-current technology. During the 1880s, this technology began gathering its strength for a mighty leap forward in the form of increasingly powerful power plants and transmission technologies. The capacity of the electricity supply quadrupled within just a few decades, and electrically based industrialization attained a hitherto unimagined scale. There is good reason why the world’s electrification at the end of the 19th century is sometimes called the “Second Industrial Revolution.”

Heavy-current technology at Siemens

A new technology and new business models

The origins of the German electrical equipment industry in the mid-19th century largely coincide with the rise of Siemens & Halske. Especially in the early phase, when light-current technology predominated, the company enjoyed a market-dominating position. As heavy-current technology rose in importance, Siemens still remained one of the leading companies in the field. But it gradually came to face serious competition.

Electricity was used not just for lighting, but to run machinery – for example in electric trams and power plants, or also in industry itself, for instance where electric motors were used. Siemens & Halske was among the pioneers in all these fields. And the company enjoyed a correspondingly large share of the fast-growing heavy-current market, as it had invested early in further developing various components like generators, transformers, industrial drives and systems equipment. 

 

The German electrical equipment industry’s annual production volume grew almost exponentially in these early years: in 1890 the figure was around 45 million marks (including for 5.5 million electric motors and generators); eight years later, the figure had already swelled to almost 230 million marks, 92 percent of it for heavy-current technology. In the five years after 1895 alone, the number of electric power plants burgeoned from 180 to 774.

Nevertheless, the new business brought its own serious challenges. For one thing, the task of financing and completing individual projects for building power plants and installing municipal power grids expanded to entirely new dimensions. Since government remained reluctant to assist with financing at first, electrical equipment companies were forced to serve not just as the technical suppliers and builders of power plants, but as their financiers and operators. Accordingly this new business, known as the “entrepreneur” business, involved heavy burdens for capital investment. Another issue was that Siemens & Halske found itself faced with vigorous competitors in the expanding heavy-current market – first and foremost among them, Deutsche Edison-Gesellschaft (founded in 1883, renamed Allgemeine Elektrizitäts-Gesellschaft, AEG, in 1887) and the Nuremberg-based Elektrizitäts-Aktiengesellschaft vorm. Schuckert & Co. (EAG, formed as Schuckert & Co. in 1873). 

 

And alongside such heavyweights, in the 1890s Germany had no fewer than 1,300 small to medium-sized electrical equipment businesses, where there had been only 81 in 1875. All of these crowded into the market, and were one reason why the market was saturated by the turn of the century. On top of that, many companies found themselves overextended by the “entrepreneur” business and went under. That crisis led to a concentration process in the German electrical equipment industry as the 20th century began. Siemens & Halske and AEG emerged as the market-dominating corporate groups.

Siemens and Kraftwerk Union

Cooperation between Siemens and AEG

Intense competition and changing market conditions in power plant and transformer technology led – after three years of negotiations – to a cooperation arrangement between Siemens and AEG-Telefunken. The two companies merged their relevant business lines into two new companies: April 1, 1969, saw the founding of both Kraftwerk Union AG (KWU) and Transformatoren Union AG (TU). The two parent companies each held 50 percent of the subsidiaries’ share capital. KWU was headquartered in Mülheim an der Ruhr; TU had its main office in Stuttgart.

KWU’s portfolio included building conventional power plants and – accompanied by vehement controversy among large segments of the public – nuclear power plants. It also supplied components. At its founding, the new company had some 7,800 employees, most of them employed at production sites in Mülheim an der Ruhr and Berlin. In those days, production of multi-casing steam turbines and turbogenerators was concentrated in Mülheim, while Berlin made gas turbines, single-casing condensation turbines, and ship turbines. For licensing reasons, Siemens and AEG-Telefunken’s reactor production could not be transferred to KWU until 1974.

 

Although the team in Mülheim and Berlin consistently delivered machinery that achieved superlatives – including the world’s most powerful gas and steam turbines – KWU had to contend repeatedly with order slumps from the 1970s to the mid-1980s. 

 

In 1977, AEG sold its entire stake in KWU to Siemens; a year later, it assigned shares of TU to KWU. In 1987 Siemens then took over AEG’s remaining stake in TU and signed a merger agreement that ended TU AG’s existence as a separate entity; it was deleted from the Commercial Register. Effective October 1 of that same year, KWU was integrated into Siemens AG as an autonomous business. Ten years later, it became the Power Generation Group, which was renamed Siemens Power Generation in 1999. At the same time, the company’s nuclear activities were spun off as Siemens Nuclear Power GmbH.  

Portfolio optimization

Investing in markets of the future

Ever since the turn of the 21st century, Siemens has been steadily growing its portfolio in power generation, following the strategy of positioning itself in promising markets with a significant future. The company has been expanding and strengthening its businesses with long-term investments.

1997: In November 1997, Siemens decided to acquire the fossil-fuel power plant business of the long-established U.S. company Westinghouse – with its engineering offices in Orlando, Florida, and production sites in Charlotte and Winston-Salem, North Carolina, Fort Payne, Alabama, and Hamilton, Ontario – and to combine them with the Power Generation (KWU) Group. As competition in the global power plant business intensified, this pooling of resources was intended to carry the company to a world lead. The merger was officially completed in April 1998.    

2004: To be equally well positioned in the renewable energy market, in December 2004 Siemens acquired Bonus Energy A/S, the world market leader in offshore wind turbines, from its Danish former owner Danregn Vindkraft A/S. The acquisition strengthened the new Wind Power Division within the Siemens Power Generation Group, and expanded the company’s portfolio with a business that had a significant future ahead. Wind Power was headquartered in Brande, Denmark.

2015: In June 2015, Siemens acquired Dresser-Rand in the USA, a leading global provider for the oil and gas industry and for decentralized power generation with compressors, motors, steam and gas turbines and engines. This acquisition was another logical next step in the strategy of growing by adding attractive markets of the future. The acquisition was preceded in May 2014 by the acquisition of Rolls-Royce’s business in aero-derivative gas turbines and compressors. These complementary takeovers supplemented Siemens’ portfolio, enabling its energy business to offer complete solutions and services all along the value chain.

2017: In June 2016, Siemens agreed with Grupo Auxiliar Metalúrgico, SA (Gamesa), a machine construction company formed in 1976, to merge their wind power businesses; less than a year later, on April 3, 2017, the listed company Siemens Gamesa Renewable Energy (SGRE) was formed, headquartered in the town of Zamudio near Bilbao in the northern Spanish province of Vizcaya. 

Siemens Energy Logo

2020Siemens Energy is founded

The planned spinoff of Siemens Energy in 2020 opens a new chapter in the history of Siemens power engineering. As an independent listed company, Siemens Energy has broad know-how all across the energy value chain, along with a comprehensive portfolio for power utilities, independent power generators, transmission grid operators, the oil and gas industry, and other energy-intensive industries. With around 90,000 employees worldwide, the new company will help shape the energy systems of today and tomorrow.

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Technical milestones

Step by step – Technical developments in the heavy-current business

Siemens & Halske significantly influenced the development of heavy-current technology from the field’s very beginnings. It was Werner von Siemens himself whose fundamental innovation, the dynamo machine, contributed key momentum toward the ability to generate and distribute large quantities of electric power cost-effectively. At the same time, this was his most important scientific and technical contribution to electrical engineering. Subsequently a great many hurdles were overcome in applying heavy-current technology, and great successes were achieved – earning Siemens a place among the leading movers in the field, both in Germany and beyond.

The dynamo machine – The birth of heavy-current technology 

Technology has been given the means at present to generate electric power of unlimited strength inexpensively and easily wherever labor is available. This fact will be of essential importance in several areas of technology.
Werner von Siemens, 1867

In 1866, Werner von Siemens made a key contribution to the rise of heavy-current engineering by discovering the dynamo-electric principle and building a dynamo machine based on that principle. Though he was neither the only one nor the first one to make this discovery, only he recognized its technical and economic benefits. Werner von Siemens profited here by being not just an inventor and scientist, but having a businessman’s sharp eye for how to put technical innovations to practical use. Siemens developed this technology to maturity for the market during the 1870s. The lead engineer at Siemens & Halske especially, Friedrich von Hefner-Alteneck, was able to invent a configuration that enabled a dynamo to work as both an electric motor and a generator – a principle on which electrical machines are still based today. In addition to their versatility, dynamos were also such a success because their performance rose steadily. The dynamos of the first market-ready series of 1875 had a maximum capacity of just five kilowatts – yet by the turn of the century the company was building generators with capacities as high as 1,000 kilowatts.

The electrification of the world – Werner von Siemens and the dynamoelectric principle

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A gifted engineer – Friedrich von Hefner-Alteneck

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The path of electricity – Questions of power transmission 

 

In those days, the dissemination, usability and efficiency of heavy-current technology depended on other factors as well. One core issue at the end of the 19th century practically took on aspects of a religious dispute: DC or AC? Direct current, which was initially common practice and well-tested, and was also backed by Werner von Siemens, had the advantage that it could be widely used and stored. But it also had a major drawback: it could not be transmitted long-distance. A DC power grid required a dense network of power plants – a significant problem in metropolitan regions.

 

So from the 1890s onward, people also took a rising interest in using single-phase or multi-phase (three-phase) alternating current, which could be transported at high voltage across hundreds of kilometers. Yet before such power grids could be used, transformer technology had to be refined, and new electric motors capable of operating on three-phase AC had to be developed. Though these and other advances had been largely achieved by the end of the 1890s, there were no victors in this war of religion. Both forms remained in use in parallel, depending on the need and the particular situation.

First practical applications – Direct current in Godalming and alternating current in Erding 

At the end of 1881 Siemens equipped this power plant with a generator and an exciter for direct current. The facility was at a mill not far from the center of Godalming, a town of about 8,500 inhabitants roughly 70 kilometers southwest of London. The plant was originally driven by a water wheel – later two wheels – by way of belts and cables, and had a capacity of ten horsepower. The little power plant supplied electricity for 34 lamps (including a few Siemens differential arc lamps) and a variety of buildings and businesses.

 

In 1891, the “International Electrotechnical Exhibition” in Frankfurt am Main was the occasion for a practical demonstration that three-phase alternating current could be transported over greater distances. The next year, 1892, Siemens & Halske got an order to build a three-phase power plant for lighting purposes in the Upper Bavarian town of Erding. Though it took two years in all until the roughly 100 incandescent lamps and six arc lamps could be steadily supplied with electricity, the Erding plant was the world’s first of its kind.

Siemens heavy-current technology as an export hit – First plants power the globe 

The triumph of heavy-current technology – whether DC or AC – did not stop with Germany, or even Europe. At the turn of the 20th century, generating and transmitting power for light and mechanical operations became a genuine export hit. Electric power plants and grids began to be designed and built all over the world. And from the very start, Siemens was one of the leading companies operating internationally.

Technical milestones in power generation at Siemens after 1945

Higher, longer, farther – Siemens technology for power transmission 

Ever since the 20th century began, AC and three-phase current had been coming into ever wider use, even as power generation capacity also grew almost continuously. This led to a transition from an electric power supply that was more locally and municipally based, with small power plants, to regionally organized configurations with large power plants. During the first half of the 20th century, interregional power grids became established in industrialized nations, and in Germany and elsewhere, these expanded to become national grids.

 

After a period of stagnation due to World War II, these national grids expanded once again, gathering impetus from European integration, and the European grid founded in 1951 became a trans-national system for a cross-boundary power supply. One prerequisite for both an interregional and a national power supply was mature, high-performance high-voltage technology like the kind Siemens supplies. In energy distribution too, Siemens was one of the early leaders and technology drivers.

Outlook

Siemens Energy – We energize society

The world is facing an immense challenge: how can we meet the rising demand for electricity while at the same time protecting our climate? Siemens Energy has asked itself the question, and has come up with answers: We build energy systems all over the world, and by making it possible to generate sustainable, reliable, affordable energy, we help combat climate change. Find out more.