Insights“Green hydrogen is set to transform the energy industry”

“Green hydrogen is set to transform the energy industry”

The CEO and regional manager of ENGIE Peru, Rik De Buyserie, is steadfast in his belief that green hydrogen will be the next revolution in the energy sector, an increasingly complex industry which needs us to bridge the gap with clients

Photo: The CEO and regional manager of Engie Peru, Buyserie Rik. Credit: Courtesy of the interviewee

By Isabel Reciejo

In recent years, the energy industry has recognized the importance of moving towards greener models that contribute to a more environmentally friendly economy. The CEO and Country Manager of ENGIE Peru, Rik De Buyserie, has seen first-hand how this change in mindset has been permeating everyday life such as business negotiations. Before, he explains, sustainability was a secondary criterion for his clients. Now, they themselves are demanding clean energy.

In this revolution there is one area of innovation that, in his view, will be decisive in the future: green hydrogen. But, although it has very significant potential for industries such as mining that require large amounts of energy, this resource has not yet been sufficiently developed, and faces obstacles such as high costs and lack of government incentives. In view of this situation, he said, “we need to create an environment in which green hydrogen can flourish.”

The ENGIE Group is committed to achieving “net zero carbon” by 2045. How will ENGIE Peru contribute to this goal?

In Peru, the energy mix is already quite clean, compared to other countries, because about 60% of the energy is generated by hydroelectric plants and the rest is natural gas. Non-conventional renewable energies (wind, solar, biomass, etc.) currently account for less than 5%. We are the owners of the only coal plant in the country, 135 MW, and we are going to close it by the end of 2022, as part of ENGIE’s decarbonization strategy. It is an emergency plant, because it operates approximately one week a year, but we are going to close it and replace it with our new wind farm project, Punta Lomitas, which has a capacity of 260 MW.

We have new solar and wind energy projects in the pipeline. We don’t have thermal generation and for a good reason: Peru has such vast wind and solar resources that today it is the most affordable in terms of technology and it is environmentally friendly.

You have 1,064 MW of renewable energy under development. How do you see this type of energy evolving in the country?

The challenge is that Peru has an oversupply of power generation. To give a rough idea, the peak hour demand is around 7,000 MW, and the country has approximately 13,500 MW  of installed generation capacity. That means that in the next three or four years the country will not need additional capacity. What it will need is a medium to long term vision on the development of its industries, especially mining, which can generate additional demand.

These types of renewable energy projects are only viable when we sign long-term Power Purchase Agreements (PPAs). This is what happened with Punta Lomitas. We have signed an agreement with Anglo American, with which Quellaveco will be the first mine with 100% renewable supply. Contracts like this one are the only ones we are going to try with other customers, mainly mining and other major industries.

When I was negotiating with customers four years ago, they didn’t care about renewables at all, only about price, security, and quality of supply. Now the world has totally changed, and customers are asking for renewables. It is a radical change. Today they are not going to pay a premium to have green energy, but they are asking for it more and more.

What new technologies are the most important for the development of new products and solutions and what value are they bringing to your business?

For us, innovation in the energy industry can be seen under three headings. First, there is innovation in software developers and producers. In solar, wind and battery technologies… prices have come down a lot, although they have not yet reached an affordable level. Second, one area of innovation in which we want to play a very important role is green hydrogen. There are two key countries in Latin America that will play a role at the global level: Chile and Peru, because they have vast solar resources and favourable conditions for the development of wind energy, and there will come a point where electrolysis will be economically profitable, although for the moment, green hydrogen still costs more.

The third area of innovation is all about digital. We have several projects, for example, one called Darwin, which is a software designed to connect all our renewable plants in the world. Now there are more than 30 GW, and we want to reach 50 GW by 2030. With this, we can have everything online: a lot of data about generation, maintenance, how the panels follow the sunlight during the day. In our sector, the real innovation is on the digital side. Because the basic principles remain the same. For example, wind turbines are getting bigger and bigger, but that’s more improvement than innovation.

You mentioned green hydrogen, which we at MIT Technology Review have selected as one of the 10 emerging technologies of 2021. In Peru, ENGIE Impact has carried out, with H2 Peru, a national assessment on this topic. What potential do you see in this resource?

In my opinion, the most significant area of innovation that will change the industry is hydrogen. However, the technology needs to develop in order for it to be affordable. It is still the burning issue, especially in a country that has a lot of gas. And a very important point is that there is a lack of a medium- and long-term plan from the government to give it its space in the energy mix and take advantage of natural resources for its production. Green hydrogen needs what renewable technologies needed 20 or 30 years ago, which have only taken more space with measures such as government subsidies. This is an issue we are working on with H2 Peru, the Peruvian Hydrogen Association, of which we are an active partner, and the National Society of Mining, Petroleum and Energy: knocking on the government’s door to create an environment in which green hydrogen can flourish.

It will be useful for all industries that need a lot of energy. Mining trucks are the perfect example because they have a lot of energy needs and many mines are very close to areas with abundant solar or wind resources. In cars, for example, hydrogen is going to compete with batteries, but not in mining, because for a big mining truck the battery would have to be so heavy that it would affect the efficiency of the truck. And in terms of transportation, if you need to travel long distance or a lot of energy. If you only use the car once a day to go to work and back, it’s not worth it, it’s better to use an electric car.

The energy sector can also benefit from the big data revolution. How are you taking advantage of these developments at ENGIE Peru?

For us, as a large international group, the most important digital challenge is to prevent each company from inventing its own applications, because that is not efficient, since we all do the same thing. For example, we have a digital operator that allows the operations maintenance team at the power plants to get all the data they need digitally. This not only eliminates paper, but also allows us to store the data more efficiently, consult it and share it, for example, with our colleagues in the Middle East who have the same power plants, so we can learn a lot more.

It is a great tool for preventive maintenance. And, on the other hand, in Peru we are a company made up of 500 people. We don’t have the same resources as a global group. If you only look at your company, you are not going to develop the powerful solutions you need.

SDG 11 seeks to make cities increasingly inclusive, safe, resilient and sustainable. How do you contribute to building smarter and more environmentally friendly cities? 

We adapted our strategy at the beginning of the year to focus on four main areas: renewable energy; thermal energy; grids, pipelines, and transmission lines; and energy solutions. We have left aside, for example, electric mobility, chargers, and so on. In smart cities, we are promoting solutions related to the supply of green energy, rather than the development of the technology itself. For me, the most important thing in electric mobility is where the energy comes from. Imagine you are producing with coal or diesel; there is no point in having an electric car because you are going to cause pollution anyway. It only makes sense if your energy production is clean.

When we talk about the transformation that companies are undergoing, we are referring not only to changes in their business, but also in their internal culture. How are you dealing with this last point?

The biggest challenge we have on this side is organizational. The history of our company is made up of many, many mergers and acquisitions, and ENGIE has always dealt with them in a sensitive way by providing autonomy: if there is a functioning system for working, it is left in place. There is only one unique system in the group, which is financial reporting, for obvious reasons. That's why I say that the most significant challenge is organizational: using the same platforms to organize and exploit our data. We created ENGIE Digital a couple of years ago, exactly for this, and with the new strategy we are much more effective.

Within the company, you advocate the idea of fostering a "culture of innovation". What have been your most important milestones in this area?

Over the past few years we have been putting innovation on our agenda with initiatives such as innovation week, awards... and in Peru we have started with open innovation initiatives. At first, we invited other companies and universities to participate in an innovation day and share their ideas and their ways of innovating. Now, what we have done is the Customer Innovation Lab, where we ask our customers what the important or difficult issues for them are. We work together to find a solution and to get closer to them. In the past, supplying energy was a very distant business. Now it is not. Energy markets are becoming more complex, with more regulation, and helping your customer to manage their energy consumption in the best possible way can be invaluable.   

Developments in companies are also linked to a new way of understanding leadership. How has this new perspective been incorporated within ENGIE?

A couple of years ago we created what we call a Shadow Excom. I have an Executive Committee and we have done a "mirror" of this, with a group of young people, or rather, newly recruited people, who do not yet have much experience in the company. What we do is that every two weeks we have the Executive Committee, and they receive exactly the same information and the same presentations. Then they give us feedback on the important issues of the company or propose different decisions than we have made. This achieves two things: it enriches decisions, and it empowers employees. 

Published by OPINNO © 2022 MIT TECHNOLOGY REVIEW﻿ spanish edition