Transition

'The money is there. It’s now about justifying the business case. That's the challenge'

The energy transition in Europe's northern waters is underway with companies in reinvention for a renewables-power world – veteran ABB among them. Managing director Per-Erik Holsten spoke exclusively with Darius Snieckus about its vision for 'North Sea 2.0'

ABB managing director Per-Erik Holsten
ABB managing director Per-Erik HolstenFoto: ABB
  • Darius Snieckus
If we could roll back to July of this year when ABB and Hitachi announced the finalisation of the joint venture agreement that will marry ABB’s expertise in transmission and grid with Hitachi’s digital technologies. This has created a new mission in a way for ABB to focus on four key business areas: electrification, industrial automation, motion and robotics. Could you outline how you see these focuses now applying to the North Sea energy sector as it evolves from an oil & gas-centred energy play to an offshore wind sector energy play?

The four business areas you mention now have to be seen against the background of the energy transition that is underway. All four offer products and solutions aimed at embedding sustainability, integrating renewables and building hybrid networks. In a way, electrification is a key enabler across all of these.

Our goal at ABB is finding the right synthesis between these areas so that we combine the best integrated solutions and products, and whatever level of digitalisation is required. We aim to deliver in that ‘sweet spot’ as a major technology player.
Among those four areas, electrification overarches all, of course, but how do you see the industrial automation, motion and robotics parts of that mission statement feeding into what is now the fundamentally greatest industrial revolution since the Industrial Revolution?

We obviously still need to generate power, be it offshore wind, solar, or other energy sources, and we need to transmit that power to market. This is where there is a huge opportunity for integrating electrification into these traditional systems. The key is ensuring robustness of the network and avoiding and preventing technical problems.

Power management is especially important here. Hybrid networks tapping different energy sources require advanced power management to stabilise the network, ensure it works properly and that you generate sufficient power to actually deliver to consumers.

While electrification is a key enabler for the energy transition, automation and working towards an autonomous environment go hand-in-hand. You will still need human beings to perform maintenance, but digital early-detection means you can identify equipment problems before failures occur – so you can keep the plant running in a stable state.

You need to have demand to ensure a faster energy transition. The customers have to be there

Then you have decision making, which is about combining data sources and using the data to inform optimal decision making. That can be on everything from cheapest amount of production hours to identifying optimal revenue streams, optimal transmission parameters, and much more. Here artificial intelligence (AI) comes into play, with algorithms and machine learning making data work productively.

So, in short, all our four ABB business areas have an important role, with industrial automation as the solution provider for automation and the full network.

So, if I can pick you up on the power management theme. We know that the production potential from offshore wind in the northern seas is not in question, we know the forecasts that 250-450GW of offshore wind can be turning by mid-century as part of the ambition for Europe to meet its emission reduction targets. But, of course, power production is one thing, transmission is another and where those two meet, in a sense, is energy storage. We need to build and manage the power produced.
When it comes to energy storage we know the size of the market that is expected, we know that hydrogen is coming on very rapidly [toward commercialisation] as a technology seen as fundamental in the energy transition, we know that several long duration concepts around compressed air, compressed liquids are gaining ground in the market. Can you say something about how you see the energy storage landscape evolving in ‘North Sea 2.0’?

The energy storage problem is not yet fully resolved. Battery technology works for now but has only relatively small storage capacity. That expands with hydrogen because you can store a tremendous amount of energy in the hydrogen itself. So, hydrogen will play a key role in storage, and on the consumer side.

Most importantly, you need to have demand to ensure a faster energy transition. The customers have to be there for the renewables you are producing – anything from fish farms, trucks and marine vessels to aircraft, eventually. With the market in place, you then need to ensure you have sufficient network capacity, including storage, to supply them.

It’s a work in progress but things are moving quite fast. Government authorities and associated organisations are looking at rules development. There are already plenty of hydrogen or electrolyte companies that can actually produce the stuff. It’s now down to triggering the investment to really accelerate the new renewables era.

Is there any way we can better quantify that? You say that the technologies are either commercialised or in development, so that won’t be the showstopper. Obviously, government regulations are a big part of this but it’s a money trail we follow here and we need to invest vast sums on this to achieve electrification of a grid we are going to build and operate. Can we get a clearer sense, some more concrete terms, of the ambition and the challenge here?

It’s happening already. We have [major] offshore wind farms already developed – Doggerbank [off the UK] and DolWin [off Germany], for example. The sector is maturing globally, also in Asia and North America. It’s not new.

We see investors interested in funding the technologies; a lot of private investors especially in the North Sea. The former [pure-play] oil & gas companies are also transitioning into full-spectrum energy players. Both BP and Equinor, for example, have issued strong renewable statements. They’re not ditching fossil fuels, but future-proofing their portfolios with renewable production.

The money is there, it’s now about justifying the business case. That’s the challenge. You need consumers for the electricity you produce.

You talk about the history in oil & gas and some of the influence that can be brought to bear on accelerating the energy transition in the North Sea. If you look at something like Dogger Bank, Equinor’s project with SSE, the 3.6GW megaproject, where Equinor has brought a lot of learnings in digitalisation and other areas that it has been developing at the Johan Sverdrup oil field across to Dogger Bank. What would you say are the key strengths the oil & gas industry has developed over the last 50 years in the North Sea that can be ‘transferred’ here?

The energy industry brings a lot of expertise to renewables because they are used to dealing with giant projects requiring huge investment. Then there’s the entire supply chain that can quickly adapt to new energy sources.

Most of the competence required for renewables is already present in oil & gas project skill-sets, and ready to be taken advantage of. The supply chain is well established. We just need to add the necessary digital features to speeds thing up. It’s almost one-to-one with some extras.

The point you single out of this question is digitalisation, that it is the area that still needs to be developed in some sense. The oil & gas industry had the ‘digital oil field of the future’ and the industrial culture that comes with it. And, in fact, we hear from Equinor, DNV GL and others in the industry of the “lack of a digital mindset” that is delaying a lot of the opportunity that the wider offshore energy sector could be taking in hand. When it comes to ABB, with digitalisation deep in your DNA, how do you tackle the issue of developing a class of digital personnel that think differently then we used to when everything was in a more ‘mechanicanistic’ environment?

It’s about targeted recruitment, but also creating an environment where people can grow in tandem with our digital portfolio. At ABB we have both the infrastructure and a suite of digital applications already in use. That competence spans several organisations globally, but is consolidated under the ABB Ability banner.

We’re moving in two directions. One is the cloud, and the network and infrastructure you need as the framework for digitalisation. Then we have a suite of products designed to harvest ‘meaningful’ data, process it, and turn it into actionable insights. That involves AI for more autonomous applications, where machine-learning triggers certain actions and provides insights based on adaptive knowledge built over time.

Digital applications are already in wide use in the offshore industry. The key to success is domain knowledge combined with digital expertise, and deep collaboration between end users, operators, contractors, and providers like ABB. There is no point making an application unless the end user or operator understands the value proposition.

So if you wind the clock back to the late 1960s or the 1970s when the North Sea started off at this great oil adventure – no one could have foreseen how many multiple hundred-million barrel fields the North Sea would be developed and indeed the hydrocarbon play that would it come representing, rivalling all but OPEC [Organization of Petroleum Exporting Countries]. When you are thinking of this from ABB’s standpoint and you are looking ten years in the future or to a 2050 time horizon, say, what is your vision of offshore energy, some oil & gas in operation but offshore wind has very much having supplanted it as the main energy source, energy islands, a meshed grid?

The energy transition is becoming much more tangible for all of us, especially here in the North Sea. We all are faced with the challenge of meeting the growing energy demand while also ensuring we provide increasingly sustainable, affordable, and reliable energy.

Moving forward, diversification of fuels and hybridisation will play an important role to meet this energy demand. For ABB, we have been evolving our portfolio of solutions and are working with our customers across the industry to enable more energy efficient and lower carbon operations, support development of new and renewable energy models and integrate distributed and diversified energy.

I am a big believer that we as human beings can be part of changing the planet to less emission. At ABB we intend to be a big part of making that happen; not only in the North Sea, but everywhere.

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Published 3 November 2020, 07:31Updated 3 November 2020, 07:54
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