The World Energy Council has issued a ‘call to action’ on the power industry to redefine the energy sector.
Speaking at this week’s 23rd World Energy Congress in Istanbul, Marie-José Nadeau, Chair of the World Energy Council (WEC), said: “The grand energy transition is an unstoppable phenomenon. Adapting to this new reality with innovative technologies and different business models will require a massive effort and our ability to respond rapidly will define both winners and losers.”
WEC Secretary General Christoph Frei added that “slower global growth and shifting demographics” have defined a “new normal”.
“The main driving forces are increasing political pressure to decarbonise, innovation fuelled by an unstoppable digital revolution, as well as emerging risks for which yesterday’s unlikely has become today’s reality.
He said now was the time for “positive and inclusive leadership where leaders and society need to embrace these new realities, define a new energy contract to enable timely decisions, maintain stable investment frameworks and strive for continued innovation.”
The council has spotlighted several ‘new realities’ for energy. It states that “we haven’t done enough to decarbonise our economies. Current market signals alone are not enough to improve critical areas such as energy efficiency, improved electrical storage, penetration of clean transport and much needed adoption of carbon capture, utilisation and storage.
“Clear, focused and unambiguous policies and institutional frameworks are required to reinforce a wider deployment of solutions that accelerate the transition and drive consumer choice towards the most carbon and cost effective solutions.”
With the world witnessing a fourfold increase in extreme weather events over the past 30 years, WEC says that “increasing pressure on use of water in energy production and increasing levels of cyber threat that are all contributing to a new reality for the energy sector”.
It argues that with increasing systems integration, “resilience is no longer just about building systems stronger and returning single assets to full operation after a disruptive event. When interdependent systems are blacked out, by extreme weather or cyberattack, the system as a whole is at risk of being deadlocked. Black-starting capability, decentralised decision autonomy and local empowerment have become key concepts of a new ‘soft resilience’ approach as opposed to the traditional ‘hard resilience’ practice of simply building systems stronger. Operating in this new landscape requires different tools and new approaches to manage risk.”
On innovation, WEC says that “we are beyond the tipping point of a technology revolution in the energy sector”.
“Energy markets are further increasing in complexity, accelerated by fragmented energy policy, fast-moving technological innovation, and shifting consumer expectations. New realities are increasingly characterised by growing zero marginal cost supply, low entry barriers, greater focus on decentralisation and local empowerment, digitalisation and commoditisation of technology, more flexible and rapid pay back solutions, increasingly active investors and servicing of emancipated consumers.”
It states that solar and windpower will continue their rapid growth but adds that “current market designs and business models are unable to cope with these new realities and will require entirely new skills-sets, business models and financing solutions. Meanwhile, we will still depend on up to 45 per cent of our generated electricity being provided from fossil fuels supplemented by CCUS.”
And WEC acknowledges that “the centre of gravity in energy has moved outside OECD countries. China, India and Africa define tomorrow’s agenda for energy and must take their due place in global energy governance.”
“The world is witnessing a trend to more inclusive global energy governance with more global governance tools available than even five years ago.
“Meanwhile, many of the substantive agendas remain a work in progress: minimising international tariff and non-tariff trade barriers for clean energy goods and services to enable clean energy deployment; introducing carbon pricing mechanisms to ensure adequate investment signals; reinforcing regional infrastructure integration and market harmonisation measures to ensure effective resources sharing.”
WEC stresses that “focus will be required in this area, along with improved capability to respond sympathetically to increasing public activism, if we are to enable the energy transformation.”