What will it take to decarbonize grid energy’s supply chain?

Twenty years ago, when I first started reporting on climate change, awareness and action was modest among industries and businesses. Governments took the lead with policies and measures, while others followed. But that scene has changed. Governmental initiatives are still vital, but also slow. Nowadays, bottom-up initiatives from entrepreneurs are the showcase for how to accelerate climate action and unlock new opportunities to reach net zero.

A prime example of this is the Letter of Intent (LOI) recently signed by Siemens Energy and the European grid operator TenneT. Both companies are crucial links in the power grid. And, with an expected doubling of the global grid in the next fifteen years, both are facing a huge growth of activities – TenneT chiefly in the Netherlands and Germany, and Siemens Energy worldwide.

Obviously, the companies are obliged to comply with climate change legislation, but the new LOI is designed to take them far beyond that. “The energy transition not only means changes in electricity production and transportation,” says Tim Meyerjürgens, Chief Operating Officer at TenneT, “it also means we have to take a resource-conserving approach to our world’s raw materials.”

Leveraging their position in the markets, Siemens Energy and TenneT intend to decarbonize their supply chain for grid technology, including base materials such as copper, steel and aluminum. The first milestone set out in the LOI will be a carbon footprint reduction of 30 percent by 2030 – a clear and firm signal to other industries to reduce emissions embedded in their products.

“While grid technology itself doesn’t emit CO₂ during energy transport,” says Tim Holt, Member of the Executive Board and Labor Director at Siemens Energy, “emissions are still generated in the supply chain and from the raw materials used in those products. Through this agreement, we aim to reduce these so-called Scope 3 emissions.”

Holt and Meyerjürgens both spoke at the signing of the LOI, which took place at the Siemens Energy Transformer Factory in Nuremberg, Germany. In Germany alone, TenneT plans to add around 12,000 kilometers of grid expansion, 73 new substations, and 16 substation modernizations by 2045. “We are talking about immense quantities of steel, copper, and other raw materials that we need for the energy transition and the expansion of the electricity grid,” said Meyerjürgens.

The Transformer Plant in Nuremberg provides an analogy of how decarbonization solutions have developed over the years. The first steps were for Siemens Energy to reduce Scope 1 and 2 emissions from their plant by electrifying operations and using renewable energy. Both of these reductions efforts are nearing zero, but the rest – Scope 3 emissions – come from the supply chain and the raw materials used in making power transformers.

To start decarbonizing these raw materials, Siemens Energy  and TenneT have identified ten actions over the next five years. While all grid components are considered, the focus will start with transformers, what Meyerjürgens calls “the heart of every substation”. Because of the raw material used in their manufacturing, transformers have a major impact on the grid supply chain.

For example, the state-of-the-art manufacturing site in Nuremberg delivers some 70 to 75 units a year, for both onshore and offshore operations. Just a large power transformer, the size of a small house, weighs some 300 to 400 tons, including 60 tons of copper. 

“One milestone of this partnership is the shift to using 100-percent recycled copper for all transformers we produce for TenneT.” says Tim Holt, “Starting now and continuing until at least 2030, this initiative – along with other components – will save around 6,500 tons of CO₂ emissions by the end of the decade.”

Although the LOI aims at 2030 goals, the partners are already looking beyond that date – because when it comes to grid planning a time horizon of 30 to 40 years is quite common. “As a grid operator, we have a long-term view,” says Meyerjürgens. “We look at what’s necessary to be climate neutral by 2050 and go backward from there.”

“Investing in innovation is in our DNA.” adds Holt. “It’s why we’ve been in the energy business for over 150 years.”

In the end, both Holt and Meyerjürgens agree that they will have to grow a circular business model for base materials like copper and steel by 2050. “In the long term, we aim to achieve the same price level, as this is the only way to ensure the necessary acceptance of the energy transition.” says Meyerjürgens.

Holt and Meyerjürgens are also convinced that their companies can play a major role in developing those green markets for copper, steel and other base materials. Will the greening of the supply chain also need governmental support? “We don’t need to wait for governments to green the supply chain,” says Holt. “With strong partners, we can start moving toward a truly circular economy already today. Our strategic partnership with TenneT is a significant step to combat climate change, demonstrating how corporate initiatives can drive meaningful progress in reducing carbon emissions.” 

About the author: Netherland-based physicist and author Rolf de Vos has been reporting on global developments in energy and the environment for more than 30 years. Among the first to cover climate change and sustainability, de Vos has also been an acting consultant for organizations such as the Dutch Ministry of Economic Affairs and Climate Policy.

Combined picture and video credits: Anna Schroll, Siemens Energy