Peter Smits, ABB
Release Date: 2010-01-26
You went to China many times and worked for ABB in different positions at a national and global level. I would like to start by looking at Germany and the role that the country plays as a technology leader in the world of ABB.Germany is the biggest country of the region Central Europe, which I am also heading, which means that when we talk about environment and the possibility to use more environmentally friendly technologies in ABB is concerns not only Germany but also Benelux, Romania, the Black Sea etc. Germany plays an important role in ABB since we can here apply new technologies that were not used for the same purpose in the past. I think that 10 to 15 years ago, the best market for application of new technologies was China and all the latest and newest HVDC (High Voltage Direct Current) technologies were built and installed in China, from the Three Gorges project in which ABB was involved in the Shanghai-Guangdong area. I remember going to governments and telling them that we had a lot of technology to offer, but that the best was installed in China. Today because of the changing environment, we have unique technology in Germany that can be of interest for China. For example all of the countries in the EU committed to reach the 20/20/20 goals - 20% reduction of CO2 emission, 20% of electrical supply from renewable sources and 20% gains in energy efficiency – which is in ten years time. Germany took a step further by targeting 30% of renewable within the energy mix. Of course our country already has a considerable installed capacity in terms of wind, but in order to reach such an ambitious target, we will need to develop our capacities out in the sea. After losing a lot of time searching which one of the chicken or the egg comes first, i.e. wind farm developers did not go offshore because they needed a connection and vice versa, offshore wind is now starting the become Germany’s main focus. However about two and a half years ago the German government passed a law to have a kind of multi-plug installed in the sea to connect these offshore wind parks, that represent a total capacity of 400MW. This cannot be transported on a long distance with conventional technology, and ABB was the first to connect the biggest offshore wind park in the world, and the further away from the shore, it is a 200km connection – 128km outside of the coast and 70km underground in the country – where we connect 400MW of potential energy in HVDC. This is a big First in terms of application and has never been developed anywhere in the world, but was also developed in a record time as it took ABB only 26 months from the day the order came in to the day it was handed over to the utilities. Today we are only waiting for the wind farm to create the energy that has to be transported, but the connection is in place. In Germany we are pioneers in these solutions that can be used all around the world, and China was the first one to use many technologies when they had to catch up on the rest of the world. Another example of how Germany is an innovator is the Desertech foundation, of which ABB is a founding member. This foundation is how to go beyond connecting one solar panel or one wind farm, and finding a balance in order to find the optimal load. The initiative of the Desertec foundation was taken in the context of the Club of Rome, and last summer Dr. Gerhard Knies the idea came to create a Desertec industrial initiative, bringing together twelve founding members. We are convinced that ABB’s contribution to Desertec will be crucial not only because of the environmental sensitivity of the company or its experience in solar, but also because ABB has the technology to develop a connection to bring the energy to Europe. Desertec will also be a project where local opportunities will be used to develop local communities, give them wealth through electricity and develop businesses on which to build their future. Electricity is always the beginning of wealth and well being, and anywhere in the world in order to support the development of a remote village, you have to bring them electricity that will save them time, facilitate heating systems, and make education easier by bringing light. Electricity is a start for any society, and Desertec is important in a sense that it gives the opportunity to African communities to have access to electricity. On the other hand so much money being involved in this project, investors have to find their interest in such a project. Desertec fits perfectly in Western countries’ ambitions – and especially the ones of Germany – to offset their CO2 emissions and at the same time be able to feed their power grid with environmentally friendly energy. The ideal balance that Desertec found is between the needs of the countries where it will be installed and the return for investors, and HVDC is the technology to make this project possible. In order to bring the energy created by Desertec to Europe we would need a connection under the sea. Once again ABB has been the first to develop the longest sea connection in the world, linking Norway to the Netherland through a 580km long HVDC sea-cable transporting 700MW of electrical power; a connection that can work in both directions being able to supply the Nordic countries with any surplus. ABB is today recognized as a pioneer in technologies that are not used in that same way in China; obviously HVDC exists in China but is not used there in record time and in an environmentally friendly way. Desertec is a fantastic solution that can be applied all over the world, indeed 90% of the worldwide population lives less than 300km from a Desert, such as the Sahara, the Gobi desert etc So de facto, the vision of Desertec can be used all around the world.
The vast majority of the world also lives on a coast, what can be ABB’s role then in offshore wind?
It is true that some areas are more suitable for wind and there is still a lot of repowering on land in Germany, but we come to a limit on what is possible on land, and in order to get a big concentration of power with one connection we need more space. One solution is to go in the desert if the winds are good, like it was done in North America in the Californian desert. Another solution is to go offshore to get more wind and the best power. In the end it is a question of choosing the best technology for the best location, Sahara has more sun than Germany, and sun of a better quality so it makes more sense to develop solar thermal projects there than in Germany. As you know Desertec is based on CSP (Concentrated Solar Power) technology which has the advantage to store power by producing heat, which does not exist with photovoltaic.
The subject of wind power in China was of course highlighted by the conference “China wind power” last September, and the country had now the capacity to produce wind turbines, the only question is now to develop the grid. What can be ABB’s added value in China?
Germany is a unique country in terms of feed-in tariffs for renewable energy. A law has been passed to force any utility to chose renewable energy whenever available, which is very important for the development of the industry. Without such a law, when there is a lot of wind blowing but no need for it the utility will let this power go as there is no storage of this energy possible. This law can only be implemented with smart grids, in order to choose what power is feeding the grid. In the past utilities had one power plant supplying consumers with electricity according to their needs, and they adapted the capacity of their power plant according to consuming patterns. Today utilities get an input of power production that is not linked to the consumption and they need to balance between solar, wind and traditional coal fired power sources. That is why we have developed an intelligent system – the smart grid – that monitors all the consumers and producers, and gives a high degree of information on who buys and sells at any time, and enables utilities to find either who could need power or who could use less. In certain cases, we could even see consumers receiving money to use the power that utilities need to get rid of. This means that the whole environment is changing entirely and requires new solutions. ABB Germany has developed its know-how in such a field through its company Bush Jaeger. Busch Jaeger has been active for decades on the high end of in the industry of comfort within the house. The company, in partnership with Bang Olufsen, provides devices and solutions for customers who want to monitor devices in the house and control the ambiance with the lights etc. Later came devices to control the temperature and humidity level within the house, by controlling the moves of the blinds for example, depending on how the sun shines. On the top of this the company started to develop in the direction of security to tell customers what door or window is open etc. Thanks to these years of experience, ABB acquired knowledge about how to get these interfaces that is needed for a utility coming to house and that needs to know where to address which element in the house. ABB has developed communication gateways, the smart meters being of the hundreds of devices that can be applied. A smart meter will only tell the utility what is consuming how much, but there is there a need to apply this knowledge to only some devices. Image if it was applied to the entire house: you are watching the football world cup, and the TV turns off because of consumption monitoring, but you would rather have the waching machine not used. You would not want it, and would rather decide yourself when can each device be turned on or off. That is why in order to answer the new needs of our environment, and to reply to the government’s needs, we have put together cross-functional teams with engineers from Bush Jaeger and not only employees from the utilities side, but also people who are thinking about the consumer. This gives to Germany a special role within ABB as a group. We use this experience as an asset even though it was not seen as useful when no one was talking about smart grids. Altogether it was a long answer to your question, but I feel that it needed to be emphasized.
ABB started to develop its first green technology a few years ago and was at the beginning a separate part of the business. Can we say that today there is no “environment” part of the business anymore and any of your solution can be used to energy efficiency, to the smart grid or renewable energy?
You are fully right! In January 2007 when the UN report came out we looked in ABB at what we could do to contribute to CO2 emission. We surprisingly found out that 90% of our product portfolio could be used for that very purpose. This is because we live in a culture where customers ask for solutions that use less energy in order to save money. Let’s take the example of HVDC. It has been developed by ABB fifty four years ago to transport electricity on long distance with little amount of amount of power losses, and in power plants there is a crucial need for more efficiency. The same is true to find more efficient motors. Basically our customers have always chosen the products that created the less energy waste, and ABB has always been among the leading players to offer these solutions. There are many factories in developing countries that develop products with a high level of losses, but they do not have any troubles with that since it is easy to develop. However ABB has always wanted to be on the high end of the market and differentiate itself from its competition. In Germany we based all our development on productivity, quality and innovation, without which we would not survive. Technologically, any product could be developed in any low labor cost country, but if one is not productive, how can you compensate the costs of wages and components without a high quality of product? In terms of innovation, ABB has always wanted to make solutions that are more compact and create fewer losses, in a cost competitive way, so again productive, and ensuring quality. These components create environmentally friendly solutions because they involve less energy waste.
When we asked business people around Germany when we asked which were the green companies, the common answers were Siemens and Bosch. On the other hand ABB has an incredible product portfolio with green solutions; to which extend is ABB green and is there awareness on the role you play?
It depends on the way a company presents itself to the outside world. ABB does not want to show it is green, but can prove that through technology our company can have an impact on the environment and help people have more wealth and live in a better way. A common way of thinking is that one needs to make sacrifices, and of course one has to be more conscious about saving energy, and for use it means that by using less energy our customers act in favor of the environment through technological solutions.
Can you say that instead of being green, ABB facilitates development of Green ambitions of its customers?
Of course! Just look at our logo that says “Power and Productivity for a better world”. This means that ABB takes care of power, productivity and production; the better world means not only improve the world from and environmental perspective, but also that people should have a better value for their money, get improved wealth and be able to develop. That is how ABB sees itself and feels it can increase the quality of life of its customers. ABB’s portfolio has been streamlined a few years ago to become the product portfolio you see today, and we are a market leader in a majority of cases. Who else than ABB should make innovation and development for the next generation of technology? As a market leader ABB has to play this role and cannot leave it to small newcomers. Technology, innovation, research and development is ABB’s mission in the industrial world, and it is how ABB will remain a market leader and create a better world as its logo says. For ABB it is not about jumping in the green trend and go back in the labs to invent new products, but more about using existing products with new applications, to adapt what ABB already had to find solutions that fit better to the market. If energy is cheap and the costs almost nothing then products using a lot of energy are good enough for people not thinking in terms of environment, but today the whole world is tuned in terms of environmental protection. Therefore ABB combines already existing solutions and shows that it is easy for the company to develop environmentally friendly solutions. When this United Nations report came out, I wondered what ABB4s contribution could be; but we did not rush to the labs! In the pharma industry a new virus creates a rush to the lab to find a solution. In terms of environmentally friendly energy solutions, there is no need for that, and we must only be ready to apply them and actually apply them. The best example being Desertec. The technology is ready and the initiative only needs investors, which is why it will take three years to analyze feasibility, possible application etc in order to provide potential investors with the relevant set of data that will make their decision easy.
Of course Desertec faces a much more political challenge since the technology is ready and some investors have already agreed to support the project. In the same way we see in Cop15 that the future changes in the world will depend on political decisions.
We are present with the right technology which is why we have so many opportunities to participate in the global environmental development. No environment issue is linked to the financial crisis, except for the need for financing to pay for it, and how much people are ready to pay for this. If we take the example of China, the government has decided to make a huge investment on infrastructure, so decisions are taken and it all depends on applications and on priorities set on environmentally friendly solutions. If there is a will, we have the technology to move in that direction. The coming years are fascinating for ABB, and we have to see how quick after Cop15’s summit will the changes come. Altogether there was never such awareness on environmental issues, and nowadays people behave differently. Climate change is in the mind of every one and there is no doubt that environmental concerns will have an impact on investments and buying behaviors and ABB is in the right field as we can offer useful solutions that can improve the future. Obviously at the end of the day a transformer as existed for 150 years, but ABB has found new applications for it.
| Company: | ABB |
| Position: | CEO & Head of Region Central Europe |
| Country: | Sweden |