A future world in which nine billion people live well, within planetary boundaries, requires a set of systemic changes in production, distribution, and consumption. Only then can the current system move from fossil fuels into an electricity model based on renewable energies.
“Such a systemic change does not happen without serious investments and long-term partnerships,” said Ramón Zumárraga, Director of Purchasing Services, Iberdrola, the third largest electricity company in the world by market capitalization, and the world leader in renewable energy.
During an interview atSAP Sapphire Barcelona, Zumárraga explained how Iberdrola’s sustainable business model for renewable energy maximizes the use of technology in business areas that add value, either by improving processes and the productivity of its assets, or by achieving greater efficiency in its activities.
The company’s inventive approach is boundless. Among Zumárraga’s favorites are agro-solar initiatives that use land for solar power generation and agricultural purposes. “Whether using solar parks for beehives or cattle grazing, we try not to occupy the land for a single purpose,” he said.
Another company that shares the same vision on the energy transition is Vestas. They design, manufacture, install, and service onshore and offshore wind turbines across the globe. With more than 166 GW of wind turbines in 88 countries, they have installed more wind power than anyone else and have already prevented 1.5 billion cubic tons of CO? from entering the atmosphere.
“Wind energy is our competence,” said Adeola Abegunde, Director, IT Business Partner – Procurement, Logistics & Warehousing?at Vestas. “We believe wind will be the foundation of the energy systems of the future. Our solutions are accelerating the energy transition and strengthening our continued leadership in wind.”
Teaming up for success
For Vestas each customer and project are unique. Developing a wind power plant is a complex process involving multiple stakeholders, from insurance companies to financiers to regulators. Innovative long-term solutions require partnerships, such as the one between Iberdrola and Vestas on the 476 MW Baltic Eagle project spanning an area of 40 square kilometers in the Baltic Sea, 75 kilometers off the German coast.
Iberdrola is quite open about what and where it plans to develop. It informs its equipment suppliers what their demand will be in the different markets. That information helps suppliers decide if they are actually the right vendor for a project.
“One vendor may be a better fit for you in a certain range, and another one is better in a certain geography. We need to provide the base visibility, so that we can cooperate longer term,” he explained. “Many of these huge projects are being tendered by governments. When we choose a partner, we’re in the same boat, and we sink or swim together.”
Iberdrola started developing an extensive wind force portfolio twenty years ago, making it one of the largest renewable operational companies today. The company became an expert at understanding which renewable technologies were profitable and efficient as they developed over time.
Guaranteeing the capacity of equipment is a critical part of Iberdrola’s strategy which requires collaborative forecasting and planning. Suppliers need to know the company’s plans in advance to make their own production plans and secure their supplies.
“There is always some uncertainty. We are planning to invest 47 billion euros over the next three years. We need to choose our supply chain partners very carefully,” he said.
Supplying state-of-the-art assets
With assets in excess of 150 billion euros, Iberdrola is the global frontrunner in offshore wind farms. The wind’s power is stronger over the ocean than on land, but until recently, wind turbines could not be installed in very deep or complex seabed locations, because they were based on fixed structures. Now they can be installed on floating platforms that are anchored to the seabed by means of flexible moorings, chains or steel cables.
Iberdrola’s purchasing director works hand in hand with Vestas, the world leader of fixed-bottom and floating offshore wind assets. With over 25 years of offshore experience, Vestas’ wind turbines are designed to deliver industry-leading performance in all conditions around the globe.
“Developing a wind power plant is a complex process involving multiple stakeholders, from insurance companies to financiers to regulators,” said Adeola Abegunde Director, IT Business Partner – Procurement, Logistics & Warehousing at Vestas. “We have a deep-seated, collaborative relationship with Iberdrola to ensure projects are delivered on time and on budget.”
Vestas already operates about 80,000 turbines worldwide and intends to triple that figure in the next decade. Securing government funding for these massive investments is part of the job. Managing the operational and financial risks requires close monitoring, and maintaining the assets is a daunting task itself.
According to Zumárraga, Vestas’ technological innovation is making bigger machines more efficient. “I’m deeply impressed by the engineering, materials, and technology in these turbines, not to mention their size!” said Zumárraga in response to Abegunde’s comments. “Land turbines are dwarfed by their offshore counterparts. Offshore blades are each 100 meters long.”
As part of its sustainability journey, Vestas pioneered the first solution to break down composite materials in epoxy-based blades. The recovered epoxy resin is used for new ones, addressing the industry’s biggest circularity challenge, namely, the blades in operation today that need to be recycled at their end-of-life.
By integrating sustainability in everything they do, Vestas hopes to achieve carbon neutrality by 2030 without carbon offsets and producing zero-waste wind turbines by 2040.
Taking the next steps
The next common project is about storage. Iberdrola has always invested in pump storage which is a very efficient way to store energy; however, it is limited. The two companies are convinced the next big thing will be green hydrogen or ammonia using renewable energy, a trend that will have a deep impact on the energy landscape of the future. By joining forces, Iberdrola and Vestas are trying to make their customers and their supply chains aware of the need to decarbonize and provide them with industrial solutions that will allow them to navigate that journey successfully.
Iberdrola and Vestas are exemplars in the transformation of major economic systems. As described in the World Business Council for Sustainable Development (WBCSD)’s Vision 2050, such partnerships are needed to transform entire value chains. Together, they are integrating risk and performance management, driving purposeful disclosure, creating new market opportunities, and attracting lower costs of capital at much higher rates than companies that take no action.
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