Interview: Dietmer Siersdorfer, Siemens Energy CEO
Middle East division energy chief on the company's local ambitions
Dietmar Siersdorfer, CEO of the Siemens Energy Sector Middle East, runs six divisions across 16 countries in a region that’s rapidly developing renewables to compete with traditional generation. How does he keep up? UME finds out
Siemens first established a presence in the Middle East 150 years ago, and since then has been closely involved in the construction of almost every key piece of infrastructure in the region.
Active in fossil power generation, solar and hydro, wind power, oil and gas, energy service and power transmission, the firm’s Energy Sector last year posted a profit of more than $5.3 billion.
Working across 16 countries and six separate divisions Dietmar Siersdorfer, CEO of the Energy Sector’s Middle East operations, is confident that the region is developing a serious ambition towards renewable power, but that traditional generation will be needed to finance the growth of green technology.
“When you look into the Middle East, while it has traditionally been an oil and gas region, it is now growing into renewables. But at the moment energy does not have a high price tag here, and this means that new technologies - which at the beginning are more cost-intensive - are not getting the emphasis they deserve.
The governments and legislators in the region have to play a more active role to promote this, not only through words but also by putting the legal framework for it in place, and maybe looking at incentives.”
Siersdorfer points to Germany, which in 2011 constructed huge additional solar capacity, proving that the implementation of renewables can be swift and scalable.
“Solar will get cheaper, in terms of cost, when you implement more scale,” says Siersdorfer. “One thing to remember is that the traditional energy sources have to subsidise the new technologies. It’s like every innovation and technology – you have to earn the money to do the innovation, and its similar here in the region.”
Siersdorfer argues that with the cost of gas a deciding factor in the construction of new thermal power plants, prices need to be higher so that the surplus funds may be used to implement new technology.
“Implementing these technologies on a broader scale will then see them come down in price; for solar, this region is in the sun belt and has all the ingredients to be the world leader – I think it will be in the future.”
In the solar sector, Siemens is currently supplying both PV and CSP technology to the Middle Eastern market – the two key technologies in the race for solar dominance – and has also recently signed a one-year deal with renewable pioneers Masdar.
The deal will see Siemens and Masdar cooperating in solar energy technology research and development in order to enhance the use of PV panels in the Middle East region, with joint testing and research activities investigating the properties of solar panel coatings.
“This is essential for the Middle East region,” Siersdorfer explains, “because we have a lot of dust and humidity and we need to develop better coating technology to clean the panels, otherwise the efficiency will decrease and you won’t get the yield you need from them.”
“We believe that in the next few years, 80 per cent of the Middle East’s power generation will be fossil dominated, dropping to 75 per cent in the next five to ten years.
The demand on these plants is very high – if you look at Qurayyah in Saudi Arabia, which we were awarded recently, we’re talking about a 2,500 megawatt power plant. The biggest solar plant in the region at the moment is the Noor facility in Al Ain, which is 100MW, so you’d need 25 of those for the same generation.
But this is possible with PV – it is scalable, and it’s really a matter of logistics and maintenance. You’d need a huge plot of land to do it, and there is land available here, and you need to have the right coatings on the panels, but it is possible.”
Siemens Energy is also active in other areas of renewable generation, including wind power. Last year the company won contracts for offshore farms with a generation capacity of 1.4GW, and while Siersdorfer is confident that solar generation will be the biggest player in the regional renewables market, there is potential in the Middle East for wind.
“There are possibilities for wind power – there are good wind corridors and projects developing in Egypt, and also in Libya, Jordan, Oman and in Pakistan. According to the experts, Pakistan has one of the best wind corridors in the world from Karachi going north, and that’s something that hasn’t been utilised.
“Having said that, some of those countries are at the moment heavily impacted by circumstances that are difficult to predict, which is a limiting factor at the moment, but nevertheless I believe in these countries we will see business in the future and, having then implemented economic solutions there, it will spread to other regions.”
While the renewables market is a huge area of growth for Siemens, continuous development in the firm’s traditional generation offerings are forging new and more efficient technologies.
“The Middle East region is, and will remain, one of the biggest gas markets in the world,” says Siersdorfer. “I think that’s also a very good solution for the period of growing the renewables business, because natural gas is the cleanest fuel you can use at the moment.
At Siemens we have developed highly efficient technologies; for instance our flagship product, the 8000H gas turbine, which we are looking forward to adopting in the region, having sold it already in Korea and the US.
“Efficiency is something that is driving us in all our applications so whatever we do, we try to do in an efficient way, not only in terms of being cost effective but also for output of the energy. The H-Class technology was a huge effort over years and we’ve recently announced an initiative with Maersk to specifically adapt our technology for their needs.”
The partnership will see Siemens developing and building turbines for Maersk Oil’s TriGen clean power generation technology, which burns gas with pure oxygen to produce clean power, pure water and reservoir-ready carbon dioxide.
The agreement with Siemens will help to mature the TriGen technology to a stage where it can be used in wider commercial applications, and is a good example of the firm’s innovative trend-based development.
“You have to listen to your customers, and this starts with having some listening capabilities,” Siersdorfer explains. “As a global company we benefit from being able to adapt things which develop in other regions, and we have a very stringent development process.
For example in this region equipment has to operate in a very high-temperature environment, which needs careful consideration. It means listening to your partners and customers and developing the right technology based on their needs. That’s our lifeblood; innovation is what Siemens stands for.”
Siersdorfer is also keen to point out that developments are not reserved exclusively for new equipment, explaining that new technology applied to high-end machines in the transmission and generation areas also goes to the mature fleets, improving their output.
“We never stop innovating on the machines,” he says with a smile.
In order to service this requirement to its customers, Siemens is also planning to construct a manufacturing facility in Dammam, Saudi Arabia, which the company sees as a key area of growth. It’s also a chance for the company to develop local talent; something Siersdorfer sees as a key strategy for Siemens, which is currently a platinum member in terms of Saudisation.
“We need to build on local people – it’s about our contribution to society, and we can’t build this business on people who are coming in and out of the country. We need local people who have worked there for 20 or 30 years in order to develop a sustainable model, and that’s what we’re doing.
If you take a power plant that may be in operation for 20 or 30 years, you need to have the people who know the equipment – you need the community around it.
“So this will be a huge employment base for Saudi Arabia, and we have already started with the initiative to employ the first 40 incumbents, who are now trained at the Saudi Petroleum Institute.
They get training on the job so that in two years, when the factory is operational, they have the skills they need. We will bring in experts from Europe, but we want to make it a Saudi Arabian operation.”
In the last 20 months, Siemens has increased its Saudi Arabian fleet by more than 50 machines, and is looking to other areas of the Middle East for expansion.
“We have been very successful in Oman and we are looking for more projects there; Kuwait is active and then there’s Iraq. We’re really looking forward to working more in Iraq, and we believe that the infrastructure can be rebuilt – we are taking our share in that, in both power and generation.
We already have service people in the country working on our existing fleet, and the oil infrastructure will generate the money Iraq needs to take on more projects.”
In terms of projects already completed in the region, Siersdorfer is an advocate of the IPP model, which he says has been of benefit to Siemens.
“The IPP model is working well – we have worked with many developers here in the region, and been successful with many of them. The IPP model is a model that Siemens has adapted to very well, and that’s also the feedback we get from our co-partners.
If you look at the difference between an IPP and a utility tender here, typically a utility tender is much more rigid and stringent. When you look at the plant operation later, at the availability and reliability of the plant, there is not much difference.
Sometimes the IPP projects are even more reliable that the more rigid systems of utilities, and the model has been adapted very well here in the region. Abu Dhabi has been leading on that; in Saudi Arabia it’s very well adapted, Oman is good and now the Dubai Electricity and Water Authority has started an initiative in Dubai.”
On the firm’s goals going forward, Siersdorfer is unequivocal.
“Our key goal is localisation. We will bring more technology and more knowledge into the region with local people; we look forward to increasing energy efficiency with the solution that we bring to the market, and we want to be the partner of choice to our customers.
“The pace in this region is high,and the demands are also often changing very quickly. You might have a project today that will be gone next month and replaced with something else, but when you’re local enough and you’re staying in the region, when you know your partners and you have their trust, you can go for them.
If there is a power plant project where we are not involved, then we have done a bad job; I’m not saying that we will win all of them, but we should at least be involved, at least try to win.”
Meet Dietmar Siersdorfer
Dietmar Siersdorfer has been the CEO for the Energy sector in the Middle East since June 2008, and is based in the United Arabian Emirates. This position includes the responsibility for the Energy Conversion Chain from Oil & Gas, the Fossil Power Generation, the Power Transmission, the Power Distribution, the Renewable Energy, and the Service business for all local and international activities in the Middle East.
He joined Siemens in 1987 in Mannheim, Germany as an electrical engineer, and over the years Siersdorfer has held various technical and management positions in the Industry and Energy sectors.
From 1997 he spent two years at the regional local headquarters in Kuala Lumpur, Malaysia, promoting the Industry sector business in south East Asia and following this, took over the global responsibility for manufacturing execution systems within Siemens AG in Erlangen.
In 2004 Siersdorfer took over the position as Executive Senior Vice President for fossil power generation for Europe, Africa, Middle East and India.
In 2006, he became then the President and CEO of the global, fossil energy solutions business within the Siemens Power Generation division.