Name: The Role of the Electrical Grid in the U.S. Energy Transition
Uploaded: 2024-09-17T16:18:00Z
Duration: 15 min 28 s

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The Role of the Electrical Grid in the U.S. Energy Transition

Hello, everyone, and welcome. I'm Christine Kashkari, your host from The Trust here at the "Wall Street Journal," Barron's Group. Today, we are talking about the electric grid and its role in enabling the energy transition here in the US and around the world. From grid modernization to connecting to more sources of renewable energy, to transmission and distribution, the grid is critical if we are to achieve net-zero emissions by 2050. Our special guest today will walk us through current and future energy demands, specifically clean energy demands, and the opportunities, along with the challenges, in ensuring that power grids are able to meet them. Ladies and gentlemen, please welcome Wade Lauer, senior vice president of Grid Technology Sales in North America at Siemens Energy, a publicly-traded energy technology company that specializes in power transmission and distribution, generators, power plant technology, among many others, Wade, welcome.

Good afternoon, thank you.

Thanks for joining us. So let's start with the demand. From where you sit at Siemens Energy, what's your outlook on energy demands? What are you seeing, what are you hearing from clients that's informing your business priorities?

Yeah, so the energy demand is huge, it's growing more. I've been in the generation and transmission arena with Siemens Energy for 30 years and I've never seen this type of growth and expected future growth as well. So there's many factors that are driving it, so I think it's a mixture of everything. Certainly just the aging grid is the start of it that we've had for many years. The electrification of energy with the whole energy transition going on. Change in generation, especially the drive for renewable energy to help with the decarbonization, data centers. There's many, many drivers out there. Weather events are seeming, hotter summers, colder winters, storms and tornadoes. So it's a combination of all them together and it goes back to also how the grid was built. If you talk renewable energy, back when the grid started, right? Just a little bit to talk about it, was one-directional flow. You put the generation right next to where the load was you need. Now we have generation far away from where the load source is. So that brings in this instability in the grid and you have to use different technologies to help stabilize to make it more robust, and that's where we need to invest, right? We need to invest in keeping it stable and robust as it has been in the past.

So Wade, we talked about the energy demands and we have not even brought up AI, right? There's a report before that says AI and air conditioning would be the biggest source of demand for power. So you addressed the weather-related events earlier. Well, what about AI?

Yeah, a AI is a huge adder that's come on really fast I would say. So it's a great point. I mentioned data center, right? So you had the cloud data that we've been living with, but now with the AI, it just takes it to another level. The amount of power that it draws. Now you said the cooling, right? You got co-locators that are providing square footage, power, and cooling, as well as security, but I've heard the numbers of the power demand when you go to liquid cooling over air cooling to be 10 times this power demand. So where I think in our market we saw the demand and the growth, this is on top of that. So this is incremental more growth that we're seeing with the artificial intelligence and if you talk to the hyperscalers, the forecast is very big, and they seem to double and triple every time we talk to our customers. And it's on the grid side where we need to build more substations to drive them and power them, but now the demand is from the generation side 'cause the amount of power that's needed is growing at the gigawatt levels so, and that power needs to be added to the grid as well. So where we're getting the lead time increases in electrical equipment, we also need to focus on the generation.

Yeah, and there's another report that I saw from BayNet Company that said 90% of large companies in the US are using GenAI. So that's a lot of computing power and that is only going to grow. So Wade, plain and simple, are grids up to the task?

Yeah, the grid has been very robust. Let's not kid ourself. From the way it was developed to the way we're challenging and using it today, I think the answer is yes, but not forever, right? So we need to address it. We need to invest in it. We need to modernize it in the ways as that changing generation is pushing us too so. Like I said, it's run good for decades and now we need to maintain it and drive the resiliency side of it to make it more robust. So we need to monitor. As you mentioned, there's lots of vulnerabilities out of there. It is an aged system, like I said at the beginning, but there's also cyber, physical risks. So I think with digitalization, we can monitor this stuff up front and there are real risks that exist in the market.

So let's talk about some of those solutions to address some of the vulnerabilities that you talked about, especially from on the aging US power grid side. Short of building new infrastructure from scratch, how are you using currently-existing infrastructure to meet current and future demands?

Yeah, I mean, we can repurpose some of the areas that we utilize in the equipment and keep the equipment running. We can maybe talk about service and digitalization on how we focus there, but there's areas where previously we used corridors, transmission corridors that are approved for AC. Now we can run DC down there and get higher power and more voltage to different areas. There's creative ways that people are looking at to use rail right of ways. So that way if you get the right of way, it's faster, helps the permitting process move farther forward. So to build the grid of tomorrow today, we need to look into all of those creative areas as far as repurposing and then repurposing people. But then we need to think about the technologies 'cause there's new technologies or not even new, technologies that exist that are not able to address the challenging needs that we have with the intermittent power where you know that the sun doesn't always shine and the wind doesn't always blow. So when you're bringing that renewable generation in, we got to add equipment like STATCOMs, synchronous condensers, right? And HVDC, so the HVDC can transmit across longer lines at higher voltages. The synchronous condensers, we have to replace spinning inertia and help to stabilize with STATCOMs that intermittent power that's coming across the grid. So that with grid automation, digitalization of substations, that all drives it. There's fiber that can be included and fiber replaces a lot of the copper, so it's more cost-effective as well. So this will help us modernize and stabilize if we invest in the right areas of the grid.

So we talked about repurposing existing infrastructure. We've talked about modernizing the grid through investments and technology innovations, digitalization. I wanna focus a little bit more on the other critical piece which is expanding the use of renewable energy sources. The share of renewable energies in the US need to triple at least by 2050 if we are to reach our net-zero goals and we talked about the impact of AI. How does the US take on this kind of challenge and how are you taking on this challenge?

Yeah, it's a big challenge and I think we all need to do it together, right? So collaboration for me would be the key to pull together partnerships where together as a larger group, we can go and address legislation and help the permitting process and the planning process. I mean, so our utilities and developers are now planning for five, six, seven, 10 years where they used to look at it, but we have to actually plan because some of the deliveries aren't for that long. So I think the partnering side of it and then utilizing best practices, looking at companies that have done this in other areas, just an example, Siemens Energy, right? We're involved in Europe, right? So in Europe, they went through some of this renewable energy offshore transmission, so they have lessons learned. So we take that and we transfer that knowledge over here to the US so that we can avoid some of the challenges that they faced. I'm sure we'll find our own new challenges, but anything we can do to learn from what's been done in the market and then we really just need to focus. Focus on the critical asset areas, fix the critical components, and help to stabilize the grid.

So you need to increase renewable energy production and there's also a need to increase the ability of the grid to deliver energy from where it's generated to where it is used. When critical components like large power transformers are imported more than 80% of the time, how significant is that and how are you expanding that ability to localize power generation to achieve what you've called end-to-end energy transition?

Yeah, so end-to-end energy transmission, from our perspective, right? Is just the ability that we have to go from the generation side of the business, through transmission, the whole way down through distribution in our consumer so it gives us a broader view. Whether it's coal, gas, coal-to-gas switch, gas-to-wind switchover on the generation side and then like you said, the critical components that are needed, and we need to focus on them, are the big items like the transformers, the breakers, the switch gear, digitalization and service that we mentioned before. So we're really present in a lot of different areas in the substations, at the power plants, in the industry and electrical via vehicle arena. So in all those areas, we're looking to remove the bottlenecks on our own side, as well as in other areas and we're really focused on expanding our own factories. Just in transmission, we have 44 factories globally, but we're looking to do that there. We're looking to standardize to help us with throughput and then the biggest thing is we're looking to localize here in the US to bring it closer and reduce risk.

And that's part of your investments, right? That you're opening a factory in Charlotte?

Yep, my pride and joy. So yeah, a large power transformer factory we're gonna open at our generation site. So back to the collaboration, we're doing it so we can be shipping quicker because we're not doing greenfield, we're starting with a brownfield. So we're investing heavily of 500 KV, 500 MBA equipment out of there. In addition, an important part is we're adding a service side. So when people have to wait for large delivery times, if they have a failure, we'll be able to repair and refurbish and there's not a lot of large power refurbishment areas in the US. For us, we have to normally ship it out of the United States which just adds time to it. In Jackson, Mississippi, we've almost doubled our factory there for circuit breakers and voltage regulators and in Raleigh, we're adding a controls lab to help with HVDC and other fax equipment, so we're investing,

Right, listening to you, the investments are being made. It seems like technology solutions are there, what you were just talking about in large power transformers or intelligent power grids, but are policies and permits keeping up with the technology that you are innovating? What are some of the roadblocks that you wanna see cleared, quite frankly, to advance your goals?

Yeah, that's an area a lot are struggling with. Rules and policies are there for a reason and they're developed, but I think they need to probably develop with the way the market and the grid is developed, and we just need to reduce the complexity to get done the right things that are needed to be done. So through collaboration, we mentioned before, through partnering, there's enough work for everybody. So we just need to share what we're doing, right? We're sharing our story in Washington. We're talking to the people, the legislatures, the representatives in Washington. We're dealing with associations. We're sharing our challenges, the complexities that we're seeing. And like I said, as a larger group, this is where I think together we can help move the permitting. Again, they're there for a reason, but we need to move it faster along the board. I mean, I was in Washington and a quick story is I couldn't believe how much the representatives know about a transformer or a pole-top transformer just because it's a critical asset on the system. So they're listening, they're hearing, and we're focusing on it to help to move the grid of the future.

And of course, some of those, a lot of those infrastructure are located possibly in their districts and so they are paying attention. So it's a lot of work to be done when it comes to building a sustainable and resilient grid. Last question to you, Wade. How can we ensure we have a resilient grid that can move the needle towards a decarbonized energy landscape?

Yeah, I don't think we have a choice. It's inevitable, right? We have to fix this. We have to grow this. We have to make it robust, resilient. If you want decarbonization, you need to bring the power and that takes transmission to do it, and it takes power needs to run the data centers 'cause AI is not going away, so investing, right? Investing in the aging infrastructure, the demand is being driven by that, but we need to invest in the grid. We need to invest in the suppliers and the sub-suppliers that feed that supply base and use the new innovations, the new technologies that exist today to help stabilize the grid on the grid side and on the power generation side, and this is the way that we'll bring clean, resilient power. From the renewables, as we explained, out in the waters or far away from the source back in, we need to build the infrastructure, stabilize it, and then digitalize it. We really need to become more proactive and prevent the failure from happening, especially on our critical assets.

Thank you so much, Wade. We have to leave it there. We look forward to hearing more about sustainable technology innovations in this space and perhaps more policies that help, not hinder, our net-zero goals. Thank you so much, Wade Lauer from Siemens Energy, for being with us today.

Thank you very much.

The Role of the Electrical Grid in the U.S. Energy Transition

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