How the fossil fuel phase-out impacts the automation sector

Automation for the ‘all-electric society’

The fossil fuel phase-out is a done deal. The switch to 100 % renewable energy triggers one of the most extensive transformation processes in human history. Upcoming energy generation methods require new technology and production processes, thus generating a billion-dollar market for the automation sector.

The pivotal climate objective of limiting global warming to 1.5 degrees Celsius cannot be achieved without phasing out fossil fuels. This has led participants of the December 2023 UN Climate Change Conference in Dubai to agree on advancing the phase-out of such energy sources in an effort to achieve ‘net zero’ CO2 emissions by 2050.

Once oil, gas, and coal cease to make significant contributions to energy generation, renewable energy will be at the center of it all. We can already see this trend today. Examples include electromobility and heat pumps, with the latter fast becoming the only available heating system in Germany. The consequence: Electricity consumption in Germany will increase by around 38 percent by 2030 – from 515 TWh in 2023 to 715 TWh – according to current Federal Network Agency forecasts.

The quest for energy storage options

This raises some important questions: Where will we get our electricity from in the future, how will we generate it, and how will it reach consumers? After all, renewable energy accounted for around 268 billion kWh in 2023, i.e. a 52 % share of the German energy mix. At well over a quarter, wind power accounts for the largest contribution to this mix, followed by photovoltaics and biomass taking second and third place, respectively.

The downside: Neither wind nor sun are available at all times. But the industry needs affordable electricity 24/7. So what to do in calm, cloudy or nighttime conditions without any wind or sunshine? The solution sounds simple: store electricity. But this has turned out to be the biggest issue associated with renewable energy generation. All of those few storage technologies available are expensive, laborious, and inefficient.

Battery storage systems are considered a key component of surplus energy storage efforts. As a result, a technology more or less proven in privately owned photovoltaic systems involving storage systems with capacities of 10 to 20 kWh now faces the challenge of requiring development on an industrial scale at a rapid pace. For example, Europe's largest industrial scale battery storage facility with an absorbed storage power of 137.5 MW and a capacity of 275 MWh is to be built in Alfeld an der Leine. It is scheduled for completion in late 2025. Thousands of such projects will be required if the all-electric society's global appetite for energy is to be reliably satisfied at all times.

New tasks for robots and automation

The production of just the batteries for such large-scale projects and countless smaller, decentralized storage systems in private and industrial environments will be a high-volume business for the robotics and automation sector. Let’s take Tesla Megafactories as an example: These factories produce the so-called MegaPacks, i.e. ready-to-use storage modules. All production processes are highly automated here. They are all about robots, cobots, materials handling, machine vision, and a wide range of automation components.

The Megafactory in Lathrop, California is one of the world’s largest battery factories producing 10,000 MegaPack units per year with a total capacity of almost 40 GWh. Given the huge demand for electricity storage systems, an increasing number of battery factories will be built in Europe, too. This opens up an entirely new field of activity and a huge volume market for the automation sector.

No sector coupling, no fossil fuel phase-out

Even though battery-based electricity storage will be a major supporting pillar of future carbon-neutral energy supply solutions, it remains expensive and inefficient. In this context, sector coupling is a holistic strategy for minimizing the need for battery storage. Coupling the electricity, heating, housing, transport, and industry sectors enables balancing of fluctuations in the generation of sustainable solar and wind power to some extent. Various technologies are to be deployed in a joint effort to optimize energy distribution across these sectors, thus advancing the decarbonization of all sectors.

Electric cars are a good example of such solutions in practice. As they become increasingly common, their batteries could serve as a ‘buffer’ to balance fluctuations in both electricity generation and grid load.

1.4 million electric cars equal 10 nuclear power plants

If the approximately 1.4 million electric vehicles registered in Germany supported bi-directional charging, i.e. if they were capable of feeding electricity into the domestic grid, the situation would be as follows: Assuming every vehicle can feed 10 KW into the grid, all vehicles in the country, if sufficiently charged, could provide 14 million KW or 14 GW of electricity for several hours. This corresponds to the power output of ten nuclear power plants.

Unfortunately, such applications have remained a remote prospect so far. Germany and the world have just started venturing towards sector coupling as the topic is highly complex. But one thing is for sure: It will open up a promising market with an interesting business segment for automation technology. Because future power grids will have to be significantly more complex than those currently in use. The relatively small number of large power plants currently supplying millions of households and companies will give way to hundreds of small and large power plants that need to supply a much larger number of consumers.

A grid expansion worth hundreds of billions

The consequence: The Federal Network Agency has calculated that German distribution grid operators would have to make investments in the “low hundreds of billions” by 2030 in order to suitably upgrade their grids for the transformed energy supply. This estimate also includes the cost of building a substantial number of new substations and transformers. Implementation will require automated manufacturing processes as current low-volume, largely manual production will not be able to satisfy the demand.

And last but not least: Plenty of robots and highly automated production facilities have already been deployed in the service of sustainable energy generation – in battery production, photovoltaics and solar thermal energy, in the manufacture of wind turbines, fuel cells, and many other applications. However: Phasing out fossil fuel will succeed as planned only if it is accompanied by a massive expansion of global production capacities across all areas involving the generation, storage, and distribution of renewable energy. The transformation process towards an all-electric society thus creates a huge market for the automation industry.

The next automatica, held at the Munich exhibition center from June 24 to 27, 2025, will show how quickly this development is gaining momentum.

Author: Ralf Högel