Energy Management Case Study: Siemens

In June 2009, Siemens took its effort in solar and wind to the next level by leading the Deserted initiative. This transcontinental project aims to generate solar power in North Africa, where it is most abundant, and then transport it to Europe. The project fits particularly well with Siemens because it requires not only experience in the primary wind and solar technology but also in the complementary technologies such as power grids and switchboard. Which have traditionally been strong business field for the company. Nuclear energy: 1.Nuclear reactors are the strongest power plants possible and the most economically feasible 2. Recently Siemens has taking up its nuclear activities anew and is expending to become involved in international agreements. With Siemens becoming a potential new partner in the Russian market that holds dozen of new sectors and china that have plans to have 100 new reactors in operation or under construction by 2020 Hydrophone: 1. Harnessing the power of ocea n waves has attracted significant attention since ocean cover 71% of the earth surface. 2.US department of energy established the hydrophone program, designed to conduct R&D that will improve the technical, societal and environmental benefits of hydrophone and provide cost competitive technologies. Geothermal power: 1. This technology has a major advantage that it can be installed wherever energy is actually needed. Geothermal plants require minimal fresh water and external fuel pupils, and due to their layout are highly scalable. Smart grids: 2. Smart grid technology seems to be a natural opportunity for Siemens, based on the company's long history with electronic technology and products.Wolfgang Then believes that the market for smart grids will increase due to climate change and economic stimulus programs. 4) Threats: 1) Carbon-based fuel amount to 39% of Siemens profits, facing the reality that fossil fuel are finite, supplies will eventually run out, it Just a matter of when. T he threat is that Siemens contingency plan in renewable energy consist of 11% of its profit. ) Alternative energy: Most alternative energy creation methods have one major drawback: they can generate energy only in places were natures provide the required energy input.Wind energy The size of the wind turbine is not scalable due to technological constraints. To increase capacity, multiple wind turbines there for must be spread out over large distance from one another. Densely populated urban areas do not have adequate space to house wind parks, and rural areas have expressed annoyance with the patterns and agriculture productivities. Wind turbines possess limited efficiency. Wind turbines require large and highly specialized assembly facilities. The first ever float turbines main concerns are the durability and maintenance of the equipment against aggressive environmental condition at sea. Siemens is considering to utilize its size, contingency, competency, and cutting edge technology to further increase its market share and global footprint in wind energy. The question is whether wind energy will turn out to be the leading alternative technology, and if it does, whether wind technologies alone can generate enough profit to keep Siemens aloft. Solar energy Like wind energy solar power most be extracted were it occurs naturally.Solar panels have a low efficiency. Reaching only about 25% under optimal laboratory conditions. Solar panels due too China has become the leader manufacturer of low-cost Combination of cheap labor and available industrial infrastructure; it drove prices Down by almost The method of disposing of nuclear waste in old caves and salt mind is not 100% safe, in addition there has been reports of increased leukemia rates in areas close to nuclear reactors, changes in the micrometer due to the vast amount of steam released into the atmosphere.Hydrophone: For the technology to work, the seashore needs to be flat with only a slight slope, and requi res long stretches of littoral waters. Also tide turbines are restricted to uninhabited beaches, since moving parts under the water surface, can create hazards for swimmers, water sports, and coastal ships. Some drawbacks to wave power include the efficiency of current application necessary resistance against hostile environment (storms and salt water corrosion), cost of electricity, possible impact on marine life, and hazards to shipping. ) Candidates such as geothermal energy and hydra power, not to mention next generation nuclear reactor have evolved quite rapidly in recent years and seem poised to pose a serious threat to wind and solar applications, Siemens most relied upon alternative energy source. 4) Siemens is considering multiple options as its gateway from the problem and has to place some significant bets. If Siemens bets badly, the company risks being relegated to the sidelines as newer, more innovator firms squeeze slower-moving incumbents out of the market.Ill) PEST A nalysts: 1) Political/Regulatory/Legal: l. Politician from the US and Germany 2 of the biggest industrialized countries in the world are supporting the development of alternative energy. II. A group of 20 Coos recommendations to 68 leaders in their 2008 climate policy: A paradigm shift to low technological innovation, this will open the door for new energy companies to enter the market Ill. Combined with a growing global awareness of the impact of green-house gases on climate change as well as increased concerns regarding energy security.Energy issues are now receiving renewed interest from government and corporation alike. IV. President Obama visited the wind-turbine blade factory in Fort Medicine, Iowa to show his support receiving importing political recognition. V. Producing industrial- call wind turbines requires large and highly specialized assembly facilities. The entry-level barriers are high. VI. The effort of Siemens research in nuclear energy were put on hold in the sass when the German government passed a law that would gradually withdraw the country from nuclear-power generation.However Germany is reconsidering this decision. The German parliamentary election 2009 spawned new hopes that the German nuclear industry might be revalidated. VI'. Russia, China and the US are in the market producing and licensing multiple new nuclear reactor (12, 100, 35 respectively) . VIII. Siemens was recently plagued by a bribery scandal and because the US and the EX. Have lows that make such business practice illegal, Siemens was sentenced to 1. 6 billion in finds by the German and the US authorities. However bribery is commonplace in countries such as Nigeria, Russia and China. ) Economic: l. The prices of oil have been trending upward in recent decades. Crude oil prices spiked at an old-time high of $145. 15 per barrel on July 3 2008(up from $50 only 18 month earlier). II. Solar panels have reached a production cost of less than $1 per k output. Ill. US are Jumpin g the band wagon partly because they believe that millions of new green Jobs may help to reduce high unemployment. ‘V. Chinese companies are entering strongly to the wind energy and solar market due to a combination of cheap labor and available industrial infrastructure.China drove prices of solar panels down by almost 50% from 2008 to 2009. V. The Obama administration set a side funding to build smart-grid technologies as part of its recent economic stimulus plan. 3) Social/Cultural: l. Social awareness of the impact of green-house gases on climate change as well as increased concerns regarding energy security. II. Burning of fossil fuel releases carbon dioxide(CO into the atmosphere, which has linked to global warming. In addition many cities have become contaminated by smoke and people are suffering health problems caused by increased pollution.Ill. US government believes that investing in alternative energy will create millions of new green Jobs. IV. Rural areas have expre ssed annoyance of the sound made by wind turbines as well as their interference with wildlife migratory patterns and agricultural productivity. V. Nuclear power has serious limitations issues include nuclear accidents like Coherently and Fuchsia and how to store nuclear products which can be harmful to any living organism. L. New alternatives-energy technologies are Wing to replace carbon-based fossil fuels. II.Better materials have enabled specialized companies to build ever-larger wind turbines and new improved solar panels though increasing efficiency and reducing cost. (example: the 3. 6 mm wind turbine, first-ever floating wind turbine, cost efficient Chinese solar panel, turnkey high-tech solar plants). Ill. R in various companies has spurred immense efforts to find optimal ways not Just to capture but also to store and distribute energy generated from natural resources. IV. US department of energy recently announced 40 million dollar in founding to support design and planning work for the Next Generation Nuclear Plant (NSP).V. Harnessing the power of the ocean waves has attracted significant attention since oceans cover 71% of the earth surface. Furthermore the US department of energy established the hydrophone program designed to conduct R that will improve the technical, societal and environmental benefits of hydrophone and provide cost competitive technologies. VI. The new smart grid technology include self-monitoring ND possibly self-repairing capabilities, smart sensors and meters, and a communication network similar to the internet. V) Competitive Analysis: 1) New Market Entrants: l. A paradigm shift to low carbon economy by 2050 has a potential to drive forward the next chapter of technological innovation, this will open the door for new energy companies to enter the market. II. Since the market of wind energy has high future potential new players are entering the competition most notably from china and In recent years China has become the leadin g manufacturer and global Japan. Ill. Exporter of low-cost solar panels. V.Concerning the nuclear energy I-J, Japan, Taiwan, south scoria and India are difficult market to inter because they possess their own technology and production capabilities and for security reasons. V. Start-ups are investing significant resources in R to engage in smart-grid technologies (2 of these start-ups, Grid Point and Silver Spring Network, have managed to raise $220 million and $170 million, respectively). 2) Supplier Power: l. Sound and wind will not cease to exist within a time frame significant to humanity.II. One of the attractions of wind power and solar turnkey COPS plans is that, once installed, the turbines need constant maintenance which means lucrative long-term service contrast for the original maker and installer of the equipment. Ill. Smart distribution will greatly reduce the current problems with power demands, and can serve to integrate both tradition and alternative energy into a com mon power supply and distribution network. 3) Buyer Power: K made this market perfectly competitive. II.Knowing that energy from carbon based fuel is still at disposal and at constant price competition in this market will remain high which will give consumer a buying power. 4) Product Technology Development: . Introduction off new 3. 6-Mm wind turbine featuring a 120-meter diameter rotor equipped with 58. 5-meter long rotor blades. First ever wind turbine off the coast of Norway II. The turnkey high-tech solar plans include SSP (concentrated solar power) and CISCO (integrated solar combined cycle system) plants. Ill. The next generation nuclear power plant (NSP). IV. Technologies in hydrophone (e. . , the Appeals Wave Energy Converter) to harness the power of ocean waves. V. The smart grids technologies that will help to avoid power outages, make the grid more reliable, reduce maintenance and save energy. VI. Craig Veneer a key figure in decoding of the human genome, actually view a lgae as the most promising path in renewable energy source. These microscopic plant cells are present in an infinite supply and can generate energy quickly effectively and in an environmental friendly manner. 5) Competitive Rivalry: l. Siemens leading competitors are ABA, GE and Lastly.Never less it is always intriguing to meet in the same room and talk about collaborative ways to improve worldwide energy efficiency. II. GE launched a multimillion dollar accommodation initiative to leverage its wide-ranging technological capabilities to address problem in he green-energy arena. Ill. Enron (Germany) and Vestals (Denmark) is the major competitor of wind energy in the U and GE in US. While China and Japan are also trying to enter the market in Asia. IV. Rivalry within the solar energy market is strong and almost perfectly competitive.V) Gap Analysis: 1) Customer Gap: One example of a customer gap that may be facing Siemens is when they introduce their floating wind turbine. This gap wi ll expand if the durability and maintenance costs exceed its value. Trying to close this gap Siemens is now testing this technology to evaluate whether it is feasible or not. 2) Provider Gap 1 (Listening Gap): Cutting down the number of sector from 1 dozen to Just 3 helped Siemens close down its listening gap by concentrating on fewer divisions, moreover the energy market is a very complicated buyer and seller will exchange all the details before the buying process is done.It's so difficult to find a listening gap in this market. 3) Provider Gap 2 (Design & Standards Gap): understand customer requirements and the presence of upper management in all transactions ( buying and selling ) to improve focus on customer requirements 4) Provider gap 3 (performance ) Turnkey COPS plants and wind turbines need a long term service provider for Constant maintenance. Siemens will try to narrow this gap by providing a on-duty engineers to maintain a standard in all its plants.In addition working o n the new developed Smart-grid will help ensure a positive outcome and narrow this Gap. 5) Provider Gap 4 (Communication Gap): Siemens claimed to be the only company worldwide that support customers with efficient products, solutions, and know-how along the entire chain of energy conversion from the production of oil and gas to power generation and the transmission and distribution of electrical energy. To narrow its communication AP Siemens must maintain these standards and deliver a price competitive product and services.VI) Alternative Courses of Action: The question raised by Siemens is what to do and where to invest? Do they try to improve their current alternative energy projects? Or try to expand to different sources? Will it be efficient to invest in new alternatives source or acquire smaller companies with innovative technologies and promising market segment? 1) Alternative one: Increase investment in research of the algae plant that shows a promising path. Disadvantages: i t might turn out to be Just rubbish and all investments made could e lost.Advantages: Siemens could be a first mover in this field of renewable efficient and environmental friendly energy source, which could change the world as we know it. 2) Alternative two: Increase further its footprint in the wind market by introducing multiple giant and floating turbines. Disadvantages: it might turn out to be inefficient compared to its coast and maintenance and another first mover in some other field might be more efficient and resourceful. Advantages: by increasing its footprint in the wind market Siemens will remain the only leader and increase its market share. Alternative three: Giving wind energy its rightful share but increasing investment in solar panels by acquiring new research companies that are currently working on making new improvement in the solar business one kind has a (microscopic forest) that collects liquid water to produce steam. Advantages: Siemens will insure that the in vestment will pay off on the long run knowing that the sun is there for another 5 billion years. Disadvantages: the initial gains on this technology might not be realized under the Siemens name. W) Recommended Course of Action: Our recommendation lies on the 3rd alternative.VIII) Reason for Choice: By giving wind energy its rightful share and nuclear power a miner share, focusing on solar source innovation is a very desirable choice knowing that first sun is infinite secondly solar panels are very cost efficient which will give a higher ROE than any other source of energy and finally it is environmental friendly and social acceptable. Recommendations: a. What should be done? Siemens should retain all its work flow and progress but focus more on energy coming from the sun as this energy will be the a panacea for the world's economy as well as environmental concerns.