Interview Phoenix Contact GmbH & Co.KG

3 questions to Frank Stührenberg, CEO

The phase-out of fossil fuels will lead to a significant increase in global electricity consumption and, thus, to a transformation process of enormous proportions. From components and electricity storage facilities to wind turbines – the automation sector will witness the emergence of huge markets. How great do you think the potential of this market is and which aspects offer the greatest potential?

We generally consider the market potential for Phoenix Contact to be great. And this is not just about generating, storing, and transporting renewable energy. The efficient use of energy, preferably from renewable sources, might just turn out to offer the greatest potential here. Sector coupling, i.e. a holistic approach to energy generation and consumption, is the key to a successful energy transition. The pivotal areas of activity in this context are electrification, networking, and automation. This means that all sectors consuming energy should be electrified to the greatest extent possible. We will then create the prerequisites for comprehensive digitization of all areas based on networked systems that are free of boundaries. This will enable recording, analyzing and use of data in open and standardized automation solutions to sustainably and efficiently control energy flow. These tasks alone hold, as you said, enormous potential for our sector. Existing brownfield facilities must be upgraded to support sector coupling. For example, by linking buildings and production – always with the goal of preventing energy wastage and supplying energy to the right place at the right time.

But it is also necessary to generate as much renewable energy as possible, of course. According to the World Energy Outlook 2023 study, approximately 80,000 additional terawatt hours of renewable energy will have to be generated worldwide by 2050 in order to achieve our climate goals. To put this in perspective: This corresponds to around 1.6 million offshore wind turbines or 20,000 solar parks with an average size of 40 km². The grid must be expanded by 20 % and 20 % of it must be upgraded until 2030. This requires around 11 million control cabinets. These figures are the reason why I feel very positive about our market.

In the past, Europe has reaped very limited benefits from new markets in the field of green technologies. Just think of photovoltaics or battery production for electric vehicles, where Asia is leading the way. What do you think will be the European industry’s role in transforming the energy supply to renewable sources?

I wouldn't take such an absolute view. Even though the majority of solar panels is currently produced in Asia, Europe still creates significant value in this context. Production facilities for controllers, inverters and power semiconductors, to name just a few important fields of technology, are located in Europe. And, as I just mentioned, these are complemented by classic transformation technology such as German and European digitization expertise as well as automation technology.

For example, network security and the wider topic of cyber security are of existential significance to our sector. Both IT and OT systems – i.e. the networked and automated production infrastructure – must be protected against all kinds of attacks. And that is precisely our domain: effectively securing customized production environments. That is also because established IT security providers frequently lack specific expertise in the OT area.

These are all technology-centric areas of activity that, as you said, have enormous potential and, thus, represent a major growth area. And the best part: It is in our hands.

In your All Electric Society Park, you already exclusively use renewable energy sources, and sector coupling is a reality here. What are the conclusions to be drawn from this lighthouse project? Will our society really be able to replace fossil fuels within the next decades?

Even though we already have a large number of required technologies and skills at our disposal, as mentioned earlier, I am firmly convinced that we will experience a number of disruptive changes down the line that will add additional momentum to the energy transition. Just remember all the things that happened during the past decades. For example, innovative data storage technology facilitated mass storage, which was a prerequisite for digitization. Or the exponential bandwidth increase for mobile data applications.

The All Electric Society Park is a lighthouse project that illustrates in an effective and entertaining way how the energy transition works. It also shows that an all-electric society is a world worth living in by our standards, a world that doesn’t just revolve around renunciation. If the All Electric Society Park was a real case with interconnected and integrated production facilities, it would resemble a production building on our campus – our new Building 60. This building demonstrates how production can take place in an energy-positive environment under global competitive conditions. It contains mechanical engineering units and our automated control cabinet production facility. A PV system that supplies electricity for various purposes including heat generation via a heat pump is the centerpiece of this building. An ice storage unit serves as an energy source for heating and cooling the rooms. In addition to a direct current power grid for lighting, automation and production technology, the bi-directional charging infrastructure for electric vehicles is also supplied with electricity from the PV system. The remaining PV power is stored by converting it into hydrogen. A superordinate system controls, manages, and monitors all energy flows.

With these lighthouse projects, Phoenix Contact convincingly demonstrates that a complete energy transition is not just possible, but that it can already be implemented in the greenfield today.