Hello everybody and welcome to the Siemens Energy Hydrogen Day. My name is Michael Hagmann and I'm the Head of IR. First, I would like to draw your attention to the disclaimer and please take one or two minutes in order to read it before I take you through the agenda. If you look at the agenda this afternoon, I'm very pleased that we have three speakers here in Munich. Christian Bruck, our CEO, will talk about the market and our role in the hydrogen economy.
Afterwards, we have Armin Schnetler. He is the CEO of our New Energy business, and he will talk about our electrolyzer business. We also have Vinod Philipp here in Munich. He's our Chief Strategy and Chief Technology Officer, and he will talk about our hydrogen activities across Siemens Energy. You can also see that we have Andreas Noun, the CEO of Siemens Gamesa, and he will talk about the role of wind in the hydrogen economy.
And then I'm very pleased that we have Musabe Al Kabi, the CEO of Mubadala Investments, talk about the role of The UAE in the hydrogen economy. We are planning to have a break at roughly about 03:00 European time for about ten minutes. During the break it would be a good idea if you want to ask a question during the Q and A if you already dial in by phone. The procedure is as usual: you can place yourself in the queue by pressing star one. You can remove yourself from the queue The Q and A will start approximately at about ten to four European Time.
And with that, I hand over to Christian Bruck, our CEO. Christian, over
to you. Thank you very much, Michael, and also welcome from my side, everybody. Thanks for spending the time with us today to talk about hydrogen. We have received a lot of questions over the past couple of months and more or less every meeting about our position in hydrogen, how do we look on the market, what's the next steps to come, how fast can we expect to ramp up and so forth. This is the reason why we wanted to have this event here today to share our view on hydrogen, but also to share our view on the energy market itself and really to put it into perspective from our view to explain what are we doing and why we are doing certain steps to allow you a better understanding really of Siemens Energy as a company, but also is really understanding our actions in hydrogen.
This is not a Capital Market Day. I also want to quickly say this because we've got a couple of questions. We aspire to have our next Capital Market Day in 2022. And going further down, the overarching portfolio really of Siemens Energy and the steps we have on our journey to really transform also the energy market. So today, it's really meant to tackle your questions we received always over the past couple of months on Siemens Energy position in hydrogen.
I would like to kick it off today really by showing a little bit of broader picture on the general elements which drive Siemens Energy. And as Michael pointed out, we have a couple of colleagues also sharing with you then details of what are we doing in certain technology areas, what are we doing in collaboration with partners and so forth. And we are very happy to receive also your questions and thereafter. Let me start maybe first with one big question, what is actually the problem we are trying to resolve if you talk about hydrogen? And the problem, obviously, is not hydrogen in itself.
The problem is we are converting a massive market, a massive infrastructure, energy industry transport into a sustainable system. This is a task we're having, getting the CO2 footprint down. If you see the only really energy related emissions in 2019, we're talking about 36 gigatons of CO2. And we have a massive task as a society ahead of us to really turn this around and really decarbonize the world. We will need a lot of activities to do that.
We will not need a lot of technologies to do this. And I'm a strong believer we will need more technologies to tackle it. And it will be diverse solutions depending on the sectors we're looking in, in terms of decarbonization or really also when we can do what. And one thing what's going to happen really or needs to happen to make this reality to come to a decarbonized energy world is a massive, massive increase in terms of renewables. And this will be one underlying theme, which we will see each and everywhere around the globe, that everywhere where renewables can be pushed, we will see tremendous growth in renewables.
What does it mean in general? It does mean also that the areas of energy production, renewable energy production and consumption where we are used to consume energy might have a bigger difference distance in between these two locations because we today have obviously certain countries which are privileged to have a good access to renewable energy sources, let it be solar or wind. And these not necessarily always fall together with the areas where we consume energy. So we will also see a lot of areas which need to think about import of renewable energy. And this is obviously one big element which comes into place with regard to hydrogen.
Hydrogen allows us to make renewable energy transportable in a nice form of a molecule and really bring it from areas which have abundant resources of renewable energy to areas which are in high demand of energy to keep also existing industrial assets running or to decarbonize existing assets. If you look across the regions and you see the CO2 emissions in terms of the largest contributors on the right hand side of the slide, it is obviously also that you have a lot of areas where both falls together. You have an industry and you have good renewable potential in the country. These will have different solutions on how to realize it than areas which have a different boundary condition. And I think this is something which I always would like to underline.
It's very important to see. We will see a very diverse set of solutions once we tackle decarbonization. Hydrogen will be one important pillar, but there will be a broad set of solutions required. And this is also why we, at Siemens Energy, drive continuously also our technology base across the board from production of electricity, transport of electricity, down to really making sure that the usage of energy and electricity also is managed down to achieve the target of CO2 free industries. If you now look on hydrogen itself, obviously, what we do see, the one element, as I said, is about it makes renewable energy transportable in the form of a molecule.
The second piece about hydrogen always, which we have to take into account, it allows us to decarbonize sectors which are difficult to decarbonize. And if you look on the left hand side of the slides, you do see the power industry itself, which has done a tremendous journey already over the past years in terms of increasing renewables in the system, making existing systems much more efficient, driving high efficient interim solutions like gas turbines and really converting the system around to more and more sustainable setup. And still, we obviously have 42% of the CO2 emissions in the power sector. And this will be continued, obviously, on the journey to more renewables and higher efficient solutions as, for example, also coal to gas conversion. At the same time, it means that the majority of the CO2 emissions is still in areas which have a much lower share in terms of renewables to provide that respective energy, let it be industry, transport, buildings or whatsoever.
So how do we tackle this? And also, there comes a second part of hydrogen in play. Hydrogen is luckily a very versatile molecule. It can be applied in a lot of areas in a lot of different sectors. And it allows us to put renewable energy into sectors which are otherwise difficult to decarbonize to achieve, at the end, the target to come to a decarbonized society.
So if you look on the right hand side and put the molecule of hydrogen in the sensor and then look of all what we can do with it, there's obviously multiple solutions where we can use it and where we can apply it. It starts off with some mobility in terms of trains or trucks or cars, whatever, over to the industry or chemicals, down to really elements like putting hydrogen into facilities to produce once again power. So all these opportunities are under discussion and are really under development in terms of showing reference cases. What I think is important always now to understand, and this is obviously how we look on the case on Hydrogenis, what is now the most likely scenarios and the most likely use cases which get pushed first, which comes second and so forth, to understand also what is the sequence.
And you can argue a
lot because it will depend on boundary conditions in the different markets on how this is going to develop. But if you take it very, very simplistically, simplistically, I think we can identify already areas today which would be on a green hydrogen molecule close to commercialization. Take transport, for example, heavy trucks, trains. This is these are can be use cases where you already today can draw up a case under certain conditions that a commercial operation would be possible based on reasonable green hydrogen cost. And then there's a second bucket, I would say, in these use cases, which are industries which are somewhat able to fence off or regulate where you can give the green hydrogen molecule a value.
It could be in refining by something like RET2, for example. It could be steel, like defining a green steel element. It could be other products. And there's a third bucket of use cases where I would say these are the deep decarbonization use cases, which is then really at the end of the value chain where we really compete hard against other solutions like electrification, which would probably come at the later stage of the application. I think this is important to see.
So for us, obviously, a lot of the mobility solutions are the first one which will qualify for getting commercialized. And this is also why we look at Siemens Energy, also once we discuss pilot projects, look also very much on projects which relate to what we call Power2X, so converting power into hydrogen and hydrogen into a transportable liquid molecule. What I want to flag up here, and I think this is also one task for us today, to make sure that we understand the perspective and the size of the challenge and the opportunity we have here ahead of us. If you just, for example, take a 200 megawatt wind farm as an example for producing renewable energy, and we will convert this renewable energy into a green fuel. Then out of this 200 megawatt and this is rough numbers.
This is just to make it understood in terms of the, let's say, order of magnitudes of the different markets. And you could produce 200 gigawatt hours green fuel, which would be equivalent to 28,000,000 liters of diesel. Put this into perspective, right? 28,000,000 liters of diesel, this is roughly, roughly, if you put it into tons, it's 23,000 tons of diesel. And compare this to a fuels market, if you look to Europe, for example, from diesel, gasoline and fuel oil, around four fifty million tonnes.
It shows you how massive this transformation is. So if you talk about hydrogen and if you talk about decarbonization, we always have to be aware that we are talking about the biggest investment program since the industrialization. It will be massive what we will be seeing, and this is why the solutions corridor also will be so diverse. And this is why we will need all these different type of technologies, let it be electrification, let it be interim solutions or let it be hydrogen, because it's obviously a massive amount of change, which is required in today's system. If you have done it and if you have produced it, you can obviously, with 200 megawatt of wind farm, you can already get a road transport of 85,000,000 kilometers or 9,000,000 kilometers of mileage on the air traffic and so forth.
So the potential is there. It's massive. And this is obviously now what we're trying to tackle also in the different reference project we are looking at. If you look on Transport itself, no question, it will have different solutions, from coming from electricity, part even from biofuels, part
from
hydrogen. But what we want to show here is just once again to put it into perspective of the size of the opportunity we're talking about. If a certain portion of this mobility market is converted to e fuels, and let's assume we are looking on heavy trucks, navy trains, then it's only a part of the mobility market. But if you see the amount of energy which goes into the mobility markets, you're roughly talking, and I now talk in terawatt hours, around 34,000 terawatt hours energy equivalent. Everybody of you who is used to the electricity market recognizes this is 20% more than the today's global electricity market.
This is massive. So even if you obviously take out the 20% only for the heavy trucks and the trains, it means we are completely reshaping an electricity and green hydrogen and renewable energy infrastructure if we want to convert a certain portion of the renewable energy to green hydrogen molecules to decarbonize the sector of the heavy transport. And just obviously to put this into perspective, and this is why we believe the opportunity is massive. Even so, it will not be the only solution. But we really obviously want to shape it as a company to be part of this, and there is obviously a lot of things to come.
It will require also abundant resources of renewable energy. It will require massive investment into infrastructure to get to the point of the green hydrogen molecule. What has happened over the past months, particular, but now since quite some time, is a massive movement now. People are recognizing we have to go. We have seen a lot of support programs across the different governments being announced and being developed.
And already, if you look today on existing hydrogen programs, we are talking about €80,000,000,000 already in what we would call mature type of projects, investment volume identified. And if you take the total programs until 02/1930, you're talking about €300,000,000,000 identified for hydrogen related project to push the agenda forward. Our strong perception is really the pandemic has changed the view on climate change and that you need to tackle things boldly and now. And I think one thing we all learned in the pandemic was you can talk a lot about a problem what might appear at some point in time. And we have all seen in the pandemic, if you don't tackle it early enough, you pay it very, very expensively.
And I think we see the same trend now in climate change. We have since decades talking about climate change. People recognize it does require the effort now. Get going now if you want really to avoid the massive potential cost which climate change could bring. And this is why I'm very positive on all the projects which get launched.
One thing looking on this project and these stimulus programs, we always have to take into account, to make it commercially fly, boundary conditions need to change. So with these projects, we are also trying jointly with our partners, with the governments, with our customers to develop the boundary conditions which the market needs to have to make commercial projects viable. One thing we always have to recognize, if you want to drive decarbonization, the current stimulus program only would justify a very small single percentage of investment required in the market. So private investments have to flow this market, which will be extremely important also for the hydrogen market, which makes it necessary now to understand how the commercial case is going to look like and really build these boundary conditions. But the momentum is there.
We see, obviously, our activities also increasing in terms of identifying the right reference projects and really push forward the hydrogen agenda. But we always also have to be clear, and this is why it's always keeping a balance. A lot of boundary conditions also need to change then to build the market. What this effort of the stimulus program and all the discussions now brought really to the market is a completely different view in terms of potential projects, which you see on the left hand side of the picture. And as I said, we look always on these projects, which is more mature, which obviously getting already with the commercial case, where it's understood on how the financing is going to be done and what is announced and still needs to be developed in terms of creating a bankable case.
But you see the enormous increase of projects until 02/1930, and this is related to green hydrogen and obviously also as well as to blue hydrogen. And if this is obviously now coming in, it will trigger the other element, which is getting down the levelized cost of hydrogen, which will be the key indicator to really make it happen and then also to apply the respective hydrogen in the different sectors. And you do see, obviously, that the current cost, with an increase in terms of the different projects, will come down and at some point in time pass by the gray hydrogen. At the end, the logic will need to be, it has to be a commercial viable case to really make the market take off. And this is obviously now the question when exactly this is going to happen, how fast it's going to be.
But this will also obviously depend on what will be the CO2 cost related to gray hydrogen or certain applications and how is this going to be driven. So we are ahead of a tremendous development wave, not only in terms of project, but also in terms of products, in terms of technologies. And this is something which we should never forget. We are, at Siemens Energy, with all the experience we have also in the green electrolysis, we are in the situation today that we are happy to build any type of size of plant in the market. But we also know that over the next year, the design of our plant will need to change because costs have to come down.
In the next five years, investment costs also for electrolyzers have to come down 50% and more, like we had with other technologies, like we had in offshore wind, like we had in solar, like we have with all new technologies. And this will be an iteration really developing new systems, seeing what works. Maybe we have to take costs out and design things different. And this is now the iteration process we are going in. And this is also on how we select our projects to make sure that we can drive this cost curve down by using these different projects.
Let me get back to the use cases a little bit on how we look on it and also why we are positioning in certain areas as Siemens Energy in terms of tackling projects. As I said, for us, we always look on it. There's a certain class of projects which we deem close to commercialization. And very clearly, is our view as a company. You can argue all different ways, but this is on how we cluster it for ourselves.
And this is around trains, trucks, application. Why? Because these are markets which can be relatively good, also locally identified and fenced off. Once you give a relative decent value to CO2, already you are on this range, somewhere around 4 USD 5 per kilogram of hydrogen cost, and this would commercially work. And this is obviously why we look in a lot of areas projects.
The second element is what I said before, industries which could really be clustered in terms of fenced off and where the product itself, which is industry produces, grants
a
value to the green hydrogen, which is important, right? I mean because it does have a, let's say, extra cost, how can you make this value of the green hydrogen identifiable? And this could be steel, as I said, ammonia or refining, and this is obviously why we are looking in these type of projects. And there is a third bucket, which is, I would say, really the required for the net zero agenda, but obviously much more competitive in terms of hydrogen pricing. And you will see and hear today also from my colleagues our ambitions in terms of injecting hydrogen into gas turbines.
We have more than 50 gas turbines running on hydrogen globally. But the logic is different. The logic is really making sure that an infrastructure which exists today or an infrastructure which is invested today to, for example, convert coal to gas can also be used in ten or fifteen years. However, obviously, on the commercial price for the hydrogen, it will be the more challenging case. And this is something what somebody has to understand, obviously, once we do talk about the different cases we are driving.
This brings me also to Siemens Energy as a whole because we obviously look on it as a company, which is a leading energy technology company, which drives the energy transformation. And we always look on it from three pillars we deem as relevant for us and our company in terms of the energy market: the low or zero emission power generation the transport of electricity and storage and the third piece is really electrifying industry or reducing the CO2 footprint in the industry, so shrinking the problem, shrinking the demand side. And this is the logic on how we drive our activities, and we are obviously touching each and every area at the moment as a company to make sure that these three areas, which will be the vital elements in decarbonization of the world, we drive forward with different solutions because we will need different technologies and different solutions in different regions of the world. This And is what, obviously, we at Siemens Energy drive forward. And hydrogen will be one key element, but it's also because the installations and the overall concepts will have different setups, while the other technologies are also important for us.
We have put Siemens Energy sustainability in the core of our development and our agenda. And I said it also on the last Capital Market Day by just flagging up also the steps in terms of the journey, what we are doing, of really driving sustainability forward as part of our overall development. And this applies to the whole portfolio. You see here an example for how we take out greenhouse gases out of our transformer equipment and out of the circuit breakers, for example, with replacing the SF6, driving green hydrogen by building the next generation of the C Lysers, so our electrolyzers, but also the areas we do on a commercial base in terms of hydrogen compression. How do we push things forward?
How do we show that hydrogen can be also used in a gas turbine? And we will continue to drive this forward, obviously, with always the logic of the three pillars: talk about the generation, talk about the infrastructure, so distributing and storing energy and obviously working on the demand side going forward. And in this perspective, also our hydrogen activities have to be seen. You may have seen this picture before, obviously, on our Capital Market Day, introducing the company, on how we are built up through our divisions and through our different business areas, really from generation transport to usage of electricity, but also cutting across conventional technologies and renewable technologies. And if you look on the different parts of the business, in each and every area, we touch the element on green hydrogen.
Let it be on really commercial solutions, let it be on the buildup of renewable energy sources like with Siemens Gamesa or let it be on the connecting renewable energy sources to the grid, to our HVDC solutions. But we also obviously have straightforward commercial applications. We run 1,500 hydrogen compressors globally from our compression fleet. These are components which feed hydrogen pipelines today every day, reliable. We integrate already hydrogen solutions in existing gas turbines to demonstrate that the conversion is possible and that the overall system comes.
Why is this important? It is important because we link, at the moment, really, everything we're doing on the conventional base also with the next technologies to come and also to make clear to our customers, we are there to accompany you in this journey of transformation. And we are there to keep the lights on and really making sure that we could service such a unit, that we could install such a unit and bring the different elements together. And this is obviously for us now also the task to continuously develop the new technologies we require. For those who have participated in the Capital Markets Day, I told you that we have obviously around 23 more than 23,000 patents on energy technologies.
We will continue to build it of really making sure that the next generation comes, as, for example, on the electrolysis, where we very much focus on the PEM electrolysis, but at the same time also drive integration of system, how can we get the electrical system behind the drive because that is a capability, obviously, where Siemens Energy brings to the table. I would like, in this regard, to flag up some of the pilot projects we're doing and refer back to why we are doing exactly these and why are we not doing others. That is understood. First of all, it's obviously rooted back to the overview on the different use cases and applications. And I said already before, we believe mobility will be one of the key areas which will be not very easy to decarbonize in some areas.
Some areas will definitely drive for electrical solutions, batteries, no question, but there will be other areas where we need to think about e fuels. And this is why we pushed for the project in Chile, the Haraoni project. And what are we doing there is not building only an electrolyzer. We are doing the whole integration in terms how do you bring an electron from a wind turbine into a transportable fuel. And integrating it, understanding on how you do it on the electrical side, how do you do on the process side and demonstrating this and implementing this in Chile.
If you look on the industry side, and one example I gave before of the typical products which could be fenced off and could justify a value of a green hydrogen molecule is steel. And we have already, some time ago, started together with Frist Alpene and Linz, started to demonstrate hydrogen production in a steel mill and then obviously usage of the hydrogen. And this will be one area where I'm confident this will also be a future use case. And this is why we want to be part of these type of projects and to demonstrate also reference cases. If And you look on the right hand side, this is an example for a project where, with a customer, we demonstrate the usage of hydrogen in a gas turbine.
Why? Because it gives the optionality to use a high efficient power generation system, which is applied today and helps to serve the customers in Brazil for a long term sustainable future once natural gas would not be used anymore and to demonstrate this. But it's, as I said before, it's a different logic driving the case. It's a logic to say, how do I keep the optionality in an infrastructure which I do invest today? Why is this important?
Because we need to really make sure that we do not stop invest at the moment in interim solutions if we want to get CO2 down. And this is, I think, also important always to understand. Natural gas at the moment helps to bring CO2 down. Twenty, thirty years down the road, we might look different on this, right? But at the same time, we want to make sure that we do everything what we can to get CO2 down now as fast as possible.
But then we also have to provide solutions for our customers on how do we reuse the equipment ten or fifteen years from today, and this is why we do this project with Braskem in Brazil. Let me do some give you some words on electrolyzers and our developments there. And Armin will share with you, obviously, a lot more in detail what we are doing. But we obviously come from a relatively long PEM history also on the fuel cell side, which we have supplied in other markets. And we took it there this electrochemical capability, which was sitting in the company ten years ago and started to work on building electrolyzers and building a group up and really getting into large systems.
And obviously, in 2015, we launched the first SILISA 200, and we are have been launching the next generation, and we are already in the train of really looking ahead of the next solution. So this has been a very fast journey, more or less around ten years, high speed development, I would call it, and we will continue to do so to drive it forward. The one thing now where we're getting at this stage in is getting from a technology which has been successfully demonstrated in pilot projects also into a technology which gets more and more commercial in the way on how we produce, in the way on how we source components, in the way on how we maintain and service these facilities, on the reliability of the system and so forth. But this is obviously the development journey, which will continuously now make the products more mature across the industries, and we definitely want on the electrolyzers to be a key leader in the market there. But apart from the electrolyzers, we obviously bring with us also a lot of integration capability and implementation capability, which will be required once the sizes of the projects get bigger and bigger, what we already see in the market.
Obviously, if you see or if you go back to my example with the fuel and with the diesel, you see on how these projects potentially could be. And then obviously, they will have a certain complexity, which requires also implementation capability, not only on the electrolyzers, but really on the overall integration system. Let me close the discussion or the start of today really with our focus areas. And as I said, for me, it's important that it's understood why we are doing certain things and where do we set our priorities across the company Siemens Energy to share with you all the things we're doing. If it comes to hydrogen application in the industry, what we are trying to do at the moment is pick the right reference projects to show the use cases which are most close and most logical to commercial application.
We are not necessarily chasing the biggest amount of reference projects. We want to choose the right ones, which really demonstrate also on how do we have to shape the market conditions to make green hydrogen viable. And the second piece and I'm very pleased also that we have Mubadala today with us, and we have a lot of good partners now lined up also to help us and to support us and to work together with us on the hydrogen development side, is really to select partners. We are looking in a massive amount of work and in a massive transformation of the industry. As I said, this will be the biggest investment programs in the industry since the industrialization, if you talk about decarbonization of the industry and of the energy market and so forth.
So partner network will be key also in hydrogen. And this is what we are selecting at the moment. This is one driver for us also for certain pilot projects to set up a partner network, which helps us to build this transformation. And the third part is really now getting from a piloting stage into a commercial stage. And we are working on methods how to automize fabrication, how to professionalize the supply chain, how to make sure that we really get these suppliers and infrastructure in place with a system which still has some changes to come.
We look on it, obviously, to make sure that we are ready. Whatever the market and how fast the market is going to grow, we can answer it by also increasing our fabrication capacities. And we have today, obviously, our pilot fabrication running. We can serve all needs we get from the market today from it. But at the same time, we would be relatively fast ready to really answer an increase in capacity if required.
But we will make this dependent on really the speed of the development of the market. But developing now the fabrication methods and the supply chain is instrumental also to get the cost down. And as I said before, we, at minimum, have to talk about cost reductions of 50%. So this will be massive steps in design and fabrication. And the last thing not to forget, because I know there is a lot of ambition about hydrogen and there's a lot of appetite and big numbers and people are very keen to say what's next year.
But I also want to be very clear, we will see over the years to come a lot of technology developments still, for example, in electrolyzers. If you want to get costs down, systems will look different. And we might identify different materials, different designs, different logics, which we need to set up. This is a normal process, as I have said before. I mean, we have experienced in all our technologies which we developed.
This is an iteration. But this also means we spend quite a decent amount of work, resources also on technology developments on what is the best technology to have. For us at Siemens Energy, it's obviously two balanced. We are working on the PEM technology for the electrolyzers. But at the same time, we're working heavily on how can we do a smart integration, how can we build digital twins, how can we think ahead already in terms of providing services afterwards.
And this is obviously coming a lot with a tremendous knowledge what the organization has, which we need to bake into our hydrogen activities. So for us, hydrogen is even so a simple molecule, a broad activity in the company. We are working on all ends, and the colleagues will share with you in the different areas of our business what we are doing. And we are very much looking forward also to the discussion we have together with you and your questions, and we hopefully can provide the right answers. I would close here just as an overarching perspective for hydrogen in Siemens Energy.
As a company, As said, our main target today is really to make you understood why we are doing certain things and what we are all doing across the company that you can put the different activities into perspective. And I will hand over with this to Michael.
Thank you very much, Christian. We are now handing over to Armin Schnetler. Armin Schnetler has been the driving force really behind the development of our electrolyzer business, and he will talk you through the ins and outs of our electrolyzer business. Armin, over to you. Thank you.
Yes, Michael, thank you very much for your very nice introduction. Thank you, Christian, for setting the floor. Ladies and gentlemen, I'm very pleased to talk about the hydrogen business a little bit more in detail, which is called the new energy business at Siemens Energy. I will start with, say, what's about the new energy business? What's behind, right?
And then take you on a journey through the technology, the operations, say, and then towards the go to market, so how we address the market. And this is what I'm going to show to you and would like to share with you. Maybe first of all talking about the new energy business. The business which is, they say, the new one, the green one of the green molecule business is based on three pillars. The first one is the hydrogen system, which is all about the electrolyzer, splitting water into oxygen and hydrogen.
So it is the integration, connection to the electrical grid, the rectification, we are operating with DC, the direct currents, say, in this respect with electricity and then, of course, producing the hydrogen. The next one is the power to solution. So everything which is, say, the derivative of the hydrogen. So combining with nitrogen, for instance, then talking about production of ammonia or taking CO2 and putting it into a synthesis and then bringing the hydrogen and the CO2 together into something which could be a liquid like methanol or e fuels. I will talk about this later on.
And finally, and this is very important as well, it's all about the digital twin, the digital services behind. I mean both on the design side, on how we design our equipment and how we operate our plant and how we optimize the operation of the plant, setting the right operational conditions in order to reduce costs or increase the availability of an overall system. This is what I'm going to talk about. Why proton exchange membrane? Why the PEM?
I mean, three topics are important. The first one is, it's about the performance, the operational performance. It's about the flexibility, the CodeStar capability, which is ideal in combination with volatile renewable electricity sources like PV and especially wind. And secondly, it's about the cleaners, clean by nature. Talking about a PEM electrolyzer, then it's more about pure water only and it's about oxygen and it's about the hydrogen.
It's very high purity afterwards. And no contaminants in there, so this is something which we do see as very important. And thirdly, it's about competitiveness. I'm not talking about the price of green electricity. But due to the fact that we are operating the plant with relatively high current densities, we are quite compact, which is especially important if you are talking about special conditions.
You will hear later on in the talk with Andreas Nauen the combination of the wind turbine together with the hydrogen system. And this, of course, beside other conditions, it is extremely important to have a high degree of compactness. So that's about so we believe in that. And this is why we are talking about the PAM electrolyzer technology for the time being. How do we do this and what is important and why do we believe it?
Because we own the technology really into the detail. So we know really the heart of the technology. So we have the full in house expertise really looking into the gas diffusion layer into the different membranes, the coating, how we treat the different membranes and how the different materials, the raw materials. And what is important as well is that we think big. Mean, is beautiful, of course, as we know, but talking about the next level of the energy transition, it's all about the size.
And size means we need to have a modular design to scale it up but also have a technology which is scalable, which is able to talk about this big business and the scalability and, of course, the material. So we do a lot in R and D. We will talk about this later on in order to set the right skills in the teams but also to have the right patent situation in order to secure the technology not only today but also in the future. So this is all about, say, the R and D and intellectual property topic. So we are really going very much into detail and do not rely on too many different sub suppliers in this respect.
Owning the technology is key for us. So Christian, we're already talking about our roadmap, our portfolio. As said, we started already many years back based on fuel cells on the technology itself. And say ten years ago approximately, we started with the first 100 kilowatt installation or 0.1 megawatt, which is helping a little bit for the storyline here. And it's interesting to know that every four to five years, the power rating, say the scalability of the PAM technology increased by a factor of 10.
2015, we installed, at that time, the world's largest PAM electrolyzer technology in a plant in mines in the Western part of Germany. And since then, we are always developing further on developing the technology in the megawatt class. And since 2018 and in operation since 2019, we have set up the next generation, the current generation, which is the double digit class, so to speak, in the double digit megawatt range. And already today, we are talking about the development of projects in the one hundred and one hundred plus megawatt class. And it's important to talk about that this technology is pre engineered, prefabricated and pretested in the production center, brought online or to be brought online and then just on the site, it will be collected and connected to an electrolyzer plant.
So this is extremely important. So it's all about the digital twin during the design, the manufacturing pre engineered and prefabricated and pretested and then on-site you have less, say, failure opportunities and a higher availability. And already today, together with our partners, we are developing large scale next generation electrolyzer plants hitting towards the 1,000 megawatt range, which is essentially in order to talk about the next stage of the hydrogen production and producing costs or getting costs down, which is very important. How does it look like? And here you see the brand a little bit, the brand picture of the SeaLiSA 300.
So this is how we talk about the, say, so called double digit megawatt class, which is a 7.5 megawatt power rating, electrolyzer with a very high plant efficiency. And here, important to notice, we are talking about the plant and not the modules here, so of an efficiency of 75.5%. But on the other hand, efficiency, it's not everything. I mean, it's important. But the important thing is availability, reliability.
And of course, it is important that we are talking about levelized cost of hydrogen and specific applications. Size could matter more than efficiency in specific applications. The output of such a plant, which is shown in the lower picture here, is in the range of at rated power of 17.5 MW, it's in the range of three thirty five kilograms. I mean, what does it mean? Just operate this unit for one day, say twenty hours, take your car, your fuel cell car, then you drive this car with this amount of hydrogen produced per day from the earth to the moon and backwards.
This is approximately the daily production of such an electrolyzer area. So this is a little bit important to talk about. When we are talking about the next generation, say the plant, so 100 plus megawatt, just in a nutshell, 140 megawatt, which is equivalent approximately to eight of these arrays, is the size of a football field, which is just giving us some information about what we are talking about, which would mean per day eight cars bringing to the moon and backwards, of course. Is what we are talking about. Big, as I said, economy of scale is very important here.
We should not stop and we cannot stop with the technology we have here. We are already looking for the next stage, for the next level. And this is why we invest heavily in innovations, in R and D and, of course, in production. We are very happy that the Ministry for Education and Research, together with ourselves, announced not only two, even more joint projects. The first one is talking about getting data of the commercial operation in the next generation of the electrolyzer technologies, a pressurized one and not only producing hydrogen going already for the next stage, production of kerosene, which will be done in Germany.
And the other one is so preparing the factory for serious production in the gigawatt scale, to slice the production into different stages, looking for an optimized, say, flow of the material, of the raw material, starting with the qualification of the materials in the beginning and then doing the stacking, the production of the membrane, the coating and all of that, doing the quality process automized, of course, which is important. And at the end of the day, out of the factory, we will deliver the modules in order to make sure that this will be prefabricated in the module groups and then brought online and this is important. The second topic is important to mention as well is during the operation of these test plants here in the Deriva project, we get a lot of data, different data, so we collect as much information as possible from the different phases of this test plant. And this will be fed into the digital twin. And the digital twin therefore, of course, will enable us to do some kind of a reliability center or condition based maintenance process of the electrolyzer.
And not only the electrolyzer, but also of the whole iKerosene plant, which is important for setting the right conditions for reduction of the cost of the product which will be produced there. This is what's behind. So investing in the technology, investing in people, in the skills and of course in the production. When talking about production, it starts already in the design. So we have two parts of the production chain.
We have on the left side, we have the digital world, starting with the digital engineering, the digital twin, so to speak, of a plant. Here in this example, we are talking about a 50 megawatt plant, which is completely digitalized in the respective tools. And out of that, the information will be brought into the production line and the output of the production will be the module. The modules will be brought into the second stage of the production lines, then the output will be the prefabricated group of four modules, which is equivalent approximately to between three and four megawatts roughly. And all of that on-site in a digital twin will be set together and we call it the SEALISER 300 array system design.
This is on the left side, right? And then the information of the required, say, production steps will be brought into the production line. You see here in the front, the first, the upper build, our picture is some kind of robot, which helps us producing at a higher quality and significantly reduced manpower a higher number of units of pieces as a part of the stack of the module of this electrolyzer. So we are preparing ourselves for a gigawatt production. And depending, of course, on the market and we will follow the market quite quickly, we are looking already for a multi gigawatt production site, which is automated in order to make sure that the influence of human interaction is minimized.
This is what's behind and this is what we are looking for, right? Talking about from the production towards the go to market, we have a selected approach on how we address the market in the different regions. We have announced a couple of weeks ago the close collaboration with Siemens Gamesa on producing the next generation of hydrogen wind turbine, so which is more or less the combination of a modern special wind turbine together with a compact pressurized electrolyzer system. This is what we call the Siemens ecosystem. Ecosystem.
So very joint, very close joint development of next generation of products, for instance. And then a little bit, say, broader in aspects, you have seen about and heard about our collaboration with Air Liquide, which is a long term strategic alliance. What we are aiming for is to jointly develop projects, so to scale it up the market and to make sure that we have a manufacturing which has followed the market development and that the products are really according to the needs and the different applications. Eliquis is the number one in the gas market and is the owner of the largest hydrogen gas grid in Europe. So it was quite natural that Elekite and ourselves joined forces in order to go for a joint market approach, especially in the Elekite businesses and with focus firstly on the European market and secondly on large projects, which is around 50 megawatts and plus.
So the big ones are to make sure that we address the right products for the different applications. And thirdly, because Ellikid and Siemens Energy, we have some special competence in the coatings and in the heart of the electrolyzer, we are going to co develop the next generation of the electrolyzer technology. It will take time, but it is important to start already today in order to make sure that we have the right technology in a couple of years in order to overall reduce the cost of hydrogen. And then with regional focus, we have further on, we have developed more partnerships, for instance, in The Middle East, in Abu Dhabi with Mubadala and Masta to go for the first pilot project on the production of ekerosine, for instance. And SPIC in China is aimed for the local production of hydrogen for the mobility sector.
This so regional focus and with growing application, with growing market, of course, we will look for further on developments, strengthening the regional market access and maybe even looking for the localization of the different production facilities. On top of that, we have, and Christian were talking about, the projects in Patagonia, in Chile with Porsche and Armor, for instance, or with BASF, we announced some kind of a collaboration, which is two folded. The first one is the application in the chemical plant in Ludwigshafen in Western part of Germany. And the other one, the second part is to jointly develop catalysts and to qualify these new materials for the next or over next generation of electrolyzer systems. So joining forces on the application side in order to allow the customer, our partners, to get early access to the technology, to secure the technology, to get the information which is required to optimize the different application.
And on the other hand, it is important for us to get into a partnership with different skills and skills which are synergetic to our applications here, for instance, with respect to BASF, Airlikid, Mubadala or, for instance, our friends from Siemens Gamesa or Mobility talking about hydrogen trains for different applications. So that's the market approach and the technology approach in order to accelerate the readiness of the technology electrolyzer. I have brought two examples. The first one here is the application of a typical power to a hydrogen plant. It has been funded by the European community and this is the Linz plant as we call it, which is a pilot project producing pure hydrogen, say 99.9 plus of purity of hydrogen in a steel plant.
You can see on the left hand side the data, six megawatt is a pilot project and which is maybe the nicest steel plant with say hydrogen production, I at least, I do know. And it's the application and the use cases, of course, to firstly offer grid services, so ancillary services to the electricity partner, which is Verbund here and to produce hydrogen for the steelmaking process. This is a test bench, and we use it intensively together with our partner, not only for the technology we have been developing in the, say, 2017, 2018, but also as a test bench for the new technologies we are already developing today. So it's a continuous test operation, which we very much appreciate the collaboration with our partners there. And the other one Christian were talking about, this is the typical example for power to liquid business, which is the basis for the large scale, right?
So we do believe that the mobility market is a very interesting market due to the fact that it is big of scale, so the demand is quite high. If you do match the price expectation of the final customer. And here in the mobility sector, the price willingness is one of the highest one we see these days. So what are we doing there? We are producing green fuels for the Porsche cars based on the completely green value chain.
So including the wind turbines producing green electricity, we take the waters from somewhere which is not disturbing others, So it is according to the national rules, of course, in order to make sure that it is not harming the environment. Then we produce the hydrogen based on the PEM electrolyzer technology. We use methanol synthesis in order to produce the methanol. The CO2 for that synthesis, we get out of the air by a direct air capture technology. And finally, we are going towards the gasoline, the e fuel wire to methanol to gasoline plant, so along the whole value chain.
We do expect to produce already in 2022, say, approximately 130,000, 150,000 litres of e gasoline for the Porsche cars, which will be brought to Europe. And two years later, so 2024, if everything is running smoothly, of course, then we are talking about already more than 50,000,000 liters a year. And with another scaling up within the next two years by 2026, more than 500,000,000 litres of e fuel per year in the production. And why Harouni? Why the Southern part of Chile?
Because the wind conditions are fantastic there. So we have extremely windy conditions, more than 6,000 operating hours in that area. And therefore, the cost of electricity, the LCOE, is relatively low. This is the basis. You know that the cost of hydrogen strongly depends on the price of electricity, the operating hours of the plant itself and then the CapEx and the OpEx of the infrastructure of the electrolyzer compression and all
These are the three dominating elements: firstly, electricity price secondly, the operational hours, say, the load factor of the plant and then CapEx and OpEx of the system. And this brings me automatically to this slide. You know, we are always talking about and are confronted with questions about this €1.5 per kilogram of hydrogen or 1.5 US dollar per kilogram. It's relatively easy. I mean, it's just math, right?
So I mean, if you're talking about, for instance, dollars 16 per megawatt hour and we know that there are approximately 50 kilowatt hour of electricity needed to produce a kilogram of hydrogen, then it's just 50 times $16 per megawatt hour, which brings us to approximately €0.80 or if you could do it in euro, euros 80 if it is €16 per megawatt hour. So €0.80 per kilogram of hydrogen at 6,000 per year. And the CapEx of the system, what we see approximately by '25, we have approximately $0.7 to $0.80 per kilogram at 6,000 of an electrolyzer as an additional cost. So we end up at USD 1.5 or euro per kilogram. So it's just math.
And of course, it's all about the reliability of the overall system. But it must be big, and that's why we believe in the big systems, right? Because electricity price is extremely important. The lower you come with the voltage levels, say, the lower you come with the voltage or power rating, the more expensive the electricity will be. And the more expensive, of course, the hydrogen will become.
So summing it up, three topics to remember: the why, the what and the how. Firstly, the why: we believe in big because the green hydrogen or the hydrogen economy accounts for more than 50% of the final energy consumption globally. It cannot can only be done in a big scale. So this is important, firstly. What we are doing is we are focusing on the PEM electrolysis technology.
We believe in this. The development of this technology will be very similar to power electronics, to PV and all of that. So with increased volume, costs will go down, reliability will go up, so the best basis for the future technology here. We do believe in the economy of scale, in the different applications, in the large Power2X solutions. E fuels is the best example.
E kerosene is another one and in both cases it must be big. And what also is important, especially for the operational optimization, are the digital twin both on the production on the design side but also on the operations. And both together will serve the basis for increased reliability and lower production costs in these plants. How we do it? Three topics.
We are going to secure the technology and aiming for the cost leadership. The second point is economy of scale, going for big implementation of the Gigafactory or even the multi Gigafactory, it depends just on the scalability, of course. And the go to market is extremely important. Addressing the right markets, the right sectors, So international partner ecosystem is very important. We have already been able to become the number one in the offshore wind market.
So we know how to industrialize technologies and we know how to industrialize the PAM and the electrolyzer technology.
Thank you
very much.
Thank you very much, Armin. And I'm really pleased to see that we're right on time. And it was, of course, at the end, a very perfect segue into our next presentation. So we're now moving to Spain, where I hope that we have Andreas Nauen dialing in, and he is ready to talk about the role of the wind industry in the hydrogen revolution. So over to you, Andreas.
Yes. Thank you, Michael. And I hope everything works here from Spain. And you're welcome, and thanks also for inviting me and allowing me to present what Siemens Gamesa contribute in hydrogen and how wind and hydrogen can be a really fantastic business in the future. And I would like to start with a small anecdote.
About a year ago, I was still responsible for the offshore business. One of my best and Danish innovation engineers came to me and said, Andreas, I've done now thousands of PowerPoints on hydrogen. Would you allow me to invest a few €100,000 and really turn it into reality? And I first, of course, wondered, but a classical Danish engineer, I asked him, what do you really want? He said, I need an electrolyzer.
I need a battery. And if you are in about a year of time, I said, you get the first, but you don't get the last. I want that it works by Christmas. And, we had a discussion, of course, where would you apply it. It was, in Denmark.
We have a three megawatt turbine where he wanted to test it. And indeed, in less than a year, we started a small project. We call it Branda Hydrogen. I will talk about it later. In November, I signed my first hydrogen supply contract.
Normally, I sign turbine supply contracts. And we've produced our first kilograms of hydrogen within less than a year. So let me walk you through how I want to take beyond that one test plan, wind and hydrogen from power points into reality. If you could move then to the first page, and that addresses what already Armin and Christian have also been talking about. Wind will be right at the center of the green hydrogen revolution.
You need a lot of kilowatt hours from photovoltaic, of course, but mainly from, we believe, from wind from onshore wind and offshore wind in order to produce then green hydrogen. On the right side, it shows how much of an additional opportunity that could be for Siemens Gamesa. We do this here in comparison with the electricity generation market for wind turbines. You see that in the lower boxes, four sixty gigawatts are the accumulated wind power installed by 2030 for electricity. And we believe on top of that, there could be a 60 gigawatt market that is just dedicated to producing green hydrogen.
If you look five years ahead of that, you see even more could be coming from green hydrogen on top of the normal electricity generation market from wind turbines. So also for Siemens Gamesa not only see the strong growth in our core business, which is making wind turbines for electricity generation, But on top of that, depending on which scenario you look at, the base case or the high case scenario, there could be a huge additional business in which we could participate. And that is, of course, the main reason why we started to invest into it. It would be additional business for us. And the reason for that is clearly shown on the second page.
What do you need? You need a competitive hydrogen. You see here the blue bar, which is the hydrogen from fossil, the blue hydrogen. And going a little bit one step deeper than Christian did it in his first chart, he also showed how the cost for hydrogen would come down. And here, we compare excellent sites with normal sites.
And you see at the moment, green hydrogen is, of course, more expensive than blue hydrogen and then gray hydrogen. But with the levelized cost of electricity coming down, and Armin also addressed that, we believe that we can become quite competitive. You see here normal sites and then best sites. If you look at low cost solar or at high wind resources locations, plus like the one in Chile or in Australia, then we believe we can become competitive with green hydrogen in the best case wind already quite soon. Depends, of course, all on the load factors.
I mean talk about six thousand hours in Chile. That would be a fantastic onshore side. Offshore with higher CapEx might take a little longer. But nevertheless, based on the declining LCOE for wind electricity from on and offshore and the scale that we see coming in this industry, we believe that the cost for green hydrogen will be rapidly falling. If you then move to the next page, and I would like to start with onshore.
And why do I start with onshore? Because that is where we believe the first applications will be. You can see here the same numbers that I shared with you on the first page, the additional volume of wind power generating green hydrogen. And you see here by 02/1930, the 60 gigawatts, most of that will be onshore simply because that market is much easier to attack. The development times in onshore are shorter and therefore believe that the green hydrogen market with electricity from wind will start in onshore.
There are also already a lot of small to medium scale applications available with existing use cases. Christian talked a lot about the use cases like in fertilizers, and they are available and foreseeable from 2023 onwards. The large scale hybrid projects like onshore wind and PV, maybe often in combination as a hybrid project with favorable wind resources like in Australia and Chile, they will come up in the mid-2020s and after that. But already now, we see around 30 gigawatts of projects, so 30 out of the 50 gigawatts already globally announced onshore hydrogen projects. You see here some of the key markets I mentioned already, Australia.
There's a lot of talk here in Spain, also driven by the green recovery packages about green hydrogen from wind. And then you see a number of other countries, Chile and others I mentioned already. But this will be only the beginning. You see also that this develops into a much, much bigger market in 2035 and, of course, after that, all dependent, of course, how fast we are able to drive the costs according to the curve that I showed on the previous page. So how fast are we able to drive down costs?
If I then look at the market for offshore, that is the second part, the green part here, it will start slow and will start small with 10 gigawatts. But even 10 gigawatts, to give you a comparison, currently, the offshore market in total per year of annual install is five gigawatts. So that already would mean two additional years' capacities for offshore wind by 02/1930. So it's also quite an interesting growth opportunity for Siemens Gamesa. And of course, with the development times and also development times of the projects but as well as the technology, this market will then pick up after 2030 even faster.
The large scale projects are only planned by the end of that decade. And here, the North Sea would be an ideal starting point, first because of the excellent wind resources, and we know that already from all our wind farms that we have installed in the North Sea. And of course, there's a strong demand for hydrogen. And we believe also that the rest of the world and any other countries will follow. But clearly, we believe that this large scale offshore hydrogen wind turbine market will take off in the North Of Europe.
And here, the advantage of North Of Europe is, of course, the scalability of offshore wind. The normal offshore wind farm in the meantime is already 1,500 megawatt. Capacity factors in the North Sea are fantastic, easily above 50%, 55%. And the availability of sites in the North Sea is also given. So therefore, we see already now around 20 gigawatts of globally announced offshore hydrogen project.
So clearly, also that market becomes quite interesting with real projects being announced by many players. There might be an additional interesting market segment, which we call brownfield. That would be adding an electrolyzer into an existing wind farm. The early wind farms will see their feed in tariff expiring, incentives fall. And in order to give these existing wind farms kind of a new life, that could be an additional opportunity for us.
Also, electricity prices are declining. And with many of the early wind farms located close to hydrogen demand hubs like harbors or ammonium clusters, If we were to upgrade an existing wind farm with electrolyzers to generate not only electricity but also hydrogen, that would be an additional business opportunity. And we believe that these opportunities already can be realized before 2025. The development times are shorter. The CapEx requirements are, of course, smaller because the green electricity generation, the wind turbine, is already there.
And therefore, we expect that this can also generate quite competitive LCOH cost, the levelized cost of hydrogen already in a very early phase. Again, here, we see some sample projects already picking up. And the countries that you see here stretch from The U. S, Spain and or Northern Europe. So we see these three markets.
And how could now Siemens Gamesa play in these three markets? For onshore, at least in the first phase, we clearly see that there will be a centralized solution. And centralized, I mean that the electrolyzer will be separate from the wind farm, will be it could either be installed in the wind farm but separate from the wind turbine or at the other end of the electrical transmission line. You see that depicted in the first in the upper graph, and that is the first phase. So there is no dedicated hydrogen specific wind turbine development needed.
We will take a normal onshore wind turbine with an electrolyzer from, for example, Siemens Energy, and that could start the onshore wind hydrogen market.
Just give me a second. This has
to for offshore, we believe a different solution will materialize, which we call the decentralized solution, and I come in two pages how that would really look like. This would be an electrolyzer integrated into the wind turbine. And there, we would adapt an existing wind turbine to integrate the electrolyzer, and that would be then a hydrogen producing offshore wind turbine. And then the hydrogen will be transported either via vessels or hydrogen. So that would be the new unit kind of market.
And then, of course, huge service opportunities for Siemens Gamesa. From the classical operation and maintenance of the wind farm, it could also integrate the electrolyzer on the service side. But maybe even we do more like producing and selling hydrogen and also running the whole production side and production, I mean, electricity plus hydrogen. And this could be a fantastic growth opportunity also for our Service business. And in combination of the three, we see quite some potential of also driving value for Siemens Gamesa.
At the beginning, I was talking about the project from my innovative Danish engineer, and that's a picture from the project. We have taken an existing three megawatt turbine, combined it with an electrolyzer plus a battery, and now we experiment and retest how does that work. We add a new value stream. I was talking about brownfield project that would be an example of a brownfield project. And we generate not only electricity but also hydrogen from an existing turbine.
It clearly increases the value of wind power before the power goes to the grid. And it makes the wind farm much more flexible because it can either produce electricity or hydrogen. And we started to do so, and the hydrogen that we produce and sell here is used by a Danish company and used to fuel taxes in Copenhagen. The big learning that we will get out of that is how to optimize the whole operation. How does an electrolyzer operate with fluctuating wind power?
And how do you run such a complex production site? And how do you optimize the value stream between electricity, between wind, electricity from the grid, producing hydrogen, storing hydrogen, storing electricity in the battery and feeding it back into the grid. So for us, it is an extremely interesting project, and it will give us a lot of experience for future larger projects beyond just demonstrator scale. If we then move into offshore, Armin was talking about that project already, where we would take a 14 megawatt wind turbine, our largest offshore wind turbine that we have currently in the market, and we would combine it with a Siemens Energy electrolyzer. This is a joint development project that we just started, and that will take a bit more time.
We expect to have the demonstrator up and running maybe in mid-twenty twenty. And this clearly has benefits if we combine both. If we make a tailor made and modified wind turbine to produce hydrogen, It will reduce CapEx because we can take out all the HVE infrastructure that is needed, and we can replace it by a pipes network. It's also, with regards to application in the North Sea, much easier. It would also, according to our calculation, increase the system efficiency and thereby drive down the cost for the green hydrogen to be produced.
And it would also increase the plant load factor because it's much more flexible than if you just take off the shelf products. So we are clearly excited about this project. We started that, as Armin said, a few months ago. And if you go to the next page, you can see why that cooperation between Siemens Gamesa and Siemens Energy makes so much sense. First, it's building on the strength of both company.
We are the first to announce this combination. We are clearly the market leader in offshore wind. Last year, again, we have installed about 79% of all offshore wind turbines in the world. The market leadership of Siemens Energy, Armin, was much better to explain that with the size of electrolyzers and the experience that Siemens Energy has in PAM. And the scope of the collaboration is the adaptation of our largest offshore wind turbine, the 14 megawatt two twenty two, and to combine that into a fully integrated turbine.
And with that, we are going to develop a large scale or commercial scale electrolyzer. And we are going to test, of course, how does that work then, and we are looking really forward to this cooperation and hope to have the as I said, the prototype of that cooperation and of that 14 megawatt hydrogen turbine up and running maybe 25. And then from there, we hope to see then large scale projects. But for me, it is important that we take all these steps from the Branda hydrogen project to this tailor made offshore wind turbine into a test phase, but then from there onwards into a commercial phase. And we expect them to have large scale projects, as I said in my introduction, about the market by the end of this decade.
So thank you very much for your attention, and that would conclude my contribution to the Siemens Energy Hydrogen Day.
Thank you very much, Andreas. We are right on time, so that means we will actually have a 10 break. As I mentioned earlier, after the break, we're going to have Vinod Philippe talk about hydrogen across Siemens Energy. And we have Musabe Al Kabi talk about the role of The UAE in the hydrogen economy. Q and A, as I mentioned earlier, at approximately ten to four.
And I also mentioned before that it may be a good idea if you would like to ask a question later during the Q and A if you already dial in now and place yourself in the queue.
And
yourself in the I'm looking forward to see you all again in about ten minutes. Thanks very much. Welcome back, everybody. I'm very pleased to have Vinod Filip with me. Vinod is our Chief Strategy and Technology Officer, and he will talk about hydrogen across Siemens Energy.
So over to you, Vinod.
Thank you very much, Michael. So good afternoon. What I want to do in the course of my presentation is go a bit deeper into some of the areas that my colleagues Christian and Armin were presenting with regards to how the overall portfolio of Siemens Energy is both benefiting from the hydrogen economy as well as driving the hydrogen economy. And I want to talk about it in the context of the overarching pillars that Christian presented in his presentation. When we talk about Siemens Energy and we talk about how we want to partner up with our customers towards a decarbonized future, We focus all our efforts in terms of technology, in terms of solutions in these three pillars.
We want to talk about how we help power generation get to either zero emissions or low emissions. We talk about what we are trying to do in terms of products, services and solutions in the transport of electricity and storage. And finally, there is a massive opportunity, as Christian described, even in the industrialization space when we talk about industrial processes and what are the kinds of things we can do at Siemens Energy to help reduce the CO2 footprint and the energy consumption of our customers. So what I want to talk about today is how, with the other parts of our portfolio, we are able to fulfill these directionalities. So when we talk about the value chain of hydrogen, there are many different elements to it, as you all know.
And Andreas presented the opportunity for wind coming from the side of the renewable business and the green energy. And at the same time, Armin talked about how the products and systems around electrolyzers play such a vital role in this whole economy. But that's not all. We also have many other products, as you can see in this landscape, coming from either our transmission business, where we have world leading products around our grid access solutions, our transformers, switchgear and so forth and then about our gas turbines, our entire portfolio of gas turbines and also the compressor portfolio that all play an essential role in either the supply side or the demand side of this hydrogen economy. Before I go into some of the rotating equipment relevant details, I want to spend a bit of time talking about how our transmission business is both a driver as well as a beneficiary of this whole value chain.
With some of our latest systems we have around HVDC grid access or even HVAC grid access, We have clear market leading positions. We have benefited and developed systems that continue to drive this transition. When we talk about the growth in wind, we have specially designed distribution transformers that are some of the most preferred products that our wind OEMs are using. We also have on the green portfolio side of our business, we have our SS6 Free switchgear, which is an essential component of a decarbonized chain. So what we see is as this economy develops along the lines that Christian presented along with Andreas and Armin, we see a lot of additional value coming into our transmission portfolio, which is also a key part of the overall Siemens Energy story and the overall Siemens Energy value proposition.
Another important piece that I want to highlight is that this entire business of transitioning to a hydrogen economy cannot be done by one company alone. Christian touched upon that in his presentation. I just want to highlight that again. We are developing and will continue to develop partnerships with key players across this value chain who help this whole system move forward. And you can see some of these on the slide here where we talk about working with partners in the area of e fuels, direct air capture and so forth.
And these are things that we will continue to develop in the years to come. Now let's talk a bit about the rest of our portfolio, starting with compression. Christian touched upon this in terms of the fact that we have 1,500 operating compressors in the fleet. And if you go beyond that, when you break it up into the different parts of the hydrogen chain, there is a lot of currently running assets in our recip compressors, as you can see, that are playing a key role in the pipelines, the storage and also liquefaction. We continue we have over 2,000,000 horsepower of recip compressors installed worldwide that are already playing a key role in the current hydrogen economy.
In addition to that, we continue to develop our turbo compressor line. We are looking to improve the density and the mass flows of our compressors so that when we talk about the transport of hydrogen, this becomes a key part of it. And ultimately, all of this is being also supported by our exceptional service organization, our service network that makes sure that we are able to provide this sort of key rotating infrastructure both for our existing asset base as well as for the new assets. So from our perspective, with the focus we have in this portfolio, we are very convinced that we are able to develop the sort of technologies and products needed not just for the current but also the future. And if you look at what you see on the left side of the slide, with the green hydrogen as well as blue hydrogen, we are developing our products that we have in some of the other parts of the value chain and moving this into the new green energy section.
So ultimately, our existing portfolio is relevant. We will make it even more accessible, and we will use all of our portfolio to be able to drive the topic of hydrogen forward in line with the overall company strategy and more importantly in line with the needs of our customers. I want to switch gears now and talk a bit about gas turbines because a big part of the beneficiary in terms of the hydrogen economy from the consumption side is our gas turbine product line. One of the things to highlight is the combustion of hydrogen is different from that of natural gas. And this is just an overview of how this differs.
When we talk about hydrogen, the physics of hydrogen, the diffusivity of hydrogen, the reactiveness of hydrogen is different. That leads to a different sort of combustion dynamics and combustion characteristics that we classify as flame kinetics. And what you see in the picture in the middle is how, with different amounts of hydrogen in the fuel mix, the combustion flame profile changes. Now there is a lot of know how and competence, Christian touched upon this in his presentation that a big part of our value proposition is how our deep domain knowledge in the area of combustion with different sorts of fuels can be relevant for hydrogen. And one of the most important things to highlight here is that with our adjacencies in the area of additive manufacturing, where we also have a very, very advanced state of the art, This is also playing benefit to our combustion technologies.
What you see here are some of the new burners that we have designed for our medium gas turbine product line, the SGT-six hundred, seven hundred and eight hundred that are optimized for hydrogen combustion. What we can do with the fine details that we can develop into these three d printed models and designs is to avoid certain risks around flashback or hotspots and to make sure that we can also reduce the development cycle times to be able to develop the technologies even faster. So the point over here is that our deep domain knowledge in combustion, in gas turbines and our advances in additive manufacturing are all coming together to play a pivotal role in this sort of a moving forward in the area of hydrogen. So what does that mean for the real products? What you see here is the current and future hydrogen capabilities of our gas turbine portfolio.
What you see is depending on the specific product line, we are today commercially released to burn different levels of hydrogen. For example, in the SGT-six 100, we are able to go up to 60% in hydrogen combustion. And I'll talk a bit more about this in a later slide. Similarly, with our large gas turbines, the E class, the F class, the H and the HL, we are already able to burn 30% hydrogen in the fuel mix, and we will continue to develop these technologies. One important point I want to make here just to set the context straight is that as we look at hydrogen in the context of generation, the infrastructure challenge of making sure that these large volumes of hydrogen are made available for the gas turbines is going to be as much, if not a bigger challenge, than the technicalities of being able to burn the hydrogen.
And what we see here in terms of timescales is that over the next two years, we want to make our medium gas turbine product line 100% compatible with 100% hydrogen mix. And on the other hand, with regards to our large gas turbines, we are going to continue developing the technologies as we see the needs in the market evolve so that eventually over the course of the next few years, within this decade, we are able to burn 100% hydrogen. What you also see here is that we have a very strong base to start from. This is something that I want to get across very clearly is that our gas turbines today are burning varying levels of hydrogen in them. We have them, for example, in our Syngas fired F class gas turbines in different parts of the world over forty five years of accumulated knowledge and operational experience in syngas combustion.
Syngas, as you might know, has got already a pretty high fraction of hydrogen in there and this is something that we have already been gaining experience on. Similarly, when we talk about our medium gas turbines, we have a lot of experience mixing hydrogen with natural gas for specific applications and so on for the small and aero gas turbines also we see a lot of existing experience base that we can tap into. One of the side benefits of having this sort of operational experience is that we are able to feed back the experience so that we can develop the technologies faster. We can develop the technologies in a more qualitative manner so that we can get the sort of product quality and product reliability that our customers are looking for. So when you talk about how we want to make this transition happen, one of our key points is that we want to make our technologies retrofittable.
And what you see on this slide is how we are designing our packages so that we can upgrade them to be hydrogen compatible in a manner that lines up with the specific needs of the customer. For example, if you take a power plant today that is based on Siemens technology, for up to 15% hydrogen mix, we don't need to make any major modifications. When we get to 30%, we have to make some small modifications. Up to 50% to 70%, we have to make some special adjustments around the burners and so forth. And then when we get to 100%, we are talking about a whole new burner system.
The point about this is that we are building on our service competence. We have a service network that is today developing upgrades that they bring into the power plants on a pretty regular basis. And we are designing our hydrogen strategy also to be compatible with this upgradeable approach that we use for other parts of our power plants. Some of the things that we talk about over here are what are the main systems that we have to try to upgrade or modify in the course of this transition. In some cases, depending on the specific use case of the customers, we have to make some adjustments in the plant and auxiliary systems.
In others, we have to maybe make some adjustments around the burners. And there are a few fundamentals around I and C systems, flame control and monitoring, fuel systems and so forth that, in general, require a bit of an upgrade and modification. But the overall story on this is that our hydrogen strategy is based on retrofittability so that we can make sure that the overall asset base that is existing today, the brownfield assets are all in the path towards decarbonization and becoming more sustainable. One of the things we have to also continue keeping in mind is as we work through these specific use cases, we have to make sure that we are satisfying the different certification requirements of different authorities. But ultimately, our view on this is that the hydrogen economy is also going to be a big boost in our view on how we can develop our service capabilities and build on what we already have.
This is one example, and this was touched upon briefly by Christian in his presentation, is that how we are working with a customer, Braskem, in Brazil to build in this hydrogen transition into their power plant. And what we have here is an SGT-six 100 that is able to burn high hydrogen containing residual process gas that the customer's process is emitting. And historically what the customer used to do was to use this process gas to convert to heat through a HRSG. What we have now designed over here is that the use of this process gas to burn in a gas turbine so that we are getting both electricity and heat. And by this sort of a cogeneration design, are able to reduce the CO2 emissions and water consumptions of this power plant by what the figures you see there, 6% CO2 reduction and 11% water consumption.
This is a great example of the third pillar that Christian talked about, where we develop products and solutions that help reduce the carbon emissions as well as the electricity consumption and resource consumption of existing processes. We are making this plant design fully redundant so the customer has a 100% plant availability capability. And this is something that we have built into our service business where we also have the O and M on the plant. This is just one example of the sort of solutions we can bring into the market today to start partnering up with our customers to be able to transition with them towards a more sustainable future. And when we talk about that whole footprint and we talk about the global picture, this is, I think, one of our key differentiators.
We have a landscape a network across Siemens Energy that has sales, service and execution capabilities in over 90 countries. And you also see that in this map where different parts of the world are working with us in different use cases. My colleagues talked about Haru Oni, First Alpine and others. What I want to highlight over here, for example, is how we are using the case with Stadtwerke Leipzig, where we are burning hydrogen and we will burn hydrogen in our SGT-eight 100. In this context, over the course of the next years, we want to make sure that the amount of hydrogen produced green is consumed in our SGT-eight 100 gas turbine so that we have a green combined heat and power plant in Leipzig with over 93% total plant efficiency being produced in a green sustainable manner.
Another example is what we have with our partner in China with SPIC, where we are working together with them to produce green hydrogen for the Olympics for the public transportation. And in The U. S, we are working with the Department of Energy to be able to develop a new high volume electrolyzer project so that we can also help The U. S. Market make this transition towards the hydrogen economy.
So what you see over here is that we have a very broad setup that allows us to customize and tailor our solutions, tailor our systems to the specific needs of the customers in the different parts of the world. As Christian mentioned, the problem, the challenge is extremely broad, large scale and complex. And there are going to be no single point solutions that will address this challenge. What we need are a range of options, a range of technologies and a range of solutions that we can then design for the customers together with them to meet their specific needs and specific use cases. And this is something we feel that we are one of the best positioned companies to be able to produce on a global scale.
This is just to reinforce the message that we are not starting from scratch at all. If we look at our fleet of running turbines today, we have over 50 units with 2,500,000 operating hours running in different parts of the world with varying levels of hydrogen. And this is something that is an asset base and experience base that is extremely valuable because this experience is what leads to the two very important second parts of the whole sustainability triangle: reliability and availability. So when we talk about this from a Siemens perspective, it is our belief that with our combination of competencies, our combination of our network across the world, we are able to provide very specific solutions that meet the different needs of customers. This slide alone will show you how across our entire gas turbine portfolio, be it an E class gas turbine or a SGT-two 100 or an F class, we have a broad range of capabilities that we can take advantage of.
And this is something we will continue to build on because this is where I think one of the key differentiators of Siemens Energy comes to the table. So if I finally pull all this together, what I want to clearly highlight is that Siemens Energy is a company that has a unique combination. And what is a unique combination? It's our global presence, our service networks, our deep know how, our access to customers and partners that are able to drive this whole economy forward in concert with all of the other players in this market. The second important point is that we have a pretty unmatched set of technologies, products and solutions and systems that support the entire value chain.
We talked about the wind turbines. We talked about the electrolyzers. In this presentation, I went a bit deeper into our compressors, our transformers and our gas turbines. And this whole thing being applied both to brownfield as well as greenfield. Because if we have to achieve the goal that we have set for ourselves of net carbon neutrality or net zero by 02/1950, We have to focus as much on the brownfield applications as we do on the greenfield.
When we talk about this, it's also super important that our customers require high reliability. Our operational experience that I was talking to you about shows that we have the capabilities and the experience to be able to provide these green solutions for production, for compression and for applications around the world. So we feel pretty confident that with this sort of a background and this sort of a portfolio and this sort of scale, we are the partner of choice for this transition to a global hydrogen economy. Thank you very much.
Thank you very much, Vinod. And now we are actually going to Abu Dhabi, where Manuel Kuhn is interviewing Musabe Al Kabi on the role of The UAE in the hydrogen economy.
We're here in, the Mubadala headquarter where we have been invited to. And, this conversation is part of the Siemens Energy's hydrogen innovation day, which is part of our investor relations activities
Mhmm.
After the spin off of Siemens Energy. With me is Musabe Alkabi, the CEO of the UAE investments platform from Mubadala and also a member of the investment committee. Thank you very much for having us. My name is Manuel Kuhn. I'm the head of new energy business for Siemens in Middle East and Africa.
And, since we had a lengthy and, very fruitful discussions already on how to cooperate on, the aspect of hydrogen and the hydrogen economy. It's my pleasure to have a few questions for you and have a conversation with you about your view and Mubadala's view on the hydrogen economy. Mister Akavy, you you just moved from your focus from traditional oil and gas and energy into specifically looking into the investments and the diversification in The UAE economy. And this all happens in the context of the energy transition. Can you please explain us a
bit what is Mubadala's thinking behind this move and your personal move? Thank you, Manuel, and truly looking forward for this conversation. Let's start with the energy transition. Mubadala maintained a clear view on the energy transition. We started our formulating our progressive and outlook for the energy back more than fifteen years back.
Mhmm. 02/2006, we established a renewable energy company called Master. And that vision was anchored around the world is gonna be is going to be different going forward, and the outlook for energy is going to be reset. So our view currently is consistent with the views of many people around the world, including Siemens Energy. We believe that the energy transition is happening.
We're witnessing a structural change in the energy landscape going forward. But in the meantime, we all agree that the demand for energy, demand for electricity is going to almost double from now up to 2050. So there will be a requirement to invest significantly in this space. And that energy transition is anchored around what we all know about climate change. Mhmm.
So we have a collective responsibility to play a constructive role in addressing the climate change issue Mhmm. And be part of a good force going forward. But let's also be realistic that the conventional energy sources like hydrocarbon will remain relevant. Mhmm. We might debate on the percentage of the hydrocarbon that will play in the future outlook of the energy, but it is going to be a significant part of that mix going forward.
Now let me zoom on the hydrogen. Why hydrogen? Why now? And let me take you back to the year 02/2008. 02/2008, Abu Dhabi and Masdar and Mubadala acknowledged this emerging energy source.
We conducted studies at that time primarily around blue hydrogen Mhmm. To see if it is a viable and commercially commercially viable source of energy. Technically, we confirmed our view. It is technically a reliable source of energy. The big question at that time, and we're talking about 02/2008, 02/2009, if you remember, that was the global financial crisis plus the commerciality of this emerging energy source.
So at that time, it was not very attractive because of many reasons, including the technological evolution of this method, the electrolyzers, the concept of blue hydrogen at that time. So, you know, we decided, yes. It's it's an area that we need to monitor. Two years back, we started reviving our view. Mhmm.
What would the future look like? How do we see the hydrogen evolving? And we upgraded our view on the hydrogen for few specific and or for two principles. One of them is, yes, it's reliable because it is addressing some of the inherited issues with the renewable Mhmm. The reliability of the renewable.
So this could provide you with a more stable source of energy twenty four seven almost at, hopefully, the right economics. And then, of course, it's gonna help on the global efforts to address the climate change. So we upgraded our view, and, you know, we decided that's something that we need to pursue. And we think we have the right environment here in this region and in Abu Dhabi and in The UAE to enable this energy source to grow and, you know, maintain Abu Dhabi's position as a reliable energy source like what we've done in the in the last fifty years.
Mhmm. I think it's it's very interesting to perspective if you if you think the the way how also Mazda by driving the renewable energy sector brought us to the point that today we can look at it again and say, what is the difference between today and 02/2008? And and actually the activities that that Mazda and Mubadala were driving in between actually are part of the story that that brought us here. So we we are really proud and and happy that that we have this this strong engagement and this discussion on how we can bring the hydrogen business forward, also specifically looking into The UAE. What is your expectation from Mubadala's side?
How the sector will develop? And and do you have specific industry applications or sectors in mind where you say that this this is where we should really look into first?
Yeah. Well, we've obtained a specific view on the potential of the hydrogen. So let me highlight some of the activities that we've done in the last three months. We started with Abu Dhabi Sustainability Week. We signed the Hydrogen Alliance where we brought three big Abu Dhabi entities on the table.
And we're debating. We're positioning the hydrogen agenda to ensure that Abu Dhabi maintains its leading position as a reliable energy provider. So there are different elements around that hydrogen alliance, and we are, as we speak, pursuing certain initiatives. So let me zoom in now to Mubadala. So in with Mubadala, we signed with Simmons Energy, and we're trying to collaborate.
We're identifying certain initiatives. How can we take our partnership not only in The UAE, but also expand it regionally and potentially globally? So, you know, there are also a few initiatives that we're we're pursuing together, as you know. Let me zoom in more to MASTER. MASTER signed a very important agreement and with the with parties from all over all over the world, including Siemens Energy, for a hydrogen demonstrator.
Mhmm. And why hydrogen demonstrator and why Abu Dhabi? We believe that this hydrogen demonstrator will enable us to prove concepts, certain concepts. And let me take one give you one example. One of them is a sun fuel Mhmm.
To enable the airplane oh, sorry, the airlines and to enable the aviation sector to become more sustainable Mhmm. And address the climate change. Because that's one sector, to be frank, that will face more headwinds in the future. Yeah. To so the big question to all of us is how do we how do we move that sector from carbon intensive Mhmm.
Into less carbon intense intensive and potentially green in the in the future. So we believe that hydrogen demonstrator where we potentially going to produce thin fuel from green hydrogen would be an important data point for global initiatives to make a traditional sector like the airs you know, the aviation sector to become more sustainable in in the future. So, you know, we're we're we're working, with, like minded partners like, Simmons Energy, and I hope to have a similar conversation down the road in one or two years from now, and we celebrate the successful, hopefully, completion and of that project. So at different layers, we're pursuing all these initiatives and ensure you know, trying to promote this new source of energy. One last point I would like to make is that, also, hydrogen could and potentially could enable traditional industries in the region and in particular in The UAE to be become more competitive globally.
Mhmm.
And I'll give you one example. Emirates Global Aluminum recently announced the first ever production of solar aluminum Mhmm. Where they're using solar energy to offset part of their conventional, you know, energy requirement. And with that, they managed to certify certain production as a green aluminum. It's unbelievable how, you know, the the how customers reacted to that Mhmm.
That initiative, which means that ultimately, Simmons Energy or Mubadel and here, we need to fulfill the requirement and the desire of customers globally. If they want the green products, we need to provide them with the green products. So I see it as also an enabler
Mhmm.
For certain traditional industries to move from carbon intensive, traditional industries into less carbon intensive, potentially green industries in the future, and that will enable these industries to become competitive globally. Mhmm. And hydrogen should and will play a constructive role in upgrading these traditional industries.
It's fantastic because it it also shows that we are creating a different kind of product. Green aluminum is not the same thing anymore. It it it fulfills the same function in the car or wherever it ends up, but it's not exactly the same product and the same would probably also hopefully apply to our sustainable aviation fuel. There is there is obviously a lot of debate about now choosing the right sectors where to start, what's the right market which might scale, where there are still alternatives. But the ultimate goal, I I believe, is to bring in value add also into The UAE and allow this economy, this high hydrogen based economy or hydrogen supported economy to to further further scale.
What's your view on that? And where do you see the opportunity and and and challenge for them?
I think I as I mentioned earlier, I think The UAE, we're we're we're pursuing in different fronts when it comes to the sustainability ESG agenda. So we have a strong confection that oil and gas will remain relevant for the foreseeable future. I think there are also more initiatives to for that traditional industry to become more sustainable. So we're we're exploring and we're pursuing carbon capture. Mhmm.
That is one emerging or already established technology that will make conventional hydrocarbon more sustainable. We're pursuing more efficiency Mhmm. In the system, upgrading the power sector in The UAE. We're cons we're pursuing, of course, our renewable energy through master, waste to energy. On top of that now is hydrogen, and that built on the legacy of The UAE.
So we've been a progressive nation for the last fifty years, and we'll continue to be a progressive nation going forward and embracing these changes. Mhmm. So I am confident that we're creating the right ecosystem to enable other supporting industries to fulfill that vision. So be it in the technology side, be it on the efficiency side, be it on the renewable side. So they I think that collectively, we will create that ecosystem to enable more sustainable activities and creating the right, I would say, socioeconomic impact.
Mhmm. And if that's successful, the big the the next question is why don't we expand the treasury and expand it potentially elsewhere in the world? So, these are the areas of focus. You know? I mean, when it comes to the energy, we also embraced for the first time probably in the in the region, at least in the Arab world, a nuclear power Mhmm.
You know, power generation. So that's something also added to the mix, and I think will provide the right ecosystem in the in the in the country and address also the issue of climate change Mhmm. And ensuring that we will minimize our carbon footprint going forward. So it is one piece, the hydrogen, of many other pieces that collectively will position The UAE, Abu Dhabi stronger going forward, especially in the in the energy space. And I am confident that we will see more and more initiatives going forward.
So in a nutshell, Mubadala is very committed to this space. We're very committed to push the economic diversification agenda, and part of that economic diversification is the energy transition and the hydrogen role. And we're looking for like minded partners like Simmons Energy. And I hope to have another conversation with you in a few years down the the road, and we're celebrating key milestones. Mosabe, thank you very much for the for the wrap up already.
It was very insightful, and,
I truly believe that, the energy transition and the diversification initiatives in The UAE that have been driven since many years already are actually completely working hand in hand. And I think, Mubadala is the best is the best example how to drive this.
Thank you. Truly enjoyed the conversation. Thank you. Wish everyone all the best. Stay safe.
You too. Thanks.
Thank you also from my side, Muzaba Al Kabi and Manuel. We now have the Q and A. So I've got with me Christian Buch, I've got Vinod Filip here and Armin Schnetler. At the moment, we've got about 10 questions, and we're going to start with Gael de Bray at Deutsche Bank.
Ger, please go ahead.
Hello. Good afternoon, everybody. Can you hear me well?
Yes, thank you.
Okay, cool. Look, the first question I have, from a strategic point of view, the key focus of Siemens Energy so far seems to have been on turning around legacy businesses and not so much on investing in growth. So with the prospects of the hydrogen business unlikely to be profitable before 02/1930, at least for the electrolyzers part of it, how do you think about the potential conflict of interest here? I mean, the risk I see obviously is that you will only start building the electrolyzer capacity really in ten years' time when there's going to be a market. And meanwhile, all the players, startups will perhaps have eaten your lunch as we've seen in other industries.
So I'd like to know how you think about this.
Clearly a question for you.
Hello, Gerhard. Good to hear you. And thanks very much for raising the question. It's a very, very valid one. I mean, I come always from the logic.
I mean, the company needs to be stable first, then profitable and then grow. That is my logic, which I explained also on the Capital Markets Day back in September and which prevails. At the same time, we are spending roughly also what I said in September, 1,000,000,000 in terms of R and D money across the different businesses, sometimes to make our service business more profitable, sometimes to look into new things like electrolyzers. And this is a fine balance. That said, very clearly, I mean, what we communicated on the Capital Market Day is what we're working towards, delivering on the profitability improvements of our company, creating options for the future.
But as I've clearly also said on the Capital Market Day, and I think we also showed today, it is a longer term option. And this does not really stand in the way of driving up our profitability. That is our commitment, and this is very clearly the priority setting in terms of driving it. But at the same time, we're obviously a company with a quite broad and diverse portfolio that we want to keep the options open for future growth. But first comes the profitability.
And then based on this, we want to leverage a good ecosystem, what we have, to really tap into future markets. The key message today was more in terms of saying, look, we have a machine running, which is under optimization in terms of how to deliver projects, how to develop products and services to the market. And we can leverage these capabilities also in future technology areas, like potentially hydrogen, probably a lot better than others. But as I said very clearly, we are working on our cost out programs. We are working on our profitability programs.
And this is our key commitment, which we'll not walk away from by no means.
Thank you, Christian.
Okay. Can I have a second question, please, on the relationship between electrolyzers and the wind market, because obviously a key driver for the cost of electrolyzers is the cost of renewable power? Could you comment on what you're seeing in terms of pricing development in the most recent auctions, in particular in the offshore wind domain when where there seems to be a lot of both appetite and competition?
Yes. And I mean, what you see and you have seen it in the last auctions, you will have continuously new players coming in and you will have more players coming into the market. At the same time, it will be massive capacities now coming in, let it be if you look on Europe, The U. K. Or Denmark or even Germany or now also with The U.
S. Looking really going much bigger into this. I do believe that, let's say, the general levelized cost of electricity in the offshore wind will further come down. We have to work against it in terms of really having leading products and how best also to design and shape it. But I think in the hindsight, it also means the competitiveness of offshore wind power does increase, right, in terms of also making this electricity source very interesting as a renewable energy source.
So in this regard, I think it's a normal process. I do believe, as I said, it's levelized cost of electricity also with the bigger sizes of the wind parks going to come down. And even more important that we always have the leading edge in terms of the right turbine at the right time to position in this market. But I think it is now an area which sees a different step of growth compared to the last years and a different amount of players moving into this. However, Gael, you also know that the development of offshore wind projects is also takes some time, right?
We are talking today about projects which would be then five, six, seven years out. And obviously, this is now the process which the industry is going to do, but I expect the levelized cost of electricity further coming down.
Thank you, Christian. Thank you, Gael. If I could ask, given that we have so many callers, maybe that we start with one question, maybe a small follow-up question before we then go maybe and ask an additional question later. So the next question comes from Andreas Willi at JPMorgan. Andreas, if you please go ahead.
Thank you.
Yes. Good afternoon, everybody. I'll stick to one question then, one for Christian. If I look at the medium term plan you presented last year, the guidance beyond 2023 talks about 0% to 3% revenue growth for Siemens Energy. That includes Siemens Gamesa, which will probably imply negative revenue growth for Gas and Power.
Given the opportunities you've discussed today on the hydrogen side, is that still a valid assessment of the longer term growth that the new opportunities to transition some of the existing offering into this hydrogen economy is not going to be sufficient to grow revenues overall for Gas and Power?
Thanks, Andreas, for the question. And I mean, it's obviously, when we presented the plan last year, we didn't include a growth element really from the hydrogen because we treat it as an option. We say this is a market to come. We see, obviously, now a a couple of months later, the market becomes more and more realistic. We didn't include it in the planning.
And it's an option, obviously, for further growth. But the numbers which we have shared in September, obviously, are really driven of making our business profitable on the existing base. And I think looking forward into the particular second half of the decade, there are several elements in the areas where we are active where you could construct more growth cases around. But I also would link to the first comment to get from or question from Gail to say, let's make sure profitability first and then stepwise into the growth cases. The element about hydrogen, where I'm always careful to say is when exactly now does it come because, as I said before, some boundary conditions need to change.
We need to give CO2 a value. We need to give green hydrogen a value. If this comes and these things fly, yes, and I also said it in another area, I believe it can be a big market for us. If you see what alone I mean, the 40 gigawatts would reflect, I mean, it's a double digit billion amount of investment into these areas. So it could be, for us, let's say, billion market, but this is an option where boundary conditions still have to change.
So going forward, the answer would be yes. Is it but it's too early now to quantify it or testify it? This is why I also said it's not our Capital Market Day two now. We will do it in 'twenty two, having relooked on the options. And for the time being, obviously, our projections do not include potential growth from hydrogen opportunities based on electrolysis.
Thanks for the clarification. To follow-up on that, when you say you basically see this market, particularly on the electrolysis side, to develop over time and you will develop your business as the market develops. What's the risk that others just spend the money and develop huge capacities ahead of that because the equity market is clearly giving some companies pretty much free capital at the moment?
Yes. And I obviously, I'm very convinced that with the activities we are doing also to develop new fabrication methods, automation of the fabrication supply chain and so forth, we're doing all the right things. And honestly, then building up the, what you would call it, gigafactories is a lesser part of my concerns, right? It's more really do we have the supply chains in place and so forth. So I think you do not get kind of a leapfrog mechanism if you pre invest.
I think you can build up a factory relatively fast if the rest of it is in place. I mean this is what Armin and his team are doing. And obviously, in this regard, I think it's other things which we need to drive, which I think we're doing with the partners and with the money we spend to the extent we need to. And I feel comfortable to be able to face this competition, let me put it this way.
Thank you very much.
Thank you, Christian. And the next question comes from Ben Uglow at Morgan Stanley. Ben, if you please go ahead. Thank you.
Thank you, and good afternoon, everyone. I hope that all are well. Really, I think my questions are more on the technical side and and maybe potentially for Amin. What what I was curious about, two things. On on the electrolyzers, you mentioned in your presentation that there is quite a lot of know how around the the membrane and the coatings.
And I guess my question is, in principle, how is the barrier to to to entry? I mean, how complex in reality is it for a company to to develop pen technology in principle? That's question number one. Question number two is just alkaline versus pen. You're you're making an all in bet, really, on pen, where there are plenty of companies around the world from China to Norway that are using a more broad based approach.
Did you believe that alkaline is is a thing of the past and that the future will be pen?
Yeah. Thank you.
Thank you very much for the question. I mean, to the first one, the the entry barriers. I mean, it is relatively easy to build some kind of a pilot application, a fuel cell or an electrolyzer. But it is relatively difficult to build it in the large scale and over long periods for a long duration. We are not talking about small pieces.
We are talking about megawatt industrial scale electrolyzers. So the entry barrier is relatively high there. And you need a lot of operational experiences in order to optimize the design, the coating and all of that for long duration reliability and endurance. So this is what how we see. The second part of your question is the alkaline, a topic of the past.
I mean, we will see definitely. The history, of course, is with the alkaline. If we would not believe in the PAM, we wouldn't do it most likely. On the other hand, of course, what we are doing right now is to look into the heart of the system to understand every bit and piece in order to optimize it, but at the same time, of course, looking to the left and to the right side in order to look what are the technology developments for the next generation, say it in the alkaline, say it in the next generation technologies, high temperature electrolyzer technologies. So we are technology agnostic but with a strong focus on the PEM because we believe in the PEM technology similar to the development maybe on the photovoltaics, on the power electronics.
So we do believe with increased volume that even cost will go down significantly and and and and, say, reliability will even more increase.
Understood. Thank you very much. I'll pass it on for now.
My pleasure. Thank you.
And the next question comes from Sean McLaughlin at HSBC. Sean, if you go ahead, please.
Good afternoon. Thanks
for taking my questions. I mean, firstly, just on the multi gigawatt facility, I mean, is when do you pull the trigger on this facility? What is the catalyst? And what kind of CapEx would that, facility require? And and secondly, a broader question just around blue versus green hydrogen.
Now I there are a number of different views out there as to, you know, green versus blue, but it's clear that the majority, I think, of the earlier investments are coming in blue. I mean, do you think carbon capture is a missing part of your portfolio?
I would take the pleasure to distribute the questions, right? I mean, if Vinod can take out the blue one and you do the rest, right? I mean Yes.
Thank you, Sean. I think on the blue versus green, I think the first thing is that, as I also tried to explain in my presentation, the portfolio we have today around compressors and gas turbines are pretty agnostic to the color of the hydrogen. So if the blue market develops and will continue to develop, we can tap into that and benefit from it. In the context of whether this is going to be something that we have to do some special development for, not really. So our portfolio is pretty resilient to be it blue or green.
And with regards to the overall discussion on carbon capture, we have some ideas that we're exploring right now. But I think also one important point to get across is we at Siemens Energy want to create a partnership based innovation approach also. And we do believe that there is a place for us to partner up with other companies to bring some of those technologies into our integration and solution delivery capabilities. So at this point in time, we look at carbon capture. It's more of a partnering approach we are taking.
We believe that's a better value proposition for us. And in the blue versus green, our portfolio is resilient to both.
Armen? Yes.
May I take over the increase of the capacity? I mean, as we already communicated, the capacity right now, what we have is in the range of, say, two forty, two fifty megawatt a year, which can be easily doubled within a couple of months just by adding a second shift, so having the right people in place, which is relatively easy to do within Siemens Energy. Then to ramp it up, of course, is a part of the automation process. It's, of course, in the supply chain to qualify more sub supplier to get the market ready requires CapEx investment in automation and production and, of course, the electronic management system in the range of, say, low double digit million euro investment.
Maybe let me add one comment to this, Jean, on your question. What is then does make a use case in the gigawatt area really then fly? Obviously, at the end, it's about how bankable is the project. Does it make sense in terms of the operational cost? And this is my point around what boundary conditions are set up around it.
First of all, I think at the moment, if it's not if it's just for demonstrating it, it makes more sense to demonstrate 100 megawatt than one gigawatt if you lose by the operation money. And this would be obviously the logic. But as I said before, in the use cases, there are cases which you can make FLY relatively easy if the respective parties involved will be willing to do so, to fence off certain products, to give the green molecule a value. But the key blocking point to having these gigawatts of projects going forward, I think, is exactly this, is on the operation, not so much on the investment cost, but on the operational cost because power cost versus not granting green hydrogen a value, there is a mismatch, is on the operational cost this gap closed. And this is why, obviously, certain regions talk about carbon contracts for difference and identifying this.
And this is now like this green premium, which has to be clarified in the gigawatt projects.
Thank you. And with that, we come to the next question, and that one comes from Simon Turnison at Jefferies. So Simon, if you please go ahead.
Yes. Good afternoon, everyone. Can I ask on the opportunity for the gas turbine market? You mentioned the retrofit opportunity, for example, for the combustion chamber today. Maybe you can use one example of your turbine fleet and elaborate a bit more.
I don't know if you want to mention it as a percentage terms to the overall cost of a turbine or in absolute euros. But what's really the upgrade potential to one of your turbines as an example if that turbine had to run on a hydrogen fuel mix? And then secondly, just in terms of your patent technology, if I read correctly, it's very reliant on rare earths such as iridium, for example. And I read that the iridium market is quite limited in terms of capacity today. How do you think about potential shortages here and the potential impact also on price increases of rare earths to your production?
And are there any alternatives you could use? You.
Go to start on the gas turbine?
Yes, I can. Thanks, Simon. I can take the question on the gas turbine upgradability. So if you think about it from the context of today, so today as part of our service model, we are offering combustion system upgrades and turbine hardware upgrades today. So this is part of our long term service contract model where once every few years, based on the operational history and the needs of the customers, we go in and we replace combustion hardware with low emissions, better combustion hardware.
So the introduction of the hydrogen capability through retrofitting is part of the same long term service or same service model. So we are not designing the systems to be more expensive for our customers. We want to fit it into the existing service models because that's the sort of a model we have right now. So for example, if you look at a F class gas turbine that was installed, let's say, fifteen years ago, in the course of the last fifteen years, we already have done probably four different combustion system upgrades where we went from DLN to ULN to ultra low NOx to lower PPM combustion right now. So the transition towards hydrogen and bringing hydrogen in as an upgradability is following the same sort of model.
So from our perspective, this is not going to be an additional burden per se on customers. And as I mentioned before, for hydrogen mixes of about 15%, we don't need to make any modifications. For up to 30%, some modifications, but all of this is still within the range of our existing service business and the service upgrade models. And I'll hand it over to Armin for the second question.
Yes. No, thank you very much. I mean the question on the precious metal like iridium, platinum, of course, it is right that we're using these precious metals in our electrolyzer technologies. The situation maybe is a little bit similar to the car industry when they required more platinum many years back. And since then, of course, the production of platinum increased by five times.
And what we are doing right now is, on the one hand, of course, to secure the supply chain and, on the other hand, working on the technology. In order to reduce iridium per electrolyzer, per module to go for the recycling, which is very important here with the right partners to do so and, of course, looking for next generations of electrolyzer technologies requiring no or even less iridium compared to the tape M technology we have today. So working on the technology, but also working on the next generation and on the supply chain.
Thank you very much.
Thank you. And the next question comes from Sebastian Gruber at Commerzbank.
Go Yes. You, Michael. First question is on the overall R and D spend. Christian, you mentioned the €1,000,000,000 that you have as a budget for the group. I think in the past, you said always €50,000,000 is roughly the budget that's going into the electrolysis piece.
But what you said today with all the other areas within the GP segment, so generation, transmission, industrial applications, Wouldn't this suggest that there's a structural need to step up this R and D budget going forward? That's the first question. And the second one is on the boundary conditions. I think you've been repeatedly pointing to the importance of the CO2 price to make the stabilized cost of hydrogen work over time. It's a bit ironic eventually, but is it fair to say eventually that the real kick start can only come through once really the politicians are really taking over in this particular aspect?
Thank you very much for these two questions. Maybe to the first one on the R and D spend. I think we explained also a little bit in the past on that a major driver will be relocation of funds also. On looking our on R and D spend. So I think there's a lot of potential to leverage different focus areas and to shift around from areas where we had spent in the past and where we want to spend in the future.
So what you're going to see is not an increase in R D. I don't expect this because I think we have a decent amount that is not a limitation budget, but rather in terms of really picking the battles a little bit differently. And this will happen gradually because at the same time, never to forget, the biggest spend of our R and D money goes into the incremental improvements of our day to day business, keeping the service margins up and keeping really the tiny little things, which are super important to drive profitability but obviously will not be the growth drivers in this. But we are now stepwise reallocating. Also not to forget, particularly on the hydrogen area, we have the pleasure to enjoy also certain subsidies in terms of joint projects.
And this third element is really looking for partners. I mean this is really something which is really important. Not everything we do in R and D, have to do alone, right? And really sharing also burdens. In this regard, even by driving more rigorously innovation, I don't think our spend has to go up.
I think we can do it more effectively. Now you have to remember the second question, sorry.
The power supply. The support and policy.
Sorry, exactly. Sorry, the CO2 support. I would give it back to you. I mean, this community here is actually perfectly suited to answer that question. I don't think so.
I think, honestly, industry and capital are going to move faster than probably a lot of the regulations. I mean, I see a different momentum today already to be willing to step into the first projects despite the fact that maybe not every CO2 price regulation is in place and not every carbon contract for difference is understood because the need is accepted to move on. And I see companies on the willingness to discuss already to anticipate a certain mechanism, which is not even there. So I would expect industry and, let's say, this private capital to tackle it even faster and push with this also then finally the regulation. But I think we do not have to wait until the global scheme is fully in place.
I think this will move faster.
Thank you very much.
You're welcome, Sven.
Thank you. And the next question comes from Jonathan Monsey at Exane. Jon, if you please go ahead.
Yes. Thanks for letting me ask the question. Just wondering about the kind of the whole hydrogen value chain and how much of an opportunity is you it is for you beyond even the electrolyzers. How much will you be looking to just sell the product versus the whole solution? How much can your compressor business play a role here?
I guess the hydrogen needs processing moving around. Is that much of an opportunity? And and what would that represent relative to the to the electrolyzer proportion of the overall opportunity?
Yes. So I'll take it, yes. And obviously, the answer would be it will be diverse on the different solutions and depending on the different use cases. You might find areas where just deploying an electrolyzer core unit even and put it out, and there might be areas where you do require electrolyzer as one part of the solution. You have heard Moussabi from Abu Dhabi also explaining that it's obviously one element of the variety, which then would combine really a wind park, really also the understanding on how do you do the potential grid connection, how is the bigger installation of electrolyzers and the whole load management.
So I think you will see both. And this is obviously also what we do see as our offering in the market that we can do handle this variety. If you look on the electrolyzers itself, and we just would look on what I would call the core unit and the balance of plants, the system overall, what is it normally, 20% on the core unit?
25%.
25% on really the module itself, and then the rest is really also balance of plant, integration, power connection and so forth. This is why it's also so important, and Armin alluded to this, that we do not think about it of just developing a stack, right? But we think of it developing also an electrical integration, digital twin, how do you do load management and so forth. And this is one of the offerings which I think Siemens Energy can with its capabilities, what it has better drive than probably a lot of others because we would need this diversity in the different solutions because they're going to look very different.
Is there opportunity for a short follow-up? Just regarding obviously, there's no rotation in the electrolyzer. I'm just wondering how the is there much of an aftermarket opportunity here beyond what may maybe compressors or something like that would offer? Is there much in the way of aftermarket revenue That's in an a super question, and
it will depend also very much on what is the optimum design from a levelized cost of hydrogen Because there's obviously an operating pressure of the electrolyzer and there's a need, for example, in the pipeline. Let's assume you go to a pipeline. Does it make sense to run the electrolyzer on a high pressure? Or does it rather make sense to run it at a lower pressure and compress it afterwards? This is not clarified yet.
And there's different designs in the market. And this is probably only answered once you're clear where these commercialized systems go to. But I think it's not unlikely to assume that for hydrogen pipelines, 40 bars, 50 bars, 80 bars on this level, you probably have somewhat like a mix, right, where you would run at some pressure the electrolyzers and still need compression equipment in larger installations. So there could be potentially the opportunity, yes.
Thank you.
Thank you. Next question comes from Iris Tseng at Credit Suisse. Iris, please go ahead.
Thank you, Marco. And I want to follow-up on the aftermarket opportunity of saliva. So it sounds like that and firstly, what is the lifespan of the system? And sounds like if we think about, say, ten, twenty years down line when the gas part of the business starts to decline and when the new energy part of the business starts to grow, and then the service business was before the more lucrative part of the business, while it sounds like electrolyzer, maybe that is of slightly lower aftermarket opportunity, if my understanding is correct, compared to, say, a gas turbine?
Armen, you want to take it in terms of really the long term durations and how the design is in the service piece? Thanks for
the question. I mean, the duration or lifetime of an electrolyzer as for any electrochemical, say, product or system strongly depends from the operational conditions, yes? If you have a smooth stable operation, so we do expect lifetimes in the range of forty sixty thousand, eighty thousand hours, as I said, depending on the operational conditions. If you really use them in with the strong volatility, shut up, shut down times, ramp up times, very similar to the gas turbines, then you stress all the products, all the materials in a completely different way, then, of course, the lifetime gets down. We call this the equivalent operating hour, what we are going then to calculate based on the operational conditions.
This is the first one. The second one, talking about the service business. In general, the stack, the electrolyzer stack, say the heart of the electrolyzer, is more or less maintenance free. Of course, all the auxiliaries, the compression, the pumps and water treatment and all of that, this requires some kind of maintenance. So what we are looking is some kind and this is what Christian and Vinod and myself, we were talking about the digital twin, is even getting operational data, calculating the age, the real age, the condition of the overall system and the plant.
And based on this information, we do make some maintenance activities specific for each part of the plant. So this is what's behind. So in general, the stack is maintenance free. The surrounding depend on the operational condition.
Thank you for that. And can I just quickly follow-up? So what are the key customers for your electrolyzer business that you envisage five, ten years down the line when the market goes up? And are they necessarily the same customers as you would traditionally have for the gas turbines? And if not, how you are going to make sure that you can capture that those audience?
If I just continue to answer the question, I mean, the customers, there could be any type of customer. So we are in contact for all our customers in the utility, in the industrial application field. So whenever there is a need for hydrogen in the process in the application, this one is typical the customer for an electrolyzer business. It depends a little bit on the application itself. It could be in the hydrogen where in the, say, mobility field with fuel cells mobility, for instance, then you do the, say, production of the hydrogen maybe even directly close to a filling station or you do it in a refinery, you do it in a steel plant.
It could be that the owner of the steel plant, the operator does it by themselves or himself or there's another company like the gas company like Aliquide where we teamed up with, say, is the operator and owner of an electrolyzer. Or BASF, we announced as well the partnership, they might become the operator and owner of an electrolyzer in the future, too.
I think one benefit is for Siemens Energy, and this is always to be seen, is obviously a very broad customer base. And there's a generation business, which obviously tackles all the electricity companies. But there's obviously also the transmission and the industrial applications business, which really cuts across all industries. And we have around 100,000 assets installed in the world, which also means it's across the different businesses, whether it's chemicals, steel, fiber, you name it. And what we're obviously seeing now is that because hydrogen is so versatile, you will need to touch all industries.
And that is one benefit we want to leverage because these are customers who know us today. There might be, on top of it, additional, but I think this is one unique benefit what we're having, of having extremely broad and diverse customer base on which we can build on.
You. You.
Great. And thank you.
So the next question comes from Supriya Supramanian at UBS. Supriya, if you please go ahead.
Great. Thank you, Michael, and thank you all for organizing this event. Definitely a very, very interesting topic. I just had one quick follow-up from an earlier question that you mentioned that in terms of the retrofitting related to the gas turbine business. And you said that you do not expect to be an extra burden to your customers and build it into your existing service offering.
How does that tie in with maintaining your high service work margin? Yeah. And I also have a second question on the electrolyzers business between Alkaline and PEM. When do you see or do you have an estimate of by when PEM becomes post competitive to Alkaline? And how do you see the potential future for disruption maybe from solid oxide or SOFCs as well?
Thank you.
Thank you, Supriya. Let me take the first part and maybe just reinforce the message. So the model I was talking about was our customers today have gas turbines that we upgrade. So the service model will remain strong because the customers are looking to upgrade their assets to be able to burn hydrogen. And when we talk about burning hydrogen, the overall degradation of the turbine in the future is not going to be fundamentally different from what we have today, which means that we will still have to have major inspections or minor inspections, major inspections, major overhauls in the same sort of a model as we have today.
So as Christian mentioned a bit earlier, in terms of the R and D investments we make to improve the profitability of the service business, driving cost out, all of those things are still relevant in the future to make sure that the service margins remain strong even under the context of a hydrogen fired gas turbine. What I was trying to say is that we don't expect the model per se to be disrupted, but we have to, of course, make sure that we run the fundamentals when Christian talked about stability, profitability and growth that applies to the Service business overall anyway. So that was the point I was trying to make that this is something that fits into the plans we have, and we will keep driving that business from a Service perspective and make sure that we do everything that is needed to keep the profitability levels in our ranges that we aim for.
Now let me take the part of the competitiveness. I mean, if we do not believe in the competitiveness of the PEM solution, of course, we won't do it. Of course, I guess that's clear. We would like and we are competitive compared to the alkaline business. It is important that we are thinking about the overall system.
There could be a special aspect with respect to the compactness, the application of a specific electrolyzer plant. It's about maintenance costs. So it's not only about the CapEx. It is the operational condition, the lifetime, but also the maintenance efforts. So we need to look for levelized cost of hydrogen rather than looking for CapEx, for instance, only.
You were mentioning the SOEC technology, an interesting technology, of course, in the technology readiness level, not by far not that mature compared to the PAM and the alkaline technology.
Thank you.
Okay. Thank you very much.
Thanks, Supir. Next question will come from Rajesh Singla at SocGen. Rajesh, if you please go ahead.
Yes. Hi. Thanks for taking my question. So we know like so we have been hearing a lot about hydrogen being a long term substitute or long term will have a very strong role in the energy transition. So from a near term perspective, when I look at your presentation, you have been talking about the retrofitting business.
So as you said that your customers are trying to update, looking for upgrade in their existing capacities. So what kind of revenue stream are you looking at for upgrading of the existing installed base of your gas turbines? So that is the first question. And the second question would be one of your chart you suggested that around two third of the hydrogen market would be driven by green hydrogen by 2030. So so can you can you basically explain a bit more about that on on those assumptions, like when we talk about blue hydrogen versus green hydrogen, why you are more bullish on green hydrogen than blue hydrogen, which looks a bit more easy than the green hydrogen?
Maybe let me jump in briefly and then hand over to Vinod for additional comments. In terms of if you try to calculate revenue streams and try to nail down numbers, I would say too early, right? I mean, I would see on how the markets develop, what is because as Vinod explained, it's obviously in an existing service model. This is our main target to keep the service model running and profitable. And then the question is, okay, when does it kick in?
Does it kick in in 2027 or 02/1930? Or what do we see there? And this will obviously depend on market develops. But it's really making sure that these assets are, first of all, usable and obviously, also the service model remains intact. So now on a percentage of revenue, we'll be heavily dependent on things which happen in the market and also where is green hydrogen used first.
Because as I said also in the use cases, they are definitely, from a CO2 perspective, certain things you would do before that, right? And I think this is always has to be seen once you look on green hydrogen applications. On the blue hydrogen versus green, obviously, you also have to see, I believe, it is somewhat to a certain extent, I wouldn't say a niche, but it requires special boundary conditions, right? I mean, you have to have the reservoir, you have to have the willingness to do it. Not every region who could do it does it.
And it's a technical possibility, but it will depend really on is it now realized or not on a lot of different conditions. Vinod, anything?
Yes. I would just reinforce what you said that for us, Rajesh, in terms of the strategy of Siemens Energy, it's really about making sure that we are partnering with our customers in the short and midterm as they transition with those three pillars: zero or low emissions generation, which creates a lot of opportunities for service within our existing service model and then the third pillar around decarbonizing and electrifying existing industrial processes that also offers opportunities to work with the brownfield assets within our existing business model. So as Christian said, we don't know how specifically that will develop, but at the same time, it fits very well in our strategy.
Okay. So maybe one follow-up. Thank you for the answer so far. How much is the installed capacity base for us in the gas turbine business till today, which we are servicing?
Yes. So roughly speaking, we are talking about a global fleet of about 1,500 gas turbines that we today, as Siemens Energy has on the large side, and then we add in altogether between the gas turbines and compressors and so forth. As Christian mentioned before, we have altogether about 100,000 operational assets around the world that are rotating, and all of these are the basis of our Service business.
Thank you. We've got two follow-up questions before we come to the end, and we'll wrap it up. And the first follow-up question will actually come from Andreas Willi at JPMorgan. Andreas, if you please go ahead. Thank you.
That was easy. Thank you, Andreas. Next question comes from Simon Turnison. Then Simon, if you please go ahead.
Yes. Thanks, Michael. One question I had on Europe. I think European targets are for 40 gigawatts cumulative in terms of green hydrogen by 02/1930. Do you think that's realistic?
And if so, what do you think in terms of market share you can capture over this period? And the second question, could you talk a little bit more about the bottleneck around distribution of hydrogen and how you think about it? I guess, and tell me if I'm wrong, but I think there are two ways. Either you make hydrogen liquids, which involves quite a lot of expensive upgrades to the existing infrastructure or building new infrastructure or you convert it to ammonia, which sounds like the much cheaper way given the existing infrastructure. If you could just talk a bit more about the bottleneck here.
Yes.
I would take it, but I would be happy also if Armin, let's say, adds on the different elements there. Maybe let me start with the second part first in terms of the right element of molecule. I'm also a strong believer that we have to look at existing logistic chains. And ammonia, methanol are these logistic chains which are there, which you can relatively easy tap into, which obviously would make a lot of sense. And this is also why we do look, for example, in the reference projects, like in a project for Haraoni, where at the end, the first step is producing methanol.
And then you could do classical gasoline out of it and do it through the classical transport routes. The liquid hydrogen is a possibility. Obviously, you know there are markets like Japan or certain parts of The U. S, which are based on liquid hydrogen, but in big ships, big fleets is something which is definitely more challenging. What we should never forget is looking on hydrogen also a little bit with an eye on the existing pipelines.
And if you see the big connections from where they're coming, I mean, you know there are certain from North Africa going to Europe, there's obviously some pipelines coming from the East, does it make sense to use them to transport, at least if it is just a co injection, which will then change the use case. But I think you will see the multiple ways on to transport hydrogen. I do believe existing resisting chains make a lot of sense. The 40 gigawatts in Europe, yes, do believe it's possible. I do believe it's very ambitious also at the same time, seeing the time frame what we're having.
I think it's honestly more ambitious even on the renewable capacity than sometimes even on the electrolyzers. This is also what we have to see. But it could still be done. And for me, the current time, and I'm talking now about the next five years, it's not about market share. It's about picking the right projects and doing the right things.
I'm happy to be asked from you once again about market share three years or four years or five years down the road, but at the moment, market share would be the wrong driver from my perspective. I mean, anything?
Difficult to add something. I mean, even the announcements. I mean, it's a European announcement. It's actually, it's two times 40, right? The 40 is in Europe and the other 40 is, I mean, for the import.
Considering what Christian said and the, say, development of renewable energy sources, for instance, in South America, in Australia, in The Middle East, Northwest Africa, it is maybe even more realistic to talk about these regions where electricity is very cheap and loading factors are very high that we are talking about a quicker import market rather than having this 40 gigawatts installed in Europe.
Thank you very much.
Thank you. And that was really the end of the Q and A. Thank you, everybody, for participating. Thank you all for being here. But of course, I would let Christian wrap up.
And before we go, Christian, over to you.
No, thank you very much, Michael, and thanks to all of you for staying with us for the afternoon. And I just would like to repeat what I said at the beginning. Hydrogen is a fantastic molecule in which we believe in. At the same time, this was not meant to be a Capital Markets Day and really changing things we said in September, but it was really meant to strengthen the dialogue, which we started in a lot of discussions before to make sure that we have a joint view on how Siemens Energy is capturing this opportunity and is building this going forward into the strategy. I hope you enjoyed it.
I'm looking forward to our continuous dialogue also in the other meetings to come. Thank you very much. Stay healthy and hope to see and speak to you soon. Thank you.