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The Way Towards Economic Decarbonization: A New Energy Reality

Since 2014, the International Energy Agency has been observing a remarkable development: despite continuing growth in the global economy, worldwide energy-related carbon dioxide emissions are staying flat. This turning point in emissions signals more than the decoupling of economic activities, writes Lisa Davis, Chairman and CEO of Siemens Corp in the U.S.: it reflects a transition in the basic power generation landscape.

We are seeing an accelerating and intensifying shift towards electricity and the economic breakthrough of new energy sources and solutions. But as with any change, this shift must be built on a viable economic foundation. Future societies will demand a stable and resilient energy system providing clean and affordable energy. As social values and the generation landscape continue to change, the right balance is still to be found.

Decarbonization is gaining momentum

Decarbonization is advancing both in energy usage and in power generation. We are observing a growing, cross-sector shift away from primary energy towards electricity, as the increasing electrification of industries is promising greater flexibility and efficiency. Power generation is projected to increase around 78% by 2040, while primary energy demand will grow by just 33% in the same period. Incorporating advanced technologies will unleash major CO2 saving potentials in all kinds of industries.

At the same time power generation experiences a growing share of renewable energy sources. With competitive feed-in tariffs, they have evolved from an idealistic concept to a viable business model, promoting the idea that a decarbonized energy system can in fact become reality. The strong trend towards environmentally friendly energy is continuing, renewable energies will reach a 32% share in the energy mix by 2040.

An increasingly decarbonized energy future, however, must target not just the economic advance of renewable sources but also their integration into the various existing energy systems around the globe. Soaring demand requires energy systems to utilize available energy more efficiently and to be balanced more economically than is generally the case today.

Exploiting digitalization to increase efficiency and flexibility

To handle the escalating divergence between supply and demand, balancing efforts will have to rely on traditional fossil power generation. Modern gas-fired power plants are the ideal solution for complementing fluctuating renewables and will continue to play a vital role in the energy mix for the coming decades. Here, digitalization has opened up new opportunities along the entire value chain. Enhanced design and analytics capabilities and closed-loop data utilization are paving the way for further improvements in all areas, from design to operation and service.

Flexible gas turbines like the new HL-class from Siemens with ramp-up capacities of 85 MW per minute can react quickly to changing load demands and help harmonize the grid. With efficiency levels above 63%, they also achieve low LCOEs, enabling them to operate competitively while reducing the ecological footprint.

The new HL-class gas turbine from Siemens can react quickly to changing load demands and help harmonize the grid.

Exploiting decentralized and diversified energy opportunities

In addition, energy systems will have to exploit new opportunities to efficiently bridge the gap resulting from unevenly distributed producers and consumers. Apart from enhancing the infrastructure itself to better respond to demand, converting surplus electricity into other resources like syngas or heat can also increase the flexibility of power use.

Battery systems can stabilize and increase the efficiency of local power networks, like one of Siemens’ solutions does on the small island of Ventotene, Italy. There, the Italian utility ENEL is able to reduce fuel consumption by nearly 15% and slash the operation time of its generators by more than half. Current electrolyzer systems can also swiftly capture wind or solar energy in the lower megawatt range. The resulting hydrogen can be fed into the gas network, used for mobility or in the chemical industry. Sector coupling provides new choices for using energy when and where it is needed most and where it can be used most efficiently.

Cohesive collaboration to harmonize the energy system

Shaping and merging digitalization and decentralization opportunities to achieve a harmonized energy system is the key to economic decarbonization. Most of the necessary technologies are already available or at an advanced stage of development. The challenge remains to find the right balance in the energy system, so participants can not only coexist but support each other’s strengths and profitability.

Politics, industry and society need to jointly initiate the decisive measures and share responsibility for their implementation. Most countries have set energy goals and are adopting modern technologies to boost efficiency and reliability and reduce CO2 emissions. In order to drive or even accelerate energy transitions, regulatory and social support are essential. This requires a long-term political commitment to ensure a sustainable energy supply. One must provide stable framework conditions and secure incentives that benefit all sides – and encourage the necessary investment environment.

We’re aiming for a new energy era that is cleaner, but also more interconnected than ever. Everyone has a role to play and the responsibility to achieve this sustainable transition.

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