Our constant is change

80 years of STEAG

1930s and 1940s – All beginnings are hard

When Steinkohlen Elektrizität AG (which literally translates as “hard coal electricity company”) – the precursor of the present STEAG – was founded on September 20, 1937, the persons responsible for the German coal mining industry had already been debating the issue for over twelve years. “We have to do something to oust electricity generation from lignite as far as possible,” said Otto von Velsen, Managing Director of the mining companies Bergwerksgesellschaft Hiberna AG and Bergwerksgesellschaft AG Recklinghausen, at a meeting of the Rhenish-Westphalian Coal Syndicate in 1925. After the First World War, it was cheaper to extract lignite for power generation from open cast mines than to mine hard coal, which is why the coal mines were pushing to found a company which would use their hard coal for public energy supplies. In the end, the project was implemented by a roundabout route: Two large power plants had to be constructed in Lünen and Marl to supply two energy-intensive works for the production of aluminum and Buna, a synthetic rubber – STEAG’s first two customers. In addition, the new energy company already established a degree of marketing expertise: The numerous mines in the Ruhr area which produced their own electricity for their winding equipment made the power they did not need themselves available via STEAG for the public electricity supply.

1950s – STEAG’s second birth

IIn September 1950, STEAG secured a broader field of activity by entering into a contract with Rheinisch-Westfälisches Elektrizitätswerk AG (RWE). One year later, a similar agreement was reached with Vereinigte Elektrizitätswerke Westfalen (VEW). For STEAG, these contracts represented a kind of second birth, as they finally drew a line under the dispute over the involvement of hard coal mining in public electricity supply, which had raged for over two decades. The mines were able to renew their power generation equipment, make good commercial use of surplus electricity and, by means of interconnected operation, keep the reserves at their power plants low. But at the end of the 1950s, the mining crisis in the Ruhr area set in – and also caught STEAG unawares. Particularly as the demand for coal in the previous years had been so great that it even had to be imported from the USA. “That time saw the start of a crisis to which an effective solution was only found ten years later,” says Dr. Hans-Christoph Seidel, who, as the Director of the History of the Ruhr Foundation, has been researching into the history of the Ruhr area for several decades now (see also the interview with the historian on page 20). “In 1968, the Federal German Government passed the Act to Restore the German Hard Coal Mining Industry. On November 27, 1968, after no less than ten years of mining crisis, the majority of mining companies in the Ruhr area founded Ruhrkohle AG as the umbrella organization for mining in the Ruhr.

1960s and 1970s – STEAG is Germany’s fifth largest power generation company

Ruhrkohle was intended to consolidate the German hard coal mining industry, create a healthy economic basis for it and secure employment in the mines. In the summer of 1969, the Federal Government, Ruhrkohle and 19 (later 26) of 29 mining companies on the Ruhr signed the basic contract for the reorganization of the coal mining industry. STEAG, now a subsidiary of Ruhrkohle, develops into the second largest power producer from coal and the fifth largest power company in Germany. With the conclusion of the so-called power plant transfer and interconnected operation contract between Ruhrkohle and STEAG one year later, the company became the electricity industry arm of Ruhrkohle. All activities in the electricity sector, including the coal mine power plants, were then concentrated at STEAG. In addition to the power industry, the district heating business grew steadily in the 1970s, and international business also developed – initially through the training of power plant personnel and technical support in the operation and maintenance of power plants, for example in Saudi Arabia, Indonesia and South Africa.

1980s – STEAG invests in environmental protection

For STEAG, the 1980s were characterized by two opposing developments: On the one hand, the company shut down smaller coal mine power plants because they were no longer needed. On the other hand, STEAG invested in innovative environmental protection technology at the large power plant sites and, for example, installed a DeNOx test facility for reducing nitrogen oxide emissions at the Voerde site in 1985. To realize this investment in environmental protection, a capital increase from DM 150 million to DM 200 million was carried out in 1984. In addition, the so-called “contract of the century” concluded in 1980 between the German mining industry and power generators for the conversion of around 630 million metric tons of hard coal into electricity opened up new opportunities over the next 15 years. In the same year, STEAG and Deutsche Bundesbahn concluded an electricity supply contract, which led to the construction of the traction power turbine generator set at the Lünen power plant. The consequence of the century and traction power contracts was the expansion of existing locations such as Walsum, Voerde and Lünen. Abroad, STEAG expanded its activities by taking on the production of expert reports and performance of engineering work in Bangladesh, Indonesia, Colombia and Turkey.

„In my time as Chairman of the Executive Board, STEAG’s development was already marked by major changes that had to be mastered in order to keep STEAG on a successful course: In Western Germany, no new large-scale power plants were needed in the foreseeable future, and our opportunities were limited in the former East German states. The Leuna chemicals plant was the only place where we were able to win a contract. So we put our cost structures to the test. Our yardstick was the electricity generation cost structures of the best coal-fired power plant operators in international competition. The analysis revealed a cost gap of 30 percent, which had to be closed. I still remember well the concerns of employees and their worries about their jobs, but they all pulled together and moved along – and succeeded. We also decided to enter new markets: We built power plants in Colombia, Turkey and the Philippines, creating new and, above all, sustainable sources of income. Incidentally, the present head of STEAG, Joachim Rumstadt, made the complicated contracts for it watertight. Today I wonder what would have become of STEAG if we hadn’t had the courage to break into an unfamiliar foreign market. When the next change was announced in 2004 – RAG as the majority shareholder had decided to integrate the energy activities of RAG Saarberg into STEAG – I took the opportunity, in consultation with the Supervisory Board, to retire. I had an exciting time at STEAG, and I still look back with gratitude today.“

Dr. Jochen Melchior
Chairman of the Executive Board of STEAG AG from 1995 to 2004 

1990s and 2000s – National and international growth

In the 1990s, STEAG finally emancipated itself from its decades-long role as a supplier of industrial electricity and district heating in the Ruhr area. After the reunification of Germany, STEAG in Saxony-Anhalt took over Industriekraftwerk Nord from Leuna-Werke and leased it to the newly founded LEUNA-STEAG Energiegesellschaft mbH. With the foundation of STEAG Energieanlagen Sachsen Anhalt GmbH (SESA), STEAG launched its first new build project in eastern Germany at the same location. SESA also functioned as the owner of the new combined cycle gas and steam turbine power plant in Leuna. A few years later, this project was followed by a power plant to supply electricity and heat to the large-scale refinery which was then being constructed. In 1998, the takeover of Saarbergwerke AG by Ruhrkohle AG (RAG) brought power plant activities from the Saarland into the group. This integration was completed – following the complete takeover of STEAG by RAG – by the foundation of Saar Energie AG in October 2004. And STEAG also began to expand its commitments internationally: In 1999, the Termopaipa IV power plant, which was planned, financed and built by STEAG, went on line in Colombia. In 2000, construction work began on the Iskenderun power plant in southern Turkey, which commenced generating electricity in 2004. In 2006, finally, a power plant went on line in Mindanao (Philippines). The realignment of RAG, which began in 2003, and the focus on the Chemicals, Energy and Real Estate business areas again brought about changes for STEAG. At the beginning of 2005, all of RAG’s activities in the areas of coal trading, power plant construction and operation, waste disposal, and gas and district heating supply were pooled at STEAG. The energy company had thus become one of the mainstays of the RAG Group. On September 12, 2007, RAG Beteiligungs AG became Evonik Industries AG with the three business units Chemicals, Energy and Real Estate. At the same time, RAG Aktiengesellschaft emerged as an independent company from the former RAG Group. Since then, both companies have been owned by the RAG Foundation. In 2008, Evonik Industries began to position itself as a special chemicals group – energy and real estate activities were no longer regarded as core businesses.

„One major challenge was the decision to build the new Walsum 10 unit because it was the first time a new power plant was to be constructed in Germany after many years. That is why it was important for Evonik and its Chairman, Dr. Müller, to support our project in the long term and for the cooperation with EnBW and our Austrian partner EVN to function so well. Even back then, the situation in Germany was anything but ideal for conventional energy, which is why we decided not to build a new unit in Lünen, for example. The takeover of the power plants in the Saarland was also challenging. The aim was to avoid duplicate structures and become a single company, but of course we had to tread very carefully. I was also proud of our commitment abroad: The Mindanao power plant was completed in my time, and the performance of our engineers in India was impressive. At STEAG, I experienced what living in a social partnership means. The great commitment of the power plant operators, the willingness of the employees to go abroad – all that was by no means a matter of course. Once, for example, when we had planned a project in Russia but didn't have enough engineers available, we asked our retired staff – and everyone, really everyone, was ready to take part. That's what makes STEAG special.“

Dr. Alfred Tacke
Chairman of the Executive Board of STEAG AG from 2004 to 2006, and Chairman of the Board of Management of Evonik Steag GmbH from 2007 to 2008. Also a member of the Executive Board of RAG Beteiligungs AG (later Evonik Industries AG) from 2006 to 2008.

2010 to the present day – Departures and innovation

The new decade brought a profound change in STEAG’s ownership structure: In March 2011, a consortium of seven Ruhr area municipal utilities acquired 51 percent of Evonik Steag GmbH from Evonik Industries AG, and the former company shortly afterwards changed its name to STEAG GmbH. Since 2014, STEAG has been wholly owned by the municipal utilities of Bochum, Dinslaken, Dortmund, Duisburg, Essen and Oberhausen. Today, more than 6,000 people all over the world work for STEAG, and the former coal-fired power plant company now stands for many energy sources – renewable and fossil – with comprehensive know-how in power generation and the energy industry. In 2010, for example, the first STEAG wind turbines in Germany were installed on the Oberscholven mining heap in Gelsenkirchen. In 2013, STEAG commissioned the Walsum 10 power plant unit in Duisburg with a total output of 793 megawatts – with an efficiency of more than 45 percent, it is one of the world's most modern hard coal fired power plants. In 2015, STEAG set another milestone with the foundation of the Rhine-Ruhr district heating trunk line: The large-scale project, which is funded by the state of North Rhine-Westphalia and the EU to the tune of up to 100 million euros, is to run 25 kilometers across the Ruhr area and save around 100,000 metric tons of carbon dioxide emissions each year. Equally innovative is the large- scale battery project presented by STEAG in 2016: Six battery systems with a lithium-ion based capacity of 90 MW were put into operation in North Rhine-Westphalia and the Saarland and contribute with their primary control power to stabilizing the electricity grid. However, the politically driven rapid expansion of energy from renewables and the resulting low electricity prices on the exchanges are forcing STEAG to take drastic steps. In March 2017, the Voerde power plant, once Germany’s largest coal-fired power plant with a capacity of 2234 megawatts, was shut down. But there is also good news in the field of conventional generation: In October 2017, STEAG announced plans for the construction of a new gas-fired power plant in Herne, which will produce both electricity and heat through cogeneration.

„I have been with STEAG for 20 years now and have seen how we and our employees have mastered even the most difficult situations: demanding orders under time pressure, technically tricky tasks that have demanded all their know-how from our engineers or sad events such as the recent closure of the Voerde power plant site. And it is precisely now that the turmoil on the German energy market is demanding a great deal of us. STEAG has to reinvent itself – once again – in part. However, this is one of the very characteristics of our company. When the conditions have changed, STEAG has also changed and has always been good at helping to shape the conditions which result. Coming from coal- fired power generation, STEAG today stands for many energy sources – renewable and fossil fuels. We have continuously expanded our service and production base. I am sure that we will continue to be successful in doing so. In addition to our high level of expertise, we also have one thing above all else: trust, respect for each other and, last but not least, a sense of community. This is what this company and its employees are all about: not forgetting their roots, but always being able to set new goals. Our constant is change.“

Joachim Rumstadt
Member of the Management Board of Evonik Steag GmbH from 2007 to 2009. Chairman of the Board of Management of Evonik Steag GmbH (renamed STEAG GmbH in 2011) since 2009. Also a member of the Supervisory Board of RAG Aktiengesellschaft from 2009 to 2014.