Enterprise in the Energy Sector - Amazon S3 · Enterprise in the Energy Sector Mike Colechin ©2016...

©2016 Energy Technologies Institute LLP - Subject to notes on page 1

©2016 Energy Technologies Institute LLP The information in this document is the property of Energy Technologies Institute LLP and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Energy Technologies Institute LLP.This information is given in good faith based upon the latest information available to Energy Technologies Institute LLP, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Energy Technologies Institute LLP or any of its subsidiary or associated companies.

Enterprise in the Energy Sector

Mike Colechin


The UK energy challenge...

Tensions are increasing...


The UK energy challenge... Demand is growing, assets are aging, prices are rising... irrespective of a CO2 reduction target

• 62m people ....................................................... growing to 77m by 2050

• 24m cars .......................................................... growing to 40m by 2050

• 24m domestic dwellings .................................... 80% will still be in use in 2050total dwellings 38m by 2050

• Final users spent £124bn on energy in 2010 .... 9% of GDP

• 2.4m English households in fuel poverty .......... average ‘fuel poverty gap’ £438 and increasing

• Over 90GW generation capacity ....................... from 1MW to 3.9GW

• Over 200 ‘significant’ power stations ................. average age >20 years

• 50% of power generation capacity …………….. in 30 power plantsaverage age 30 years


What is the ETI?

• The ETI is a public-private partnership between global energy and engineering companies and the UK Government.

• Targeted development, demonstration and de-risking of new technologies for affordable and secure energy

• Shared risk

ETI programme associate

ETI members


What we do...

System level strategic planning

Technology development & demonstration

Delivering knowledge &

innovation


“No emissions targets” and “-80% CO2 in 2050” are very different worlds…

0

20

40

60

80

100

120

140

2010 2020 2030 2040 2050

GW

Gas + CCS

Nuclear

Hydrogen

Renewables

Gas

Coa

l

No targets -80% CO2

UK

ele

ctric

ity g

ener

atio

n ca

paci

ty

Coal + CCS

No targets -80% CO2

Coal

Gas

NuclearRenewables


0

20

40

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120

140

2010 2020 2030 2040 2050

GW

Gas + CCS

Nuclear

Hydrogen

Renewables

Gas

Coa

l

No targets -80% CO2

UK

ele

ctric

ity g

ener

atio

n ca

paci

ty

Coal + CCS

No targets -80% CO2

Coal

Gas

NuclearRenewables

As long as we prepare NOW, decisions on 2050 can wait… but not for long


Key decisions and cost implications• Direction change between “no

targets” and “-80% CO2” polarises in mid 2020s

Delay in launch of major build programmes beyond mid 2020s leads to cost increases of ~£5bn p.a. as more costly alternatives are built• Key electricity decisions are national

policy led programmes – Nuclear new build– CCS

• plus… local and individual consumer decisions on other critical areas - with major implications for distribution level infrastructure – Heat delivery

(gas, electricity, biomass, district heating)

– Transport(liquid fuels, electricity, hydrogen)

There are logical asset replacements (technically and financially) that ensure security, sustainability and lowest system cost

Nuclear

Gas

Bioenergy feedstock's

(for heat and power)

CCS (fossil and biomass

fuels)

Efficiency improvement

(transport and buildings)

Offshore renewables

all “no regrets” choices for the next 10 years


What we need...

• Understanding of the drivers on future development

– Costs

– Supply capability and capacity (in a global market)

– Infrastructure decisions

– Investor requirements

– Consumer needs/desires

• Clear market and value opportunities for investors and consumers

• Supportive and stable policy

• Consumer support

But... the future remains uncertain and we need an energy system design that allows for this

• Ready to make informed choices• A system that creates and retains

optionality• Prepared for investment in a wide

scale infrastructure roll-out• Innovate to drive down cost

(technology and business models)

• We need innovative incentives for industry to invest in the UK


Pilot Scale Demonstrator

Technology Considered “Commercially Proven” & Economies of Scale AchievedPre-Commercial Full-

Scale Implementation

New Ideas

Basic R&D: speculative, science led industry needs led

Feedback of R&D needs

Demonstration DeploymentResearch & Development

Underpinning R&D to mitigate perceived technical, market & financial risks

Applied R&D to address technical issues

Technology Push... …Market Pull


Successful innovation is open and iterative

Innovation is complex and non-linear

Collaboration is vital

You have to take risks

Linear models still have a place (provided they are recognised for what they are)

Evolution of Innovation Models

Linear models Technology push / market pull

Non-linear models CouplingChain linked

Integrated models NetworkingOpen innovation

Systems models

National/regionalSectoralTechnologicalCyclic

Evolutionary models

ExpectationsMulti-level perspectiveSocio-technicaltransitions

1950

1970

1990

2000


It takes time for innovation systems, networks, relationships and expectations to form, evolve and mature.

Weak or immature innovation systems may delay progress and decrease the likelihood of success.

A new technology will pass through distinct stages in its evolution but the process is seldom linear.


Innovations may be idea-led and/or demand-led. The forces of technology-push and market-pull combine to provide continuous challenge to develop cost-effective technologies.

Promising technologies may fail to attract sufficient risk capital and/or the resources needed to support demonstration due to significant market uncertainty.


Useful technologies and ideas are exchanged and may be spun in or out at any stage

Organisations pursue multiple pathways to advance their ideas


The ‘critical components’: sustainable innovation requires routes to market, access to finance, a supportive policy environment, and widespread innovation capabilities within companies and ‘the system’


A large scale solution (CCS) – illustrates the policy journey


Key Issues:

• Systems approach

• Overcoming technological roadblocks

• Building innovation capability

• Strategic collaboration

• Promoting entrepreneurship

• Demand-side policies

Policy journey...


Mass market solution (electric vehicles) -illustrates the market journey


Key Issues:

• Missing markets

• Multiple risk factors

• Novel technologies

• Finance to support demonstrators

• Consumer acceptance

Market journey...


Medium scale solution (distributed energy) –illustrates the capability journey


Key Issues:

• Disruptive innovation

• New business models

• Skills gap

• Dependence on environmental policy

• Commercialisation skills

Capability journey...


Medium scale solution (fault current limiter) – illustrates the company journey


Key Issues:

• Externalities

• Path dependency

• Coordination failures

• Risk and uncertainty

• Long time horizons

• Leverage vs crowding in

Company journey...


Summary

• The low carbon energy sector faces multiple challenges

• It will not be possible to meet these challenges without innovation

• Innovation in the energy space is immature and complex

• This all makes it a very rewarding place to work…


For more information about the ETI visit www.eti.co.uk

For the latest ETI news and announcements email [email protected]

The ETI can also be followed on Twitter @the_ETI

Registered Office Energy Technologies InstituteHolywell BuildingHolywell ParkLoughboroughLE11 3UZ

For all general enquiries telephone the ETI on 01509 202020.


BACKUP


* 2010 UK consumption divided by 60M Notes: 1. Passenger transport figure excludes international air travel(people in the UK) 2. Data excludes heavy industry

0 1000 2000 3000 4000 5000 6000

Space heating - domestic (Th)Space heating - commercial (Th)

Water heating - domestic (Th) Water heating - commercial (Th)

Process heating (Th)Cooking - domestic (Th)

Cooking - commercial (Th)

14,000 passenger km (Th)4,250 Goods Te km (Th)

LightingAppliances

MotorsCompressed airVentilation / AC

IT, etcRefrigeration

Other

Energy kWh p.a.

Individual energy consumption in the UK*...


Hea

t / E

lect

ricity

(GW

)

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200

Jan 10 Apr 10 July 10 Oct 10

HeatElectricity

GB heat delivery system design point

GB electricity delivery system design point

Source: UKERC (2011)

GB heat and electricity demand variability(commercial & domestic - 2010)


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Time of Day

Other personal

Entertainment

Holidays/day trips

Shopping

Education

Business

Commuting

Average hour = 100

Data source: Department for Transport (2005-2009 data, weekday journeys only)

Road traffic density peaks at around 8am and 3pm

Enterprise in the Energy Sector - Amazon S3 · Enterprise in the Energy Sector Mike Colechin ©2016...

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Transcript of Enterprise in the Energy Sector - Amazon S3 · Enterprise in the Energy Sector Mike Colechin ©2016...