© World Energy Council Energy in transition - navigating through uncertainty. Dr Christoph Frei...

© World Energy Council

Energy in transition - navigating through uncertainty

.

Dr Christoph Frei

Secretary General & CEO

World Energy Council.

Acapulco, 11 September 2015Mexican Energy Congress

twitter:@chwfrei

© World Energy Council impact

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tyWorld Energy Issues Monitor 2016 preview World

© World Energy Council 2015

need foraction

criticaluncertainties

weak signals

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climate framework

large scale accidentsglobal recession

capital markets

commodity prices

electricity pricesexchange rates

energy water nexus

land use

talent

energy poverty

energy affordability

extreme weather risks

cyber threats

corruption

terrorism

China India

Brazil

Russia

EU CohesionMiddle East dynamics

US policytrade barriers

regional interconnection

market design

energy subsidies

decentralised systems

sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels

smart grids

innovative transport

electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economy


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► Price volatility, economic uncertainty, market design and electric storage are the top insomnia issues for energy leaders globally.


need foraction


weak signals

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climate frameworklarge scale accidents global recession

capital markets

commodity prices


energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China India

Brazil

Russia



market design


sustainable cities

coal

ccs

biofuels

smart grids


electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economy

regional interconnectionenergy subsidies

energy efficiencyrenewable energies

WHAT KEEPS ENERGY LEADERS AWAKE AT NIGHT


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► Regional interconnection, renewables, energy efficiency and transitioning subsidy regimes are issues keeping energy leaders most busy globally.


need foraction


weak signals

WHAT KEEPS ENERGY LEADERS BUSY AT WORK

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capital markets

commodity prices


energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China India

Brazil

Russia




market design

energy subsidies


sustainable cities

coal

ccs

biofuels

smart grids


electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economy


energyefficiency

renewableenergies


un

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► Cyber threats and commodity prices are among the biggest up-wards movers on the energy leaders agenda.

► Coal is moving downwards.


need foraction


weak signals

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large scale accidents global recession

capital markets

commodity prices


energy water nexus

land use

talent

energy poverty



corruption

terrorism

China India

Brazil

Russia




market design

energy subsidies


sustainable cities

energy efficiency

ccs

renewable energies

biofuels

smart grids


electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economycyber threats

coal

climate framework


un

cert

ain


► CCS, unconventional or nuclear are cooling down.► Renewables and energy efficiency are robust as

top action items.


need foraction


weak signals

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climate framework

large scale accidentsglobal recession

capital markets

commodity prices


energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China India

Brazil

Russia




market design

energy subsidies


sustainable cities

coal

ccs

biofuels

smart grids


electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economy

renewableenergies

energyefficiency


un

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tyWorld Energy Issues Monitor 2016 preview Mexico


need foraction


weak signals

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climate framework

large scale accidents

global recession

capital markets

commodity prices

electricity prices

exchange rates

energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China IndiaBrazil

Russia

EU Cohesion

Middle East dynamics

US policy

trade barriers


market design

energy subsidies


sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels

smart gridsinnovative transport

electric storagenuclear

hydro

unconventionals

LNG

hydrogen economy


un

cert

ain


► Price volatility, market design, US Policy are among to issues keeping energy leaders awake at night.


need foraction


weak signals


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climate framework


global recession

capital markets

commodity prices

electricity prices

exchange rates

energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China IndiaBrazil

Russia

EU Cohesion


US policy

trade barriers


market design

energy subsidies


sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels



hydro

unconventionals

LNG

hydrogen economy


un

cert

ain


► Talent, energy efficiency and managing energy subsidies keeps energy leaders busy at work.


need foraction


weak signals


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climate framework


global recession

capital markets

commodity prices

electricity prices

exchange rates

energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China IndiaBrazil

Russia

EU Cohesion


US policy

trade barriers


market design

energy subsidiesdecentralised systems

sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels



hydro

unconventionals

LNG

hydrogen economy



un

cert

ain


► Other top issues include extreme weather events, climate framework, regional integration.


need foraction


weak signals


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global recession

capital markets

commodity prices

electricity prices

exchange rates

energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China IndiaBrazil

Russia

EU Cohesion


US policy

trade barriers


market design

energy subsidiesdecentralised systems

sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels



hydro

unconventionals

LNG

hydrogen economy


climate framework


un

cert

ain



need foraction


weak signals

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capital markets

commodity prices


energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China India

Brazil

Russia




market design

energy subsidies


sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels

smart grids


electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economy

Consultancy

Oil & GasUtilities

Government

Asia

Africa

Europe

LatAm

MENA

NAmOECD

NonOECD

G20


► Resilience / extreme weather events & water nexus are high on the agenda of LAC countries.


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need foraction


weak signals

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capital markets

commodity prices


energy water nexus

land use

talent

energy poverty



cyber threats

corruption

terrorism

China India

Brazil

Russia




market design

energy subsidies


sustainable cities

energy efficiency

coal

ccs

renewable energies

biofuels

smart grids


electric storage

nuclear

hydro

unconventionalsLNG

hydrogen economy

Consultancy

Oil & Gas

Utilities

GovernmentAsia

Africa

EuropeLatAm

MENA NAm

OECD

NonOECD

G20

climate framework

► Climate framework … is less high on the agenda of LAC countries.


Financing Resilient Energy Infrastructure preview

Number of natural catastrophes, 1970-2014

Insured catastrophe losses, 1970-2014

Source: WEC Financing Resilience Report, 2015 (October 1); also Swiss Re, 2015: Sigma report No 2/2015

0

20

40

60

80

100

120

140

160

180

200

1970 1975 1980 1985 1990 1995 2000 2005 2010

Natural catastrophes

Source: Swiss Re Sigma 02/2015

► Comparing the last 5 years to the last 20 years: The occurrence of extreme events has roughly doubled, which, according to the IPCC, is largely connected to the 40% increase of carbon dioxide in the atmosphere.

► From impact-resistant “hard” – ‘safe-fail’ – components to ‘fail-safe’ “soft” systems.

► The solution appears to be ‘smarter not stronger’.


Financing Resilient Energy Infrastructure preview

00© Oliver Wyman

The impact of extreme weather on energy infrastructure

Pie charts would indicate current energy supply mix now & estimated in 2050

As of December 2014, biggest dams in Brazil were at 16.1% of capacity.

Extreme weather by region

Strong cold/heavy snow Heat wave/droughtHurricanes / Tropical Cyclones Flooding Convective Storms

North America x x x x xSouth America xEurope x x xAsia and Asia Pacific x xMENA x xSubsaharan Africa x

Strong cold/heavy snow (including blizzards)

Heat wave/drought Hurricanes / (extra) tropical cyclones

Flooding Convective Storms

North America x x x x x

Latin America & the Caribbean

x x x

Europe x x x x

Asia x x x x x

MENA x x x

Sub-Saharan Africa x x x x


Myth 1: Demand growth will be fully met by clean energy sources

0

100

200

300

400

500

600

700

800

900

2010 2020 2030 2040 2050

EJ/

y

Renewables: output of electricity and heat; Biomass: primary supply incl. waste; Nuclear: 33% efficiency

Total Primary Energy Supply

Renewables

Hydro

Biomass

Nuclear

Gas

Oil

Coal

0

100

200

300

400

500

600

700

800

900

2010 2020 2030 2040 2050

EJ/

y

Renewables: output of electricity and heat; Biomass: primary supply incl. waste; Nuclear: 33% efficiency

Total Primary Energy Supply

Renewables

Hydro

Biomass

Nuclear

Gas

Oil

Coal

JAZZ SYMPHONY

Global total primary energy supply to 2050

Renewables undergo rapid development, accounting for almost 50% of total electricity generation in 2050 (cf. 20% in 2010)

Hydro and wind electricity are competitive. Renewables account for roughly 30% of total electricity generation by 2050.

16 Gtoe

10.4 Gtoe


Myth 2: We can reduce global GHG emissions by 50% by 2050

2010 2020 2030 2040 20500

10

20

30

40

50

60

70

80

CO

2 e

mis

sio

ns

(Gt/y

)

Note: assumes over the long termthat non-energy CO2 emissions fromindustry,agriculture and land useare reduced to insignificant levelsin Jazz and Symphony

IPCC Categories (CO 2 – eq)

445−490 ppm

490−535 ppm

535−590 ppm

590−710 ppm

710−855 ppm

855−1130 ppm

JAZZ

SYMPHONY

Emissions trajectories for atmospheric GHG concentration

445−490 ppm

490−535 ppm

535−590 ppm

590−710 ppm

710−855 ppm

855−1130 ppm

JAZZ

SYMPHONY

445−490 ppm

490−535 ppm

535−590 ppm

590−710 ppm

710−855 ppm

855−1130 ppm

JAZZ

SYMPHONY

445−490 ppm

490−535 ppm

535−590 ppm

590−710 ppm

710−855 ppm

855−1130 ppm

JAZZ

SYMPHONY

445−490 ppm

490−535 ppm

535−590 ppm

590−710 ppm

710−855 ppm

855−1130 ppm

JAZZ

SYMPHONY

IPCC Categories (CO2 – eq)


Myth 3: Universal access will be achieved over the next 10-15 yearsPopulation without access to electricity (in millions)

1,267

319

530

22 0 0

Eas

t Asi

a World

029

0

Latin

Am

eric

a &

The

Car

ibbe

an

20 0 0

Mid

dle

Eas

t &N

orth

Afr

ica

135

8 26

Sou

thea

st A

sia

&P

acifi

c

589

266

402

Sub

-Sah

aran

Afr

ica

471

45102

Sou

th &

Cen

tral

Asi

a

2010 J

JAZZ: 310 million without access in 2050

SYMPHONY: 530 million without access in 2050


Energy SecurityThe effective management of primary energy supplyfrom domestic and external sources, the reliabilityof energy infrastructure, and the ability of energyproviders to meet current and future demand.

Environmental SustainabilityEncompasses the achievement of supplyand demand side energy efficiencies and thedevelopment of energy supply from renewableand other low-carbon sources.

Energy EquityAccessibility and affordability of energy supplyacross the population.

Balancing the‘Energy Trilemma’

ENERGYEQUITY

ENVIRONMENTALSUSTAINABILITY

World Energy Trilemma



Sweden

Germany

NorwayIndonesia

Brazil

South Korea

AACUnited States

India

BBCMexico

South Africa

World Energy Trilemma – selection of CEM countries


World Energy Trilemma 2014 Colombia


World Energy Trilemma 2014 Germany


Scenarios.. and the importance of singular events“History has witnessed a number of singular events (e.g. oil shocks) that have translated into moods, policy and mobilisation of capital in new technologies and thereby contributed to learning curves and sustainably changed the energy picture. What will be next?”

Event Change of mind-set Innovation push, new players

World War I Power & speed on sea is critical (Churchill)

Oil replacing coal for shipping

Oil shocks (1973/79)

Oil independence Energy efficiency push

9-11 (2001) US energy independence Shale oil & gas push; by independents, not IOCs

Financial crisis (2008)

Less leveraging, Basel III More equity required, less projects realised; conventional investors lost cushion, shift to new investors

Fukushima (2011) [& Chernobyl 1986]

Anti-nuclear «Energiewende», solar & wind; HH and new players, not utilities as main actors

Ukraine (2014) EU gas diversification LNG push

China «new normal»

Qualitative instead of quantitative growth

Gas, nuclear, renewables, clean and water efficient

14-11 oil shock «It’s not going to last..» Oil instead of LNG? Cautioned unconventionals investors




Cyber disaster (UK, Germany, ..)

Anti-monoculture in IT, anti-centralised

Decentralised & disconnected local solutions (including storage)

Draughts (Brazil, Africa, MENA, Australia)

Regional water management co-dependency

Large hydro + regional integration (or: more fossil or alternative storage as back-up in draughts..)

Hurricanes (Asia & Africa, NAm)

Fast recovery and local solutions

Soft resilience with local empowerment ; storage & (diesel, CHP) back-up generation, micro-grids (NY post Sandy)

Energy market design crisis

Avoiding brown-outs and price peaks (S-Africa, Germany)

Local storage & (diesel, CHP) back-up generation

Heightened geopolitics

Nationalistic agenda Domestic / local resources & solutions

Nuclear risks & China

Scalable pragmatism Gas / LNG, renewables, efficiency (including storage & local solutions)




Cyber disaster (UK, Germany, ..)

Anti-monoculture in IT, anti-centralised

Decentralised & disconnected local solutions (including storage)

Draughts (Brazil, Africa, MENA, Australia)

Regional water management co-dependency

Large hydro + regional integration (or: more fossil or alternative storage as back-up in draughts..)

Hurricanes (Asia & Africa, NAm)

Fast recovery and local solutions

Soft resilience with local empowerment ; storage & (diesel, CHP) back-up generation, micro-grids (NY post Sandy)

Energy market design crisis

Avoiding brown-outs and price peaks (S-Africa, Germany)

Local storage & (diesel, CHP) back-up generation

Heightened geopolitics

Nationalistic agenda Domestic / local resources & solutions

Nuclear risks & China

Scalable pragmatism Gas / LNG, renewables, efficiency (including storage & local solutions)

► Key enablers are storage & local solutions, hand in hand with a democratisation of energy


Summing it up

High energy price volatility: The new normal

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© World Energy Council Energy in transition - navigating through uncertainty. Dr Christoph Frei...

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Transcript of © World Energy Council Energy in transition - navigating through uncertainty. Dr Christoph Frei...