Innovation in Action: Siemens Energy’s Digital Path to Sustainable Energy

Let’s talk about this transition that we see in the energy sector and its transition to centralized operations.

We can really start at climate change and the climate crisis, and this is obviously driving a huge transition. We call it the energy transition in our sector, and it’s a move from a sort of conventional fossil-based production of energy to a renewable one. If we think about replacing fossil capacity, so let’s say a large coal-fired plant with hundreds of megawatts, if not gigawatts of power capacity, with a similar capacity made-up of wind and solar and waves. What you quickly find out is that the sun shines in certain areas in certain parts of the day. There’s really nice wind patterns, but only in certain geographical areas. Often times you have to spread that out to a bunch of different areas. You can’t build it wherever you’d like to like we used to in the old days. We put a power plant where you want to consume it right in the middle of town or at the edge of town. It’s what we call centralized production. With the distributed production, we end up having to spread these things out.

How does Siemens Energy monetize this transition (from distributed to centralized operations)?

Everything is spread out and that comes with a cost, and it sort of mirrors our business models the way that we think about how we organize ourselves around solving problems mirrors the customer problem. So if the customer is forced to centralize their operations in order to manage the complexity, so we too must centralize the way that we operate and develop products.

I still think in an industry where, especially engineering companies, have a tendency to kind of go “I’m just going to build my data backend myself because I look at how many products that I’ve built over the years, how can this be any different?” while you have companies that are specifically building software that are really good for the purpose. What’s your personal view on this?

I think that is a tendency that you do see with technology companies because they’ve (already) solved the hard problem, right? They’ve done something no one else can do. They have a certain domain expertise that nobody else has. (But) it becomes a challenge of scale and leveraging the best what other people have already done. It sometimes feels like it should be choice No. 2, but I honestly think that it’s in the company’s best interest to focus on what their real value add is, so whatever that core value proposition is, whatever their unique selling point is and making sure you deliver that. There’s a lot that can be saved in terms of time, time-to-market, speed, development, and internal resources.