DI Energy Annual Magazine 2017

MISSION INNOVATION DI ENERGY SPECIAL ISSUE — 2017

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We must invest more in the energy industry

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RESEARCH AND DEVELOPMENT Bjerne Clausen, Haldor Topsøe

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esearch and innovation are among the main sources of growth and prosperity. As you can read in this magazine, at DI Energy we want more private and public investment in research and innovation. We want this because research and innovation increase productivity and with that a company’s competitive strength.

At the same time we note the lack of venture and growth capital in the Danish energy industry. I wonder why, given the huge potential of the global market. It ought to be attractive seen from an investor perspective. Globally, investment is shifting towards more investment in renewable energy and energy efficiency, among other things as a result of political goals for a green energy transition. At the same time, economic growth is driving increased demand for energy. If we combine these two factors with the desire for high security of supply, there is a need for energy technology development and that requires steadily increasing investment in renewable energy. But right now that is not happening in Denmark. If Danish investors with growth and venture capital have not discovered the potential in energy, well, we have to do something about it.

We would like to understand why and to find out, we have launched an analysis of Denmark as a pioneering country in technology. The analysis will among things other point out that capital-intensive energy technology receives very little venture capital investment. We find that worrying, because that is precisely what is required to kickstart vital innovation — and it takes a long time for energy technology hardware to become commercial. Denmark as a pioneering country in energy technology is an objective we would like to see set. That demands extra effort. We want it, because it promotes Denmark as a competitive green energy country.

For this reason, I welcome Denmark’s participation in the international initiative, Mission Innovation. Denmark is taking part together with a limited group of countries, not because of our size, but because we have something to offer.

It means that at all times we must make an extra effort to improve Denmark’s positions of strength. If not, others are waiting to take our place.

If we are to improve Denmark’s strengths, we need more funds for research and innovation. That is the reason for this magazine’s focus on the theme. We spend too little on technical research and training. Let us now become more ambitious.

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RESEARCH AND DEVELOPMENT Thea Larsen, EUDP

ENERGY STORAGE Lars Barkler, Lithium Balance

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INTERVIEW

We need a Mission Innovation plan for Denmark

Being part of Mission Innovation is good for Denmark and Danish energy technology. But as yet we still have no Danish plan for Mission Innovation.

We need to take action to prepare one. Taking part in Mission Innovation means we must invest significantly more than we do today. That is the message from Troels Ranis, director of DI Energy, a division of the Danish Industries Confederation (DI) TEXT Jesper With — PHOTO Lars Just

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INTERVIEW

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Danish Mission Innovation plan must be ambitious and reach beyond the perspective of the country’s next budget, says DI Energy director Troels Ranis. He is calling for significantly more public investment than the DKK 580 million promised by the government to Mission Innovation at the time of the Paris climate agreement.

“We ought to invest at least one billion Danish crowns, double what the government has promised. We have big ambitions on behalf of the DI Energy membership. There are lots of exciting projects out there, from both large and small companies. They need capital to be successful. The Danish commitment to Mission Innovation is through the Energy Research and Development Programme, known as EUDP in Denmark, which is nowhere near large enough to manage the volume of applications to come. We must remember that for every billion of public spending invested in energy technology, two billion is invested by the private sector. Spending one billion of public money is very worthwhile because it leads to lots of innovation and export revenue to Denmark,” says Ranis.

He points out that the national action plans presented in the run up to the Paris climate summit, COP21, demonstrate that the world is prepared to invest massively in the green energy transition. With 80% of global energy stemming from fossil fuel combustion, more investment is needed in green energy. Denmark must be there at the front, delivering the technology of the future.

“Of course we don’t know all the answers for the future, which means we have to invest strategically with an ambitious Mission Innovation plan that clarifies our priorities as a small country with a large energy technology potential,” says Ranis.

He welcomes the launch of a new export strategy for the energy industry by the government and energy, utilities and climate minister Lars Christian Lilleholt, which puts both of them at the forefront of boosting exports of energy technology solutions and services identified in the coming years.

Action to promote exports of energy technology will bring rewards for Denmark.

For this reason the initiative needs to be followed up by a plan to increase energy technology research and innovation activities.

Clean energy investment a mega trend As part of Mission Innovation a group of billionaires led by Microsoft’s Bill Gates

has established the Breakthrough Energy Ventures (BEV) fund to support investment in clean energy. The criteria for BEV funding are focused on innovative climate friendly projects and are based on the belief of the founders that the global megatrend underway is an essential energy transition.

“This megatrend will set the agenda for the global economy in future. It’s not philanthropy, it’s big business, despite Donald Trump’s possible change of course, which can only be a bump on the road. The development cannot be stopped, when the cost is so low and with so much dynamism in the development of new green technologies at competitive prices. We have to get ready.

How do we, as a country, go forward?” asks Ranis.

nologies is getting tougher, as other countries and companies wake up to the potential. He believes Denmark needs to devote more effort to — and be much wiser about — investment in new technologies.

“We must develop a still stronger culture of innovation in Denmark and become much better at scaling the good ideas in Danish companies for export markets, where there is a need for Danish new energy technology know-how. The BEV fund contains some big players who have chosen to enter the market for new energy solutions. It is an example that Danish investors should follow. There is money to earn and at the same time they would be supporting Danish positions of strength,” says Ranis.

Examples of the strategy working can be

“We must remember that for every billion of public spending invested in energy technology, two billion is invested by the private sector”

The cost of wind and solar power, the leading green energy technologies, has fallen drastically, to the point where nearly all countries can join in, not just the most affluent. It is a unique evolution which has progressed even faster than Ranis believed it could.

“The price bid for Kriegers Flak [offshore wind project] and the near shore wind projects has surprised me. It runs ahead of the world’s expectations. The regional solar photovoltaic tender is also impressively competitive in relation to conventional energy,” he says.

More private investors No Danish investors are to be found among the backers of Breakthrough Energy Ventures, which primarily involve American billionaires. But perhaps Danish investors could be inspired by them, suggests Ranis.

He would like to see more Danish players prioritise investment in energy technology.

Ranis wants to know more about what drives investment in renewable energy and how best Denmark can profit from its knowledge and experience in the sector. The competition to develop future energy tech-

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found internationally. In Germany, Deutsche Bank has announced it will not be investing in new coal projects in recognition of the commitments it has made under the Paris climate agreement. By signing the Paris Pledge for Action, together with 400 private and public companies and organisations, the bank has signalled its welcome of the climate agreement from the Paris summit in 2015, states Deutsche Bank.

Ranis wants Denmark to follow that agenda and attract far more private funding. He believes the way to achieve that is through more public-private cooperation. Here the EUDP programme is vital. Also the innovation fund has a central role to play, with its potential for prioritising new energy projects.

“Many companies want to innovate but they fail to find sufficient grants and investment. We miss out on a lot of potential business because our efforts are only mediocre.

We need to change gear and I believe we can.

If we develop a Mission Innovation plan, we will have clear goals, making it easier to talk to the private sector. It can invest more and will do so if it sees public spending on innovative projects. Let’s get that plan made,” concludes Ranis. •

INTERVIEW

Denmark’s energy, utilities and climate minister, Lars Christian Lilleholt, talks about energy research funding priorities, how to attract foreign investment in R&D, the role of Mission Innovation in Denmark and how venture capital is needed to fund the step from innovation to commercialisation

With Mission Innovation we strengthen research and development TEXT Jesper With — PHOTO Jeppe Bøje Nielsen

How can we get even better at implementing the products and solutions that result from innovation and development? How can the conditions under which Danish energy companies operate be improved, given that the energy technology research and development programme (EUDP) has been reduced, even though its budget will benefit from funds transferred in 2018 from the forskEL electricity research programme?

Denmark has a well functioning value chain for research and development of energy technology. We have good data that shows Denmark as best-in-class over a range of important benchmarks across the value chain. These include high-impact publications within research, the number and type of demonstration projects within areas like wind technology and smart grid development, the number of patent applications

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for energy technology and also our exports, where Denmark is European champion.

We clearly have a good starting point founded on a number of positions of strength built up over the past 30-40 years.

We must maintain our leading position and the best way to do that is to use a range of tools and analyses to look forward and identify the largest and most promising areas of potential. We are doing that right now, such

Danish energy research needs boosting

The global climate agreement has come into force, ‘Mission Innovation’ has been launched, and the EU has adopted its ambitious energy strategy. Green energy is all around us, and DTU welcomes this trend. In fact, DTU is passionate about delivering even more of the research which can contribute to new green solutions. Solar power and wind power can easily meet Denmark’s energy demands. The problem is that electricity generation fluctuates, depending on how much the wind is blowing and how much the sun is shining. How do we guarantee that enough electricity is available in calm and cloudy weather?

About 1,000 of DTU’s employees are working to solve this problem. They are driving research into sustainable energy sources and energy systems as well as the conversion and storage of energy. They deliver expert analyses and advisory services. They educate the future engineers who are going to make the world an even greener place. In Denmark, approx. 57,000 people are already employed in the energy sector, and in 2015, Danish energy technology exports topped DKK 71 billion. These figures can be boosted considerably through increased energy research.

www.dtu.dk

INTERVIEW

Under the latest government reshuffle, energy ­research has been promised higher priority.

This will be achieved in part through the Mission Innovation project, under which public investment in energy related research is to be doubled in 2020.

Energy research is also to be increased in other ways under a new cross-party energy agreement to be concluded in the autumn for the period ­after 2020. We will have a strong focus on the broad ­conditions for companies, universities and other players at the forefront of technology development

as in the Energy Commission, which has energy research and technology development as one of its themes, and also in Mission Innovation.

Under the latest government reshuffle, energy research has been promised higher priority. This will be achieved in part through the just mentioned Mission Innovation project, under which public investment in energy related research is to be doubled in 2020 in relation to EUDP’s baseline budget for 2015/16. In addition, energy research is to be strengthened in other ways under a new cross-party energy agreement to be concluded in the autumn for the period after 2020.

We will have a strong focus on the broad conditions for companies, universities and other players at the forefront of technology development.

What can be done to make Denmark a more attractive investment target so that foreign companies and investors spend money on research and development activities in Denmark?

Denmark is already very attractive to foreign companies for location of research and development activities. In areas like wind, a number of foreign companies have established themselves in Denmark because we

have the right technology demonstration and test conditions, we have the right people with the right skills and in general we have a good framework for R&D. Additionally, Denmark is an open and export focused economy with a wide international engagement. We are in the process of increasing that engagement, for example through Mission Innovation, which gives us the opportunity for exposure in international consortiums.

In relation to our capabilities, it is important to be able to continue to provide skilled engineers and technicians within the field of energy. Denmark has a number of leading companies, consultancy firms and technical universities which create the conditions for development of competent workers. We are also remarkably good at working cooperatively in Denmark, such as between companies and universities. It is a strength we must nurture and develop. We know it creates good results.

What are your expectations of Mission Innovation and how can participation benefit Danish companies?

As far as Denmark is concerned, Mission Innovation means the government will boost energy research by setting aside a to-

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tal of DKK 580 million to 2020 which will mainly go to EUDP. Denmark’s participation is based on a model which will see funds for EUDP double compared to the average for 2015/16.

In addition, Mission Innovation consists of private sector funds for research in clean energy technologies through the Breakthrough Energy Coalition which has launched a $1 million technology fund. The Breakthrough Energy Ventures (BEV) fund was launched in December 2016 and is expected to open up for financing of projects during 2017. Only countries that participate in Mission Innovation can apply for money and we see good potential for Danish players to receive BEV funding.

Another part of Mission Innovation is about seven so-called challenges, which are specifically relevant to social well-being within the field of energy and where participating countries join forces in research and in this way gear their efforts in relation to the toughest problems. The idea is that in the long term the work can result in new projects with Danish participation.

Last but not least, in Mission Innovation we are working on opening up for financing of projects across national programmes. As an example, foreign players could receive project funding under EUDP, provided the projects are anchored in Denmark with a Danish main applicant as a co-participant.

We want this model to spread to other countries so that Danish players can access the same advantages in those countries.

Is venture capital generally in short supply for enabling Danish companies to take the next step from innovation to market maturity? Do you see BEV as a possible solution here?

There have been a number of analyses and conferences in 2016 that have looked at this problem. There are indications that Denmark has access to less venture capital than in countries we usually compare ourselves with. But in my opinion, the analyses have not precisely explained why this should be so. They refer to general and broad conditions that are not specific to the energy sector. I believe and hope that Danish players will be well positioned to receive finance from the BEV fund which contains so-called “patient” venture capital that is specifically directed at the energy sector. •

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ENERGY INVESTMENT

Marked fall in venture capital for Danish energy technology Public and private venture capital going to Danish energy technology is waning despite the better times for investment generally in Denmark and the rest of Europe, concludes a new report by Deloitte for the energy division of the Danish Industries Confederation, industry association Danish Energy and the Danish Society of Engineers TEXT Julie Søgaard

Venture and growth capital for energy and environment, Denmark

Venture and growth capital, other sectors, Denmark

DKK (million) 2.000

1.500

1.000

500 -98% 0 2015

2014

2013

2012

2011

2010

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2009

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Three potential reasons for lack of investment The report offers three explanations for the shortage of investment in new energy technology in Denmark: policy uncertainty; lack of commercial transparency; and lack of business and finance models.

Investments of private sector venture capital and growth capital are rising in Denmark, but not in the energy sector

Source: Invest Europe, 2016

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enmark’s leading position in energy technology exports could be threatened without more investment in research and development. Investment in new Danish energy technology is now so low there is a real risk of it having a negative impact on the sector’s growth. The warning comes from Mikkel Boe, partner at Deloitte Consulting in Denmark, who has been involved in preparing a report on the dismal status of investment in new Danish energy technology.

“Investment in new energy technology has fallen significantly in Denmark, including venture capital willing to take a risk.

The drop is happening at the same time as investment in renewable energy and energy technologies is generally rising in Europe.

It looks like a specific Danish problem, says Boe.

“The policy uncertainty comes from changes in the political framework and postponement of political decisions. It’s the kind of uncertainty that can scare off investors, says Boe. Lack of commercial transparency can also make it difficult for potential investors to get a good understanding of what they are being asked to invest in.

“Those working with new energy technology can have difficulty attracting capital when they lack a standardised development model and fail to clearly demonstrate who is working with what and how far they have got. In addition, a watertight test of commercial viability has often not been carried out early enough. These are things the sector can work on,” says Boe. Lastly, the shortage of investment can be caused by missing business and investment models.

“The venture capital model is a poor fit with renewable energy, given there is often a need for investment in hardware — machinery and such like — that demands major and long-term investment without a rapid return,” says Boe. Business models are also missing that are oriented on future customers and service.

Today they often tend to be backward-looking with a focus on the actual product,” adds Boe. Need for more industrial investors The Deloitte report has also taken a look at where the new capital is to come from. The authors do not regard venture capital for hardware investment as a realistic option, even though a mixture of private capital and loans from the European Investment Bank are seen in venture capital funds in other countries, including Germany.

“In addition, it would require industry, specifically industrial investors, to play a big role in commercialisation and scaling of investments. With an increasingly technology neutral policy, it’s not likely that specific technologies will be supported, as wind has been historically. Moreover, only industrial investors have the production apparatus for integrating new companies which bring in technologies or components,” says Boe. For this reason, one of the report’s recommendations is the need to work on a close coupling of industry and the rest of the environmental network, including investors and innovation and development players, to secure the necessary investment capital. •

CHAIRMAN, DI ENERGY, DANISH INDUSTRIES CONFEDERATION:

The energy industry must invest more money and time in universities The drastic fall in public and private venture capital investment in energy technology research and development means the energy industry itself must step into the breach, says Claus Madsen, chairman of DI Energy and managing director at ABB TEXT Julie Søgaard

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n a new report, management consultancy Deloitte highlights the problems of attracting investment in Danish energy technology hardware, including demonstration plant. Demonstration facilities are a particularly important aspect of research and development for the industry, says the chair of DI Energy and managing director at ABB in Denmark, Claus Madsen.

“When you display a new technical solution in a demonstration facility it becomes much more tangible. Customers are able to talk to both the users and the owner of the facility, who have reaped lots of experience. We have many examples that show how demonstrating technology in Denmark can ease its export. If we in addition concentrate our focus on a few chosen large markets, it can be an advantage to have demonstration facilities in those countries,” says Madsen.

With the reduction in external investments, in the shape of public spending and venture capital, it is up to the energy industry itself to invest more in research and development, potentially in cooperation with other companies. At the same time, cooperation with universities should be increased for testing of technologies, believes Madsen.

He adds that even if companies have to dig into their own pockets, the energy industry still wants an increase in public spending in the long term.

“At ABB we are working with other companies to test a range of new energy technologies in the docklands regeneration project at Nordhavn in Copenhagen. At the same time we greatly appreciate the development cooperation ongoing between business and universities in other projects, such as PowerLabDK,” says Madsen. •

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MISSION INNOVATION

MISSION INNOVATION T

ogether with 20 countries and the EU Commission, Denmark is taking part in former US president Barack Obama’s Mission Innovation initiative, launched November 30, 2015 at the UN’s COP21 climate summit in Paris. The initiative focused on boosting research in clean energy technologies with the aim of speeding the transition away from fossil fuels as cost effectively as possible.

The countries behind Mission Innovation are responsible for 75% of global CO2 emissions from electricity production and 80% of investment in clean energy technologies.

National action plans presented at the Paris event demonstrated that large areas of the world, particularly Mission Innovation participants, are ready to invest massively in the transition to a clean energy economy. The participants include several of the world’s most populated nations as well as countries like Denmark, which can offer an extra contribution to energy technology solutions.

All have committed to significantly increasing their investment, initially until 2020.

Denmark has committed to investing DKK 580 million in green projects to the end of the decade.

Breakthrough Energy Coalition In an extension of Mission Innovation, a group of global companies and multi-billionaires have launched an initiative to support the development of next generation energy technology. The initiator is Bill Gates, who together with a dozen of the world’s richest individuals has established the Breakthrough Energy Coalition, including its investment fund, Breakthrough Energy Ventures (BEV). The $1 million venture fund will support green energy development and is seen as tangible evidence that the group is acting to meet its aims.

BEV is supported by the energy industry’s technology leaders and global heavyweights.

The goal is to pump venture capital into long-term energy technologies that can lead to a dramatic drop in emissions of greenhouse gases. Funds are expected to go to areas of activity like electricity production, energy storage, agriculture and transport.

Among the participants are: -- Bill Gates, Microsoft -- Richard Branson, Virgin Group founder

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-- Jeff Bezos, CEO, Amazon.com -- Jack Ma, chairman of Alibaba Group Holding -- John Arnold, millionaire natural gas trader -- Alwaleed Bin Talal, founder of Kingdom Holding

Along with a number of other wealthy individuals, those named above have said they will commit a fair slice of their personal wealth to investment in energy technology.

“As an investor-led effort, BEV is designed as a source of patient capital to spur innovation to meet the growing demand for low cost, clean energy solutions,” said Arnold at BEV’s launch in December 2016.

The fund’s founders see BEV as the sharp end of Mission Innovation. Companies with promising technologies can apply for funding from BEV to develop products to market maturity. “Our goal is to help deliver the next generation of reliable, affordable and emissions-free energy to the world,” said BEV chair Bill Gates at the December launch. •

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MISSION INNOVATION

A new strategy for the government’s Energy Technology Development and Demonstration Programme, known in Danish as EUDP, sharpens the focus on Denmark’s strengths, and aims to meet global demand and deliver measurable results

SPECIFIC AND MEASURABLE SUPPORT TEXT Jesper With — PHOTO Lars Just

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ess money is available for distribution by EUDP, but that has not made the programme any less relevant, says its chair, Thea Larsen. It has, however, resulted in a new strategy for the public support programme for energy technology, which is more specific and focused than previously.

The new focus is partly achieved by looking at demand for energy technology in a global perspective and identifying Denmark’s strengths. The plan is to focus on areas with the strongest match between international requirements and what Denmark is good at. At the same time, in relation to EUDP regulation, clear goals for the desired results have been established, making it easier to measure every fourth year the degree of success achieved by the programme.

“Our focus will be sharper. Questions to applicants will be more precise with regard to expectations for revenue growth as a result of support received and the number of jobs their project will create. Evaluation of the programme every four years is not new, but the addition of measurable criteria to the strategy is significant. We will be clear about

what we want to achieve and will be measured against that,” says Larsen.

The identified positions of strength under EUDP, where Denmark is considered to have world leading companies are: -------

Wind District heating Bioenergy Energy efficiency Smart energy and system integration Oil and gas

“We will promote our strengths. And we must exploit our ability in Denmark to work horizontally across industries and professions. In this regard we have a particular advantage and can perhaps get even better at it. Globally, the competition is tough and we must fully exploit our strengths and give companies the best working conditions,” says Larsen.

Breakthrough Energy a good EUDP addition First and foremost, EUDP supports development and demonstration of technology that promotes the transition to clean energy,

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both in Denmark and internationally. Not surprisingly, Larsen sees a continuing need for the support EUDP distributes.

“At EUDP our awareness has grown of the increasing investment in green energy technology globally. Developments in Europe, with the launch of the EU Commission’s new winter package, and globally, with implementation of the climate agreement, provide a good starting point for further development. Danish companies are generally good at applying a global focus, but they need support in the development phase to

Whereas EUDP had DKK 400 million for distribution in 2015, the budget fell drastically to DKK 180 million in 2016.

In 2017 it is DKK 190 million. From 2018, DKK 130 million will be transferred from the forskEL (electricity research) programme, which until now has been administered by Denmark’s national electricity system operator, Energinet.dk.

The expectation is that from 2018 there will again be more funds for development and demonstration of energy technology.

MISSION INNOVATION

realise full growth potential and stay out in front. When they move from development and demonstration to commercialisation, it can be difficult to raise capital and here venture capital is very welcome. At this point, we cannot contribute because we must not take part in market development. In particular, small and medium sized companies find it hard to borrow the required sums from banks,” says Larsen.

FACTS ABOUT EUDP EUDP is a public subsidy system which supports development and demonstration of new energy technology that can contribute to Denmark achieving its climate and energy goals and promote development of Denmark’s energy business potential. Since the programme was established more than 600 projects have received support amounting to DKK 3 billion. Project participants have contributed a matching sum.

“We must invest in research and innovation if we are to continue to lead in areas like wind and if we are to develop new commercial and sustainable solutions and strong companies, such as in system integration or bioenergy”

It is here that the Breakthrough Energy Venture (BEV) initiative can play an important role, she continues. Larsen has studied BEV’s guidelines for support application and her evaluation is that the venture capital fund dovetails well with the EUDP support programme. Even though the application procedure is as yet unknown, she believes the criteria match each other very well.

“I see BEV as a good supplement to the work we do. We lack venture capital as an addition to public support programmes and the private resources invested by Danish companies. This can be the venture capital for energy that we’ve been lacking, so it’s really good news,” she says.

The venture capital fund will invest massively in green energy (more than $1 million),

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making large sums available to innovative companies. In addition, BEV provides the opportunity for Danish companies to create partnerships and gain access to knowledge they lack from foreign companies.

“We must invest in research and innovation if we are to continue to lead in areas like wind and if we are to develop new commercial and sustainable solutions and strong companies, such as in system integration or bioenergy. But we need knowledge from outside, too, as we cannot do everything ourselves. We must fight to maintain our lead. For this reason we need both EUDP and the innovation fund, and venture capital like BEV,” concludes Larsen. •

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MISSION INNOVATION

Entrepreneurs to drive digital innovation Danfoss is striking out in a new direction when it initiates development and testing of novel digital products and business models in an open and entrepreneurial setting in Berlin. More creativity and a faster pace will result, says Danfoss CEO, Kim Fausing TEXT Regner Hansen — PHOTO Danfoss

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anfoss stands at the threshold of a new era. Its core business — products and solutions within infrastructure, foodstuffs, climate and energy — will continue, but the challenge is to move them into the digital world. To initiate the process, the company has established a digital skills centre in Berlin.

“Through digitalisation we can modernise our offer and develop new functionalities. The physical products will be connected and surrounded by much more software, which will add value for customers,” says Kim Fausing, chief operating officer.

Danfoss has already developed the first unique digital products and services. An example is smart control of refrigeration units in supermarkets, with automatic monitoring and control and data that can be collected and analysed. Another example is electronic thermostats that can be remotely controlled using a mobile phone app. Both solutions result in large savings in energy use.

Best culture in Europe Berlin was chosen as the location because Danfoss sees it as having the best culture in Europe for open innovation and participation of experts with the right combination of skills. The centre is located in an entrepreneurial setting, Rainmaking Loft Berlin, and Danfoss is aided by Deutsche Ventures, a firm that provides coaching, processes and networks within the digital universe and industry.

Bespoke teams Four Danfoss teams of four to five workers, brought together for each specific business hypothesis from company headquarters

Lively interaction at the new Danfoss skills centre in Berlin

and divisions around the word, are participating in the incubation period in Berlin.

They work on development and testing over three to four months before being replaced by new teams. Some ideas prove to be good.

Others are dropped.

“We use our skills centre to learn how best we can become part of the digital future and speed up development of new digital products and business models. We learn other work methods, with more creative input from outside and the deep involvement of customers from an early phase. We get fast feedback and increase the speed at which we test the idea,” says Fausing.

The approach is far removed from tradi-

24

tional thinking on development in the core business, he continues, adding that the initiative has been received by employees as a positive signal.

Winning with cooperation Danfoss management has no qualms about others stealing good ideas from such an open working environment.

“We win by opening up, working in networks and potentially developing solutions with others. If it’s a matter of technology that needs patent protection, we have good capabilities for managing that. I’d be more worried about not lighting a fire under digital innovation, says Fausing. •

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MISSION INNOVATION

Bjerne Clausen, CEO at Haldor Topsoe, identifies two decisive reasons why specialists, along with research and development based companies, choose Denmark as their workplace: the right people and the elite nature of the country’s international research environment

Research planted in Denmark raises production and jobs TEXT Jesper With — PHOTO Lars Just

I

t is essential to have the right people with the right educational background. Without them we can’t attract the necessary specialists and innovative companies from outside our borders. We must also have strong, internationally oriented research to be sure that graduates are well versed in cutting-edge issues,” says Bjerne Clausen, CEO at Haldor Topsoe, a world leading supplier of catalysts and related energy services.

Danish universities have far reaching networks on which Haldor Topsoe is highly reliant. The company prioritises and highly prizes its close co-operation with the universities as well as with other research institutes, adds Clausen.

“We benefit greatly from having PhD and post doctorate students associated with the company. It leads to the transfer of significant and important knowledge. In fact, this is how the most efficient transfer of knowledge happens,” he says.

Funding of graduates is through so-called co-financing and here Clausen would welcome more public financing. In general, public-private partnership initiatives should be increased to make better use of what he sees as one of Denmark’s great strengths.

“We are also working on increasing the tax relief for research taking place in our companies in order that we have the same advantages as other countries. Competition is tough and the right conditions are decisive for attracting the right people, developing new research-based companies and preserving research in Denmark. Research that takes place in Denmark supports production and creates many jobs,” says Clausen.

Seen from the overall perspective of Danish interests, it would also be an advantage to take a close look at the tax regulations applied to researchers and specialists who are considering the selection of Denmark.

“Human resources are the most important consideration. It’s not easy to recruit skilled researchers from abroad. While we do have a tax agreement for researchers, many disappear out of the country once their five years of reduced taxation are up. This is just as we are about to garner most benefit from them. We want to change that so foreign researchers are motivated to stay longer in Denmark,” says Clausen.

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MISSION INNOVATION

CEO Bjerne Clausen trained as a mechanical engineer and has been employed at Haldor Topsoe for nearly 40 years, the past six years as CEO.

“As a society we ought to be better at integrating the husbands and wives of researchers so they, too, get jobs and can feel at home here. All too often things go wrong because a researcher’s family life fails to function well,” believes Clausen.

Increase independent research funds He would also like to see research funds prioritised in order to channel more funds to technical disciplines, the natural sciences and to independent research in the technical field. He warns politicians against focusing grants too narrowly. Some of the most important research discoveries and innovative ideas come out of a broader approach.

“It’s fine to put so much effort into wind energy, where we are very good, but instead of supporting specific fields like wind, where we are the leaders, we ought to prioritise funding to other areas. I think it would make sense to support solar photovoltaics, where we have no significant presence.

Bioenergy is another obvious area,” says Clausen.

Success is dependent on research He believes that a focus on R&D is the major reason for Haldor Topsoe’s success.

Intensive cooperation with both national and international universities lies behind many of the company’s products and patents. The approach demands a long sighted strategy and patient owners, both of which Haldor Topsoe benefits from as a family owned company.

“It is for these reasons I urge Denmark to provide sufficient funding for R&D in the areas where we are strongest, such as drug research, material research and energy technology. That will benefit society as a whole,” says Clausen.

He regrets the cuts made to the country’s Energy Research and Development Programme, EUDP, calling instead for a significant upgrade of government spending. Haldor Topsoe has benefitted considerably from EUDP support, including for a demonstration facility at Foulum and for a high temperature electrolysis project.

“We are extremely strong in energy tech-

“We are extremely strong in energy technology R&D and we must continue to be so, giving it our all. That aligns perfectly with our view of the world at Haldor Topsoe. We are conscious of the green energy transition and reducing energy consumption and CO2 emissions in everything we do”

nology R&D and we must continue to be so, giving it our all. That aligns perfectly with our view of the world at Haldor Topsoe.

Our products are primarily based on fossil fuel energy resources but we are conscious of the green energy transition and reducing energy consumption and CO2 emissions in everything we do,” says Clausen.

The company is focusing on new products based on renewable energy and for this rea-

30

son has founded a Sustainables department, which has grown each year and now has a staff of 200.

“In Denmark we are good at cooperating with one another; we are flexible and we are independent thinkers. It is these values that are among our strongest weapons and we must exploit them, also when working abroad. They are values that are appreciated,” concludes Clausen. •

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Focus on Management and Technology In addition to the exhibition programme, Ajour 2017 will offer more than 30 professional presentations concentrating on this year’s theme, Management and Technology, including the development of new technologies for energy production and supply, maritime operations, environment, health and At Ajo ur welfare, and industry, energy 2017, tak not to mention the the lea es increase in automation d! and robotics.

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MISSION INNOVATION

Energy companies from outside Denmark are happy to locate their R&D activities in the country. But if Denmark is to continue to be competitive with other countries it must maintain its top class standards of higher education and make Denmark an inviting country to work in, says Schneider Electric’s CEO, Helene Egebøl

KEEP THE FOCUS ON HIGHER EDUCATION TEXT Julie Søgaard — PHOTO Tine Sletting

S

chneider Electric is among the international companies that for a number of years have located their research and development (R&D) activities in Denmark.

We asked the company’s new Danish CEO, Helen Egebøl, why this is so.

“Globally, we have long had a focused acquisition strategy. Our aim is to be a leading energy partner on the market for everything connected with intelligent control of low and medium voltage electricity. For this reason, Schneider Electric is always on the look out for interesting companies. In Denmark we bought Lauritz Knudsen. What we buy is knowledge, skills and products which already have a local market. In that way we enter a market in which we wish to be a strong player,” says Egebøl.

Schneider Electric keeps a constant watchful eye on its centres of activity around the world, weighing up which locations are best for business.

Shanghai and Kolding “We are very proud of our development centre in Kolding. It is here we develop software for data centres and UPS [uninterrupted

power supply] devices. We only do that in one other place in the world, in Shanghai.

So Shanghai and Kolding are our centres for development of UPS devices,” says Egebøl.

The global competition to attract R&D centres is keen, also internally at Schneider.

“In our development centre in Kolding we work very hard at knowledge sharing and cooperating across disciplines. The Danish culture is open and solutions oriented and at the same time we are highly qualified. It is a combination that makes us effective, innovative and proficient and is significant in relation to supporting the global development activities that Schneider has chosen to carry out in Denmark,” says Egebøl.

She believes that strong teamwork skills and the ability to innovate are important for Denmark, but it is also important that Denmark as a society seeks to maintain a highly qualified workforce.

“It is essential that Denmark maintains its high standards of higher education and keeps up to date with the latest knowledge.

By doing so, we markedly differentiate ourselves from other, often cheaper countries,” says Egebøl.

35

Denmark does have some disadvantages in attracting foreign investment and highly specialised labour. She points out that the tax level and bureaucracy make it less attractive to locate to Denmark. Both are barriers to be climbed over. She stresses that it really makes a difference when politicians prioritise the areas of business a company works with.

“The current political focus on data centres can contribute to strengthening our research and development in this area. There could be synergies to exploit with the very large data centres on the way to Denmark,” says Egebøl. •

Helene Egebøl has been CEO of Schneider Electric Denmark since January 1, 2017. The global energy specialist, with headquarters in Paris, has activities in more than 100 countries.

ENERGY STORAGE

Renewable energy storage in hot rocks How can renewable energy be stored cheaply and efficiently? In hot rocks, perhaps, is the answer. A new project, with support from Denmark’s Energy Research and Development Programme, is investigating the concept TEXT Julie Søgaard

100% ELECTRICITY AS HOT AIR

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W

e need giant energy storage facilities, perhaps as large as an IKEA warehouse, if we are to store energy for several days when the wind is not blowing.” So says Ole Alm, head of development for Denmark’s biggest municipally owned electric utility, SEAS-NVE, which serves large areas of the main island of Zealand.

The utility, in cooperation with the energy department of Denmark’s Technical University (DTU), the Geosciences institute at Aarhus University, electricity association Danish Energy, power system operator Energinet.dk and the Rockwool company, is developing high temperature thermal energy storage, supported by a DKK 6 million grant from the government’s Energy Research and Development Programme (EUDP).

The project involves heating rocks to 600°C using an electric heat cannon. The challenge is to heat the rocks while maintaining a constant temperature. “That requires constructing the rock store and insulating it in a way that allows for continuous

DISTRICT HEATING

ROCK STORAGE

extraction of 600°C hot air. What makes this project different from other similar initiatives is the way we are constructing the store,” says Alm. Compared to battery storage, using rocks is an alternative that demands a minimum of maintenance, given that no chemical or mechanical components are involved, explains Alm. Batteries degrade each time they are used. In principle, a hot rock storage system can run for several hundred years. The storage system may not be cheap to build, but over its lifetime it can deliver cheap kilowatt hours of energy.

“The first part of the project is about finding the right type of rock. We expect to have established that by early summer. We have an EUDP grant for a pilot project involving construction of a small rock storage system of 10-15 cubic metres at DTU’s facility at Risø, which we will experiment with over the next year,” says Alm. In tandem with district heating “In Denmark the rock storage system can

36

The structural concept behind the high temperature thermal storage system on Denmark's main island of Zealand

work in tandem with the district heating network. The process involves a deal of heat loss but this could be fed into the district heating system. The rock store, however, is not a constant source of heat. We will need to look at who and how many want to utilise this source,” says Alm. Project partners Danish Energy and Energinet.dk will be looking at the potential for storing energy in rocks when it is cheap to produce and selling it later when market prices are higher. “To make a business case, it is probably necessary to sell electricity for at least twice the cost of generating and storing it. For society as a whole, it could make commercial sense if Energinet.dk, or the state, decide that this kind of storage is essential to ensure security of supply for consumers over several days when there is no wind,” says Alm. •

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Danbor’s digitised quantum leap is revolutionising the industry Great savings, better customer services, reduced carbon emissions and an even better safety performance. These are the biggest advantages of the digitisation process now being implemented by Danbor.

Years ago, Danbor set a goal of becoming a first mover in providing supply chain services to the offshore industry. The goal was followed up by intense efforts to implement LEAN into the organisation and to make big investments in digitisation to optimise logistics, base operations, offshore services, property services, steel construction and maintenance.

“We want to be the best at providing all types of logistics solutions and base services to the North Sea offshore industry – everything from the assembly of platforms and offshore turbines to operation and maintenance and subsequent decommissioning. This is why we’ve leapt straight into the fourth industrial revolution, also known as Industrialisation 4.0,” explains Jesper Høj-Hansen, Vice President and COO, Danbor.

In brief, the fourth industrial revolution involves integrating the digital world with physical output to optimise operations and services provided to customers.

“For us specifically, it means that Danbor will be going online during June with a digital operations control centre from where we can digitally coordinate all our services and output, as well as continuously optimise operations based on big data. From here, our employees will be able to take real-time decisions, whereas many deliveries, decision-making processes and communications will be done automatically,” Jesper Høj-Hansen explains.

30% reduction in costs and carbon emissions He cites several examples of how digitisation will directly impact customers, as an enhanced and more proactive provision of services – locally and globally.

At the same time, usage-pattern information, historical data and statistics will lay the groundwork for even keener precision and optimise logistics going forward. In addition, the system removes many manual tasks and reams of paper from operations.

The digitisation process will also make a big difference if a ship is delayed. In this event, all the parties involved in servicing it upon arrival will automatically be notified by the control centre via tablets and other electronic devices. This will eliminate unnecessary waits and vehicular operations, thereby cutting costs for the customer – and reducing carbon emissions.

“At the control centre, we will collect, track and share information with customers and suppliers of services. In so doing, we will amass knowledge and statistics that will enable us to proactively provide even better solutions and products. We want to be at the cutting edge and optimise our customers’ operations before they even realise that it’s possible,” the Vice President says.

“We’ve tested the first two prototypes, which were jointly developed with the NorSea Group, which owns Danbor, and with Wilhelmsen (NorSea’s owner), which itself is a global maritime industry group. Wilhelmsen is present in 2,200 locations around the world, and it is also intensely working to digitise port areas,” Jesper Høj-Hansen says.

Another example is that the digitisation will be able to improve the tracking of units such as containers or tanks from the offshore industry. This logistical unit-monitoring capability will optimise Danbor’s planning of transport and repairs, for instance, enabling the provision of faster, better and lower-cost services to customers.

He is very pleased with the analysis results that verify a savings of no less than 30% across the value chain – both costs and carbon emissions. At the same time, this intelligent coordination of the company’s activities will also be instrumental in enabling Danbor to continue its splendid statistics of zero accidents over the past five years.

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ENERGY STORAGE

Mercedes goes big on production of high efficiency batteries

Through it subsidiary, Deutsche ACCUmotive GmbH, Daimler/Mercedes-Benz is this year launching production of a new generation of highly efficient car batteries.

At its battery factory in Kamenz, Saxony, the company will quadruple both production and its logistical infrastructure in the expectation that up to 25% of new cars will be electrically driven in 2025. DI Energy talked to Andreas Docter, director of e-drive components at Daimler/Mercedes-Benz TEXT Jesper With

40

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ENERGY STORAGE

L

ess than one million of the around 50 million cars produced each year

by Daimler/Mercedes-Benz are equipped with electric motors today. By 2025 that proportion will have risen to one in four. It will take considerable investment in research and development of not only the required batteries, but also a whole new range of cars. Combined investment in the Saxony factory and battery production globally will reach over €1 billion. The company’s aim is to lead the world in supply of topof-the-range electric cars.

“In 2025 we will be offering more than ten purely electric vehicle (EV) models in our passenger car range. At the same time we have mounted a plug-in hybrid offensive and are introducing 48-volt systems. This demands major investment and rapid development of highly efficient batteries in various sizes,” says Andreas Docter, the company’s director of e-drive components.

He points out that the complex battery system is a major integrated element in an EV, demanding specialised skills and experience to produce. Both competencies are possessed by Daimler/Mercedes-Benz,

which has more experience producing top class EVs than any other car manufacturer.

Already it has a large EV battery factory: the ACCUmotive facility at Kamenz.

“We are making Kamenz our new competence centre for production of batteries.

Research and development will take place at our Stuttgart headquarters. But it is important for us that production also takes place here at home in Germany. Our main production factory will definitely be here to exploit the close cooperation between development and innovation and the actual production of batteries,” says Docter.

Daimler/Mercedes-Benz believes lithium-ion batteries hold most potential in coming years. But Docter also sees a post-lithium era in the more distant future.

“We are concentrating on EVs and combustion motor vehicles over the next ten years. We believe demand for EVs will continue to grow internationally and we will remain true to our hallmark as a producer of cars of high quality, superior design and advanced safety. Those qualities will also help us within the field of electric mobility,” Docter says in convincing tones.

42

The new factory at Kamenz is C02 neutral, supplied with heat and power by a small-scale combined heat and power plant and solar PV system linked to a stationary battery storage bank.

“In this way the factory ensures that our cars have a very low carbon footprint. The batteries provide for zero emissions of exhaust gases and the actual production of cars, including their batteries, is achieved sustainably. We want to be consistent,” says Docter. •

Dr. ANDREAS DOCTER — Director of E-drive components at Daimler AG

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ENERGY STORAGE

DANISH BATTERIES AMONG THE FRONT RUNNERS Persistent research has transformed Lithium Balance into a leading specialist in optimisation of revolutionary lithium-ion batteries.

The company’s next step is control systems for battery storage in homes with solar power, say owner-director Lars Barkler TEXT Regner Hansen — PHOTO Lars Just

ENERGY STORAGE

Lithium Balance is currently concentrating its efforts on large battery units for housing associations

“Solar panel technology is in rapid development. ­ Tesla’s efforts are helping all of us and concern about climate change is also a driving force”

R

enewable energy technologies, including solar photovoltaic panels, will account for nearly 60% of all new electric power plant across the world during the next 25 years or so, according to projections by the International Energy Agency (IEA). Among those leading the way is Danish company Lithium Balance, located northwest of Copenhagen.

Since its establishment in 2006, Lithium Balance’s continuous product innovation has made it a significant international player within its specialisation — monitoring of control systems for lithium-ion batteries in electric cars and industrial vehicles and machines.

The latest new development from Lithium Balance is control systems for stationary batteries for rooftop solar panels on homes. A guided tour led by the company’s owner and director, Lars Barkler, starts with the production hall before proceeding to the laboratory, complete with wires, monitoring equipment and warning signs, on the way to a demonstration model — a rack of grey batteries stacked like bricks. Mounted on the side is an advanced circuit board, which is the control system from Lithium Balance. The potential of household batteries, in particular, has been indicated by

Tesla’s Powerwall home battery system.

“We make a measurement and control system which monitors the battery cells and keeps them in balance. A unit functions only as well as its weakest part,” says Barkler.

Lithium-ion batteries, introduced a few years ago, have revolutionised battery storage due to their ability to store large volumes of energy in relation to their size and weight.

Fundamentally, however, they are unstable.

“Batteries have a fantastic ability, but proper control of them is vital if they are to be safe and operate optimally. Up to twothirds of our work is to provide functional safety, to eliminate the risk of batteries overcharging, of electric shocks, fire and signal noise, says Barkler.

Batteries for housing associations Lithium Balance’s current focus is on large battery units for housing associations.

These are package solutions with the aim of utilising as much solar energy as possible and storing it with greatest efficiency. The capacity of the units is between 100 kWh and 1000 kWh. A prototype of a large unit with its associated control system is expected be ready before early summer.

The goal is series production and delivery before the end of the year. The development

46

work is happening across several projects in cooperation with housing associations in Denmark and other EU countries.

Alongside the work on large scale batteries, Lithium Balance continues to test household systems of 6-8 kWh in a specific test-house. At the same time, the company has joined with an electric utility to experiment with remote control of household solar units with the aim of improving their efficiency.

A weak link so far has been the inverter, the component that transforms direct current to alternative current in electricity grids.

“Many inverters on the market are typically supplied by the makers of photovoltaic cells, but when they are used in conjunction with a battery they are often ineffective, have a short working life and in some cases are dangerous,” says Barkler. Lithium Balance is attempting to develop better inverters together with Swedish-Swiss technology giant ABB. Danish grid offers potential The IEA expects the cost of solar photovoltaic systems to drop 40-70% in the period to 2040.

“Solar panel technology is in rapid development. Tesla’s efforts are helping all of us and concern about climate change is also a driving force. At Lithium Balance we can bring down the costs and increase power production and safety levels. Currently we sell at half the market price,” says Barkler.

The company’s solution also has an advantage in that it can be fully integrated into the grid, he adds.

Many producers of solar systems also make batteries and the competition has become tougher, but Lithium Balance is holding its place among the leaders. Even so, Barkler has a plea for policymakers. He would like to see specific rules for solar panel safety as a clear guide for technology developers. Denmark’s reputation for “probably the world’s best electricity network” should be put to use, he feels. It provides unique potential for development and testing of a broad range of renewable energy and associated technologies. He sees a large hidden export potential. Lithium Balance is ready to help lead the way.

Barkler regrets the cuts made in Denmark to energy research funding. “As far as we are concerned, we have more than repaid the research funds received in the creation of new jobs, says Barkler. Lithium Balance has grown over the years from two to 25 employees. •

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MOVING FORWARD

ENERGY STORAGE

Combine our forces in a research centre for energy storage Denmark needs to gather its forces in energy storage in a national research and development centre if we are to reach our green energy ambitions and at the same time create potential for growth and export of these technologies, believes Søren Linderoth, professor and institute director at Denmark’s Technical University (DTU) TEXT Julie Søgaard

O

ne of the major challenges to reaching Denmark’s goal to become independent of fossil fuels is finding ways to store renewable energy. Globally, in response to the challenge, intensive effort is being put into development of cheap and efficient storage technologies.

“Even though Denmark is well advanced with energy storage and conversion, other countries are too. If we are to have a strong position in Denmark in relation to others, we can’t just sit and work on it in our own little bubbles — we must also work together across the country, says DTU’s Søren Linderoth, professor and institute director.

“It is very important to have strong working environments in which we can reach the absolute highest level and at the same time disseminate and develop the technologies faster and more effectively, also to attract

more funds to lift us in this area, given that funds for energy research have unfortunately been halved in recent years. For the green transition to happen we must focus more on energy storage, for Denmark’s sake and because it would also lead to exports and jobs and contribute to securing future energy supply,” says Linderoth.

He proposes that over the next ten years Denmark wagers between half a billion and a billion kroner on a national centre for energy storage and conversion. The centre can be physically located at the DTU campus, where several energy storage activities are under way, and gather researchers from other Danish universities, including Aalborg University and the University of Southern Denmark, and from a range of businesses already working in the area.

“The projects at the centre will likely also

Giant battery grid connected in Copenhagen dockland

Elnet. It is the first time a giant battery has become an integral part of the Danish electricity system.

"Nordhavn demonstrates a suburb in growth where electricity is used everywhere.

Until now we could precisely calculate how much electricity was required in the wall plugs, but that is changing as we transition to biomass and ever more supply from fluctuating wind and solar sources. In future when electricity is used for all parts of the system and others also contribute batteries there will be demand that we have no con-

They do not look like much, the new racks of batteries delivered by ABB and installed

by Radius Elnet in the mechanical equipment room below a multi-storey car park in Copenhagen's regenerated dockland, Nordhavn, or North Harbour. The five racks delivered so far, however, can store enough energy to supply 60 households with electricity — and that is just a start, says Radius

48

lead to the creation of whole new businesses,” says Linderoth.

Work on energy storage projects is now ongoing at several locations in Denmark.

The work includes Haldor Topsoe’s project with high temperature electrolyses to convert electricity and C02 from biogas to methane (synthetic natural gas) which can be fed into the natural gas pipe network.

“It’s a way of storing wind power as natural gas. Similar technology is being worked upon at GreenHydrogen in Kolding. At EWII Fuel Cells on the island of Funen they conduct low temperature electrolyses, which can be used to make hydrogen for use in hydrogen cars because their technology can fairly easily create the pressure needed for high-pressure hydrogen storage,” says Linderoth.

These and similar projects could be undertaken under the auspices of a national centre, where knowledge could be shared about materials, heat exchangers and control systems and in this way accelerate development of the technologies,” believes Linderoth. •

SØREN LINDEROTH — Institute director DTU Energy at Denmark's Technical University

trol over. That requires we work in concert with other players for it all to function. It is a challenge we welcome along with the new technology coming our way, like these giant batteries, which can contribute to the green energy transition," says Knud Pedersen, board chair of Radius Elnet.

Nordhavn is a giant research centre for new energy technology. The battery has been installed as part of the Energylab Nordhavn research and demonstration project. •

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