Big Business Shows How to Make the Switch to Renewable Energy

The world is ready for the big switch to renewable energy, according to German conglomerate Siemens. Europe’s largest engineering company is gearing up for an expected huge surge in demand by investing billions in research, chief executive and president Peter Loescher told The Straits Times. Siemens is setting aside a quarter of its €4 billion (S$7.1 billion) in total research and development funds solely for green technology research.

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By Aaron Low in The Straits Times (8 June 2011):

The world is ready for the big switch to renewable energy, according to German conglomerate Siemens.

The engineering company, which is Europe’s largest, is gearing up for an expected huge surge in demand by investing billions in research, said chief executive and president Peter Loescher.

He told The Straits Times that Siemens is setting aside a quarter of its €4 billion (S$7.1 billion) in total research and development funds solely for green technology research.

This covers everything from improving energy efficiency to research into renewable energy and water technology.

‘Our green portfolio was €28 billion last year. It has grown by double digits in the past couple of years; (it is) a major growth driver,’ he said in an interview.

‘It will grow from €28 billion to €40 billion by 2014,’ he said, referring to the total size of Siemens’ green business operations, including investments.

Bloomberg reported that Mr Loescher aims to increase Siemens’ revenue faster than that of its rivals. In March, he set a goal to top €100 billion in overall business volume. Its business volume was about €78.6 billion in the last fiscal year.

Analysts have also said that the company is under pressure to spend its huge cash hoard – which doubled in the past three years to €18.5 billion – on acquisitions to boost profits and revenue.

Green technology could well provide some of the momentum for Siemens, as many Asian countries now take an interest in renewables, Mr Loescher said.

Germany has already taken the lead, with its government pledging to double the amount that renewables contribute to its energy consumption to 35 per cent by 2020, partly to make up for the phasing out of nuclear energy.

With Germany as a role model, Mr Loescher believes many other governments will take the issue of investing in renewable energy seriously.

‘Green energy is at a point where it is competitive with the electricity grid levels. For example, with wind energy, rapidly evolving turbine technology makes it such that they don’t need subsidies to be competitive,’ he said.

All of this will become relevant for Asia, as the fast-developing region needs to figure out how to power, house and feed its rapidly growing population, he said.

Singapore will play a key role in Siemens’ Asia strategy, acting as a key hub for emerging markets, added Mr Loescher. One of the company’s research centres based in Singapore is its global water technology and research and development hub.

Siemens, he noted, is also responsible for supplying 20 per cent of energy demand here, and its infrastructure delivers about a third of the water supply.

‘We have a strong, long-term relationship with Singapore. And we see Singapore as a very important hub,’ he said.

Source: www.greenbusinesstimes.com