“Energy systems need coexistence, not competition”
Lisa Davis, CEO of newly formed Siemens Gas and Power, on driving decarbonization in energy transition
The transformation to secure, affordable and sustainable energy has stagnated. Although energy systems are evolving at unprecedented speed and scale, the share of fossil fuels in the total primary energy supply has remained stable at 81% for the past three decades. Electrification, critical for decarbonization, accounts for only 19% of energy consumption, and investment in fossil fuels, after some decline, grew again in 2017. Three years after the milestone Paris Agreement this shows the inadequacy of ongoing efforts and the scale of the challenges. Energy Magazine sat down with Lisa Davis – CEO of newly formed Siemens Gas and Power – to get her thoughts on the way forward for the energy sector.
Aging systems need major overhaul, others are coping with heavy growth demands. Roughly a billion of people don’t even have access to power. Within these extremes, where do you start thinking about decarbonization?
Lisa Davis: As different as these demands may be, they are all moving toward more complex, multi-modal and decentralized systems. That’s what must inspire the progress in the sector. Challenged energy systems need a healthy coexistence of available energy sources, not competition. This is possible today, thanks to highly efficient and flexible technologies, new storage options and digitalization. That’s why Siemens has formed Gas and Power as one company to offer a full spectrum of products, services and solutions to address specific market needs and put us on a steady path to making energy greener.
The energy system is seeing big shifts, but what is the key for them to have a significant impact on sustainability?
Lisa Davis: Renewables have evolved from a somewhat idealistic idea to a viable economic option that’s also crucial to a sustainable system change. As societies increasingly urge for decarbonization, we can expect a growing demand and tougher emission reduction targets. The most obvious solution is to increase efficiency in the generation, delivery and consumption of energy. In fossil power generation, this means for example to shift from coal to gas, which provides great reliability and flexibility while lowering emissions. And we’re also seeing a trend toward electrification of energy-intensive sectors such transportation, buildings and industry, all of which contribute to fewer emissions overall.
What further evolutionary steps are needed by the system to reach large-scale, economically viable decarbonization?
Lisa Davis: In the coming years there needs to be greater ability in and around the system to maximize the use of renewables. First, by upgrading transmission and distribution systems to reliably integrate renewable energy, which is variable in its nature. In addition, surplus electricity either has to be stored or decoupled and used in other applications like transportation, heating, cooling, or manufacturing. Longer-term solutions for virtually zero-carbon electricity may well rely on hydrogen: Surplus electricity is converted to hydrogen, which is stored in existing natural gas pipeline infrastructure and later used for generating power or for producing synthetic fuels or other hydrocarbons. Achieving a hydrogen economy would be a pivotal step toward a carbon-neutral world.
Forecasts say O&G will continue to play a crucial role in the global energy cycle. What necessary shifts and challenges do you see in the O&G industry?
Lisa Davis: The energy world will rely on fossil fuels for some time to come. Countries like India, China and the U.S. depend on fossil power to satisfy their energy demand. Still, much must be done to reduce the environmental footprint of oil and gas activities, especially in fracking. Intensified electrification of these activities would be the best option. Also, pipeline and LNG development is important to extend the accessibility of cleaner natural gas resources.
Renewable energy has become competitive, but the speed of energy transformation nevertheless depends on the impetus by society and politics. What signals do you need from policy makers regarding the energy transition?
Lisa Davis: Population growth, decarbonization, urbanization – these are the global trends that demand major efforts from everyone connected to the energy industry. The best approach is always to address issues before they reach the point of no return. Policy makers need to keep pace with new developments and create regulatory frameworks that provide dependable support for technologies adding value to the overall system. That includes technologies that improve the operational flexibility and reliability of the power supply. It also includes the provision of suitable energy infrastructure, transmission and distribution systems as well as pipelines. There needs to be a leap in storage and conversion technologies. And lastly, a successful energy transformation will ultimately depend on the empowerment of all system participants: large, small, industrial or private. We need new technologies and new business models enabling every part of the energy ecosystem to actively contribute its specific value.
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Combined picture and media credits: Siemens AG
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