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Executive interview: ‘Hydropower has always been modern and will always be’

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Executive interview: ‘Hydropower has always been modern and will always be’
(Klaus Engels)

Dr. Klaus Engels is director operations hydro Germany with Uniper Kraftwerke Gmbh. Uniper is an international energy supplier based in Germany with a total installed power generating capacity of 22.5 GW in Europe. Uniper’s primary generating technologies are gas, followed by coal and hydroelectric power.

As head of the German hydropower branch, Engels is responsible for more than 100 power plants, including five pumped storage facilities, with a total capacity of about 2,000 MW. Before joining the hydropower business in 2008, he worked for a transmission grid operator and a strategic consultancy. Engels holds a master’s degree in electrical engineering and in business administration and received a PhD from RWTH Aachen in electrical energy economics.

In this interview, Engels discusses hydro’s role in the company’s portfolio, the future of hydropower as a modern technology, and how to attract the next generation needed to support hydroelectricity.

Q: Please give our readers a general overview of Uniper, including your hydroelectric facilities.

Engels: Uniper is a European-based international energy trader and supplier, active in more than 40 countries, with core markets in Germany, the Netherlands, Sweden and the UK. Its facilities have an installed power generation capacity of roughly 22.5 GW (equal to the total capacity of the Netherlands). The company’s overall strategic ambition is to transform the entire business to be carbon-neutral by 2040. On the trading side, the gas portfolio consists of roughly 200 TWh of long-term contracts, LNG and short-term market transactions. Also, 7.4 billion cubic meters of underground gas storage capacity (in Germany, Britain and Austria) belongs to the portfolio.

The hydropower business of Uniper consists of two divisions, one in Sweden and one in Germany. The total hydropower production sums up to roughly 13 TWh out of 180 power plants with about 500 units and an installed capacity of roughly 3.7 GW, including four pumped storage plants.

Uniper in total employs roughly 7,000 people, about 600 of them in the hydropower business.

Q: You’ve been director operations hydro Germany for more than nine years. What is your vision for the future of this group?

Engels: An intensive restructuring and consolidation phase in the past years has laid the foundation for future development in the areas of people’s competencies, new investments and digitalization. It also has prepared the financial background for upcoming refurbishments, capacity and flexibility increase, and environmental obligations in order to secure the operating licenses sustainably.

Walchensee hydroelectric power station

Q: How does being a state-owned enterprise influence Uniper’s work and direction?

Engels: Having the German state as majority owner of Uniper was not a strategic decision of the German government to invest into a promising company, e.g. to better enable the energy transition. It was based on the need to secure the German gas supply after Russia’s decision to stop gas delivery. Hence, it was a national emergency measure, and the German government together with the Uniper Board currently is working on a path to reprivatize the company as soon as possible. We haven’t experienced any influence of our operational hydropower business by the state since the takeover.

Q: Recently, Uniper has announced several power purchase agreements signed to supply hydropower, to Deutsche Bahn and Talanx Group, for example. How does this type of activity support the company’s business objectives?

Engels: These PPA signings, as well as other cooperations, underline strong partnerships, partly established since more than 100 years. Besides a less risky exposure to market price developments, these strong partnerships also demonstrate that the different industries work together toward a common goal of a greener energy supply and have a stronger common voice on political grounds.

Q: What does the term “modern hydropower” mean to you?

Engels: Hydropower has always been modern and will always be. In central Europe and in particular in Germany, hydropower was the backbone of electrification in the alpine regions. It was also a major energy source after the second world war to rebuild the country, and nowadays it has the “modern” role to make the “energy transition” possible by its predictability, flexibility and capability to store energy. Is there any other technology that remains modern for more than 100 years?

Q: What is the main challenge for your hydropower facilities or portfolio?

Engels: A general trend in western societies of noisy activists and well-organized minorities in combination with the supportive but silent majority also hits the hydropower business. Since we are looking for a good compromise between our economic ambitions, the environmental impact and public needs, some of these groups are not willing or able to find necessary compromises every society eventually needs to survive. While trying to secure existing and exploit remaining green generation potential, authorization processes last longer, environmental obligations increase, and monitoring efforts do not protect the investments, rather the opposite. Results are used to start the procedures again.

Q: What is the most striking change you have witnessed for hydropower recently?

Engels: Because hydropower is a long-term and stable business, striking or surprising changes are relatively seldom. It’s not boring, but the hydropower business is known for stability, predictability and reliability in almost all dimensions. That makes striking changes very unlikely, by definition. Nevertheless, the recent strong political support of the European and also national governments in Europe was a surprise … to me at least!

Uniper hydro
(photo courtesy Uniper)

Q: You are speaking during the keynote session at HYDROVISION International 2024 in July. Can you give us some insight into a couple of the hot topics for Uniper that you plan to cover?

Engels: I intend to share some insights about the European energy market and its transition to carbon-neutral production. I potentially will start with our famous Walchensee hydropower plant, which will receive the honor of being inducted into the Hydro Hall of Fame this year, to explain the historic ingredients of successful growth, which are sometimes missing today. Entrepreneurial spirit, courage, pragmatism and the right balance between public benefit and individual concern are mandatory. Furthermore, the right remuneration scheme is crucial to make a transition successfully happen. Without well-designed incentives, no development in the right direction will happen. And ideology cannot replace economic realities.

Q: Any final comments/thoughts on the future of hydropower?

Engels: When I studied electrical engineering, it was a tough education with lots of effort. During internships, I questioned my choice, not only once. Afterwards, I had some interesting jobs, but – by coincidence – I found a job in the hydropower business and learned about the broad and interesting fields such a business can provide. From technical to political, from economical to legal topics, working with authorities, consultancies, non-governmental organizations, the public, etc., the variety of tasks and challenges in my business is amazing. We therefore started an initiative, recently, to attract children at school and help them to better prepare their initial educational decisions. And because hydropower was called an eternal business in an official Bavarian governmental document of the 1950s, we always need to think about the next generation.