FORESIGHT Digest 2022 – Zeroing in on the energy transition

ZEROING IN ON THE ENERGY TRANSITION

TREND RADAR Scanning the horizon TECHNOLOGY Cities battle to beat the heat OPINION A new definition of pretty BUSINESS Energy transition faces a shortage of key workers INTERVIEW Audi and E.ON trade visions CASE STUDY Imagining the future

2022

Content TREND RADAR

Scanning the horizon A glimpse of tomorrow’s world— not just in energy terms, but for work, life and society as a whole Page 4

TECHNOLOGY

Cities battle to beat the heat Metropolitan areas are susceptible to climate change. What can we do to help them?

Page 8

OPINION

A new definition of pretty Big needs to be beautiful if we are to reach net-zero emissions on time, E.ON argues Page 14

BUSINESS

Energy transition faces a shortage of key workers We need to build a low-carbon economy. That means finding people who can build it Page 16

INTERVIEW

Audi and E.ON trade visions Vehicle electrification will unite carmakers and utilities. What will that future look like?

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CASE STUDY

Imagining the future A view of tomorrow is helping E.ON and its affiliates develop better strategies today Page 26

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Welcome The world faces many challenges. Having delivered major advances in wealth, freedom and healthcare on the back of fossil fuels, we now must renounce the energy sources that underpin our civilisation. By 2050—so within this generation—we must reduce our net emissions to zero and get most of our power from renewable energy sources such as wind and solar.

If we fail to do so, we will expose our communities to the increasing risks of a climate that is already changing, bringing extreme winds, floods, fires and droughts. Yet while the challenge is immense, so is the opportunity. The energy transition ahead promises to deliver a society where energy use and energy sources are sustainable and equitable.

Keeping global warming in check will demand to create new opportunities for innovation—and require the development of markets that support the planet rather than exploiting it for profit. As two leading brands with a stated interest in promoting this future, E.ON and FORESIGHT Climate & Energy have joined forces to bring you this report.

It combines the best of FORESIGHT Climate & Energy’s reporting with original content and analysis from E.ON, a leading company in the energy transition. The result, we hope, will illustrate the progress being made in solving the critical issue of how to get to net zero while preserving the wealth and wellbeing that we have been fortunate to amass in recent history.

FORESIGHT DIGEST

Zeroing in on the energy transition

PUBLISHER FORESIGHT Media Group E.ON EDITOR Jason Deign CONTRIBUTORS Thomas Boermans Erica Carr Jason Deign Anna Gumbau Nazarizal Mohammad Heather O’Brian Olena Sergienko Vaiva Seskeviciute Michael Stautz Bluedog Studio

FORESIGHT Climate & Energy is the essential read on the global transition to a decarbonized economy—objective reporting on what really matters, by expert journalists and writers. Read more at foresightdk.com/about

Jason Deign

Derk Swider

FORESIGHT DIGEST EDITOR

VICE PRESIDENT GROUP STRATEGY, FORESIGHT AND ANALYTICS, E.ON SE

Content from the publication may not be reproduced, distributed or stored in any form without the publisher’s written permission. FORESIGHT is a trademark of FORESIGHT Media Group.

FORESIGHT Climate & Energy ISSN 2446-094X

E.ON is an international investor-owned energy company, which focuses on energy networks and customer solutions. As one of Europe's largest energy companies, E.ON plays a leading role in shaping a clean, digital, decentralized world of energy. Around 50 million customers purchase electricity, gas, digital products or solutions for electric mobility, energy efficiency and climate protection from E.ON. Read more at http://www.eon.com/ innovation

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TRENDS E.ON’s Trend Radar provides a glimpse of tomorrow’s world—not just in energy terms, but for work, life and society as a whole

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ew customer interfaces, a race to produce a new generation of low-carbon fuels and a renaissance of rural areas. These are three major trends that could affect society within the next five years, according to research from E.ON. The views are part of the company’s Trend Radar, an E.ON foresight initiative that looks at combinations of events that will have significant impact in European Union markets over the next five, ten and 15 years.

The company developed the Trend Radar to provide management with early warnings of disruptive developments, support for innovation and insights about how European customers, business partners and communities will evolve. “Scanning the horizon for emerging change, analysing trends and anticipating developments helps us reveal and discuss what shapes the future of energy for the benefit of our clients, stakeholders and society,” says Thomas Birr, E.ON’s Chief Strategy and Innovation Officer.

Based on an analysis of technological trends and social drivers, E.ON’s Trend Radar research looks for emerging themes that combine technical advances, market demands and regulatory shifts, affecting the future of life, work, society and energy. The research anticipates the next big trends that will change the life of Europeans.

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NEW INTERFACES One trend assessed to be likely within five years is the development of completely new customer interfaces, with artificial intelligence transforming engagement and increasingly acting as an intermediary between machines and humans. Machinebased assistance will become commonplace in our daily routines and bot-to-bot marketing will replace direct contact between consumers and companies.

Marketing will become predictive, learning and evolving intelligently to match offers to our tastes and needs. Within the energy industry, the Trend Radar sees customer interactions being handled by digital assistants and bots rather than humans. “Customers will expect convenience, resilience and sustainability, but it’s likely bots that [sic] negotiate these needs against price,” Michael Stautz, Senior Foresight Manager of E.ON, says. “This will be a paradigm shift for customer care.”

The Trend Radar notes this area has already seen $1.3 billion in venture capital investment a year on average over the last half decade, supported by technology trends such as the growth of wearables, new payment methods and personalised pricing. And the emergence of novel interfaces could be hastened by anything that accelerates the development of artificial intelligence or facilitates interface adoption.

FORESIGHT DIGEST

TEXT E.ON

Scanning the horizon

Tracking the trends

E.ON's Trend Radar highlights changes coming up in the next decade and a half

FOR MORE INFORMATION:

FORESIGHT DIGEST

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TRENDS

Regulation, particularly around consumer and data protection or the way machines enter contracts, could also play a key role in shaping new customer interfaces. Conversely, a loss of trust in digital assistants could halt the trend.

HYDROGEN RACE Without doubt, however, the biggest energy-related trend to emerge in the next five years is what the Trend Radar calls “the H2 race.” This refers not only to low-carbon hydrogen but also to derivatives such as synthetic methane and liquid fuels.

The core technologies for the H2 race, including renewable energy systems, electrolysers and distribution infrastructures, are already established, but what is driving change is political support and government incentives related to climate targets.

Green or zero-carbon hydrogen is rapidly emerging as the decarbonisation tool of choice for a range of hard-to-abate sectors, which in turn is leading to a stampede for market share among would-be providers, from oil majors to chemical giants.

Even if the application of low-carbon hydrogen is limited in some sectors it will be unlikely to disrupt the overall trajectory of the race, the Trend Radar says. Meanwhile, the trend will benefit from economies of scale as major players enter the scene and kick-start global trade in clean hydrogen.

One example of the impact of major players is oil major Shell’s plans for a green hydrogen production facility near Rotterdam in the Netherlands. The Holland Hydrogen 1 facility, 6

the world’s largest on its announcement in November 2021, is scheduled to produce up to 60,000 tons of green hydrogen a year when it opens in 2024.

The production centre is due to be built on Maasvlakte 2, a 2000-hectare area of land reclaimed from the sea and dedicated to infrastructure linked to the Port of Rotterdam. Shell plans Holland Hydrogen 1 to be built as sustainably as possible, with reusable construction materials.

In Europe, the H2 race has been given added impetus through the war in Ukraine. As well as putting pressure on European states to find alternatives to fossil fuels, the war’s impact on oil and gas prices has made green hydrogen more competitive. Reuters reported in April that the cost of producing ‘grey’ hydrogen from natural gas, using steam methane reforming, had risen to $12 per kg. Meanwhile, green hydrogen made from solar energy in Spain could come in at $4 per kg.

As the H2 race progresses, “New services will develop in production, distribution and application of hydrogen to match clients’ needs for decarbonisation, convenience and resilience,” the Trend Radar forecasts.

RURAL RENAISSANCE Beyond these two short-term developments, the Trend Radar foresees a renaissance of rural areas taking place around half a decade from now. This trend is being fuelled by the events of the last two years. The coronavirus pandemic has shown that FORESIGHT DIGEST

TRENDS

"Customers will expect convenience, resilience and sustainability" Michael Stautz — E.ON

many workers can remain productive without being tied to an office. At the same time, COVID-19 has reinforced interest in healthy lifestyles and work-life balance.

In March 2021, for example, the BBC reported that Britons were using a platform called Rightmove to search for properties in Cornwall, in the Southwest of the UK, ahead of the capital London. The third most searched-for location by home seekers was Devon, another rural county in the Southwest.

And buyers were increasingly choosing larger rural homes to move to, with sales of five-bedroom detached houses outstripping those of other types of accommodation. “Many have turned a long-term plan to escape to the country into a short-term reality,” said the BBC. “Socially the inspiration includes more room, space away from neighbours, and working from home.”

Rural issues have become politically important in European countries such as France and Spain, which means post-pandemic recovery funds could be channelled into revitalising countryside communities. “Such [a] renaissance of rural areas will increase the need of municipalities, companies and individuals for sustainable, resilient and convenient infrastructure,” Stautz says.

The spread of connectivity, mobility and sustainable energy infrastructure into rural areas could help usher in the trend, it is believed, but a return to full office occupancy or disappointment with country life could act as showstoppers.

SUSTAINABLE PURPOSE Another trend that could be little over five years away is what the Trend Radar dubs “purpose as the new sustainable.” This is a societal shift that will require company goals to go beyond profit maximisation and consider impacts on all stakeholders, resulting in a growing focus on issues such as welfare, equality and animal rights.

The trend has been growing for some years, with a 2019 survey revealing that only 7% of Fortune 500 chief executives believed their companies should mainly focus on making profits, without being distracted to social goals. “While shareholder capitalism has catalysed enormous progress, it also has struggled to address deeply vexing issues such as climate change and income inequality,” said a team from consultants McKinsey & Company in April 2020.

“The energy industry, in principle, has a good basis to address purposeful activities around the transition to a sustainable energy system,” says Hiromi Valenzo, Senior Foresight Manager at E.ON. “However, the industry must consider wider definitions of purpose, for example, the ability to support communities and avoid social distortions.”

In total, the Trend Radar has identified 16 such trends as likely to emerge and change the world as we know it over the coming decade and a half. • Visit www.eon.com/en/innovation/future-of-energy/eon-trend-radar.html

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FORESIGHT DIGEST

TEXT Heather O’Brian PHOTOS Erica Carr & Nazarizal Mohammad

TECHNOLOGY

Cities are feeling the heat more than outlying areas. The increased use of vegetation, reflective surfaces, building codes promoting ambitious energy efficiency standards and district cooling are being employed to provide heat relief and facilitate sustainable cooling for urban dwellers

Cities battle to beat the heat D

ark, impermeable pavements and buildings dominate the grey landscape of most cities. Trees and other vegetation are often lacking. This combination gives rise to the phenomenon of urban heat islands in which the temperature of a city can be several degrees higher than surrounding areas.

In Spring 2021, three cities on three continents—Athens in Greece, Miami in the United States and Freetown in Sierra Leone—each announced they would set up a new position of chief heat officer. US president Joe Biden in September 2021 announced a plan to combat extreme heat, including in urban heat islands. The plan includes initiatives to increase cooling assistance to vulnerable communities and low-income households, better protect heat-exposed workers and promote targeted solutions such as tree cover to address urban heat.

By 2100, the urban heat island effect could warm cities around the world by as much as 4.4°C on average, according to the findings of a group of international researchers published in Nature Climate Change in January 2021. This is nearly triple the Paris Agreement objective to limit the global temperature rise to no more than 1.5°C. Since urban areas are projected to house about 70% of the global population by 2050, FORESIGHT DIGEST

up from 55% in 2018, cooling will largely be a problem for cities to resolve.

Cooling itself is a contributor to global warming, so scaling up while simultaneously decarbonising its energy use will be essential.

DEMAND GROWTH The International Energy Agency (IEA) notes that energy demand for space cooling has more than tripled since 1990 and was responsible for 8.5% of total final electricity consumption in 2019. In a baseline scenario in its 2018 Future of Cooling report, the IEA estimates energy demand for space cooling will roughly triple from its 2016 level to reach 6200 terawatt-hours (TWh) by 2050.

Due largely to the increased use of renewable energy, emissions from space cooling are seen rising at a slower but still worrisome rate to reach 2050 million tonnes (Mt) in 2050, nearly double the 1135 Mt in 2016. “The need for cooling is seen constantly increasing in all climate scenarios,” notes Irene Skoula of C40 Cities. “In most cities, heat is one of the biggest risks they are facing.”

Emerging markets are expected to account for the bulk 9

TECHNOLOGY

of new space cooling demand, the IEA points out, with India, China and Indonesia alone seen representing about half of the total—so what cities do in these places is critical.

“Cooling is one of the mountains in front of us if you look at the drivers of climate change,” says Iain Campbell at the Rocky Mountain Institute (RMI), a US-based energy research organisation. “Most people have heating so the big push now is to decarbonise it, but many people who will need access to cooling don’t have it.”

DISTRICT COOLING One largely untapped sustainable resource for cooling cities is district cooling, in which chilled water, transported through insulated pipes from a central source, provides cooling to a district or group of buildings. IEA figures indicate less than 4% of energy used for space cooling comes from district cooling, with the greatest penetration in the US, followed by the United Arab Emirates and Japan.

District cooling is five to ten times more efficient than traditional air conditioning and can reduce energy consumption by 50%, notes Giulia Forgnone of European district energy association Euroheat & Power. Cooling sources can vary from cold water from lakes, seas and rivers to waste cold and heat brought to the necessary temperature with a chiller, a type of heat pump.

Like district heating, district cooling makes sense in densely populated areas. District cooling is often combined with storage, so an excess capacity of chilled water during the night, for instance, can be stored for use during the day, enabling load shifting. Another benefit is that, unlike air conditioning units, district cooling does not eject waste heat.

In the emirate of Dubai, which boasts the world’s highest concentration of district cooling and where temperatures exceed 40°C in the summer, district cooling has helped limit electricity grid expansions. Dubai aims for district cooling to serve 40% of cooling needs by 2030.

District cooling may also be used in more temperate climates. A district cooling network in Gothenburg, Sweden, provides about 100 gigawatt-hours (GWh) of cooling a year, supplying offices, supermarkets and other customers that need refrigeration, explains Lars Holmquist of the utility Göteborg Energi.

The cool source is river water in winter and waste heat in summer. While Gothenburg’s district cooling system is destined to grow, it is not expected to rival the city’s 3.5 TWh district heating network. Holmquist sees the biggest district cooling potential in hot, densely populated areas.

URBAN PLANNING District cooling systems are easier to put into place in new developments. With the rapid rate of global population growth and urbanisation, the market will expand rapidly in the coming years, particularly in places such as India and China that are facing increasing cooling demands. According to the United Nations Environment Program, three-quarters of the 10

infrastructure that will need to exist in 2050—much of it in developing countries—has yet to be built. Implementing district cooling in existing cities and neighbourhoods is far from impossible, however.

“For district cooling, you need to dig holes into the ground, which is always a challenge if you live in a city,” notes Holmquist. “But the same is true for electricity, gas and fibre optics, so you could combine this with other people digging holes in the ground. The more urban planning you have, the easier and more efficient it will be.”

Paris boasts the largest district cooling system in Europe.

Since 1991, Climespace, a unit of Engie, a French utility, has operated a district cooling network with cooling provided by water from the River Seine and pipes placed within the sewage system to form an 86km underground network. The cooling system serves hundreds of buildings, including offices, banks, shops, hotels and the Louvre and other museums.

"Cooling is one of the mountains in front of us if you look at the drivers of climate change" Iain Campbell — Rocky Mountain Institute

While district cooling only has about a 3% market share of space cooling in Europe, Euroheat & Power’s Forgnone expects this will increase. “Cities that already have in place district cooling systems—the ones that already know this technology—plan to expand them,” she says.

A lack of knowledge about the technology is one of the obstacles to the spread of district cooling in many cities, along with the higher upfront costs compared to traditional air conditioning solutions. “But in the long term, you have a big return in terms of sustainability,” Forgnone adds.

ENERGY EFFICIENCY Although cities have varying degrees of responsibility for building codes, they can enforce existing energy efficiency requirements and sometimes strengthen them, while also working with other government bodies for tighter standards. “The way buildings are designed and built, including the choice of materials used in their construction, can have a huge impact on the need for ACs [air conditioners] and the subsequent energy needed to provide cooling services,” the IEA notes.

It believes that policies for more efficient air conditioners FORESIGHT DIGEST

TECHNOLOGY

Cool comforts

SOURCE: OECD/IEA

Projected growth in energy demand for space cooling in one IEA scenario

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combined with policies for more efficient buildings “could actually keep the energy demand for cooling flat while allowing strong growth in access to cooling for populations around the world.”

In Los Angeles in the US, a 2019 sustainable city plan required all new buildings to have net zero carbon emissions by 2030 and all new municipal buildings and major renovations to be completely electrified. Meanwhile, the Toronto Green Standard lays out the Canadian city’s sustainable design requirements for new private and city-owned developments as it moves towards zero emissions for all new buildings by 2030, building on the Ontario region’s building code.

BEYOND ELECTRICITY Not all the solutions for cooling need to use electricity. RMI’s Campbell says one way to help cool cities is to “see what you can do through urban form and design.”

This can include “using green and blue spaces in the city and optimising them, using reflective surfaces [and] removing industrial processing from centres so you reduce anthropogenic heat,” he says.

Cities can also take action to limit the impact of transport, FORESIGHT DIGEST

Brazil

European Union

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which gives off waste heat as well as adding to greenhouse gas emissions.

To effectively reduce urban heat stress, researchers involved with the Nature Climate Change study also say “green infrastructure intervention” is needed.

Trees and vegetation lower temperatures through shading and evapotranspiration, which draws heat from the air to evaporate water. Bringing more trees and vegetation to cities has become a priority of more and more local governments.

An Urban Nature Declaration signed in July 2021 by 31 cities that are part of the C40 Cities network commits them to secure up to 40% of surface areas for green or blue infrastructure. This includes trees, urban forests and parks, along with sustainable urban drainage systems and permeable pavements.

In New York City, former mayor Michael Bloomberg in 2007 launched plans to plant a million trees in a decade, an objective that was reached in late 2015 and increased the city’s urban tree canopy by 20%. In Milan, Italy, the first of three million trees the city has pledged to plant by 2030 were put into the ground in 2019.

Athens, the European city ratings agency Moody’s deems to be at the highest risk of extreme heat, is “doing a lot on green 11

THE BIG APPLE

New York became a million trees richer in less than a decade

TECHNOLOGY

and blue spaces, not only planting trees but looking where to place them to maximise their benefit,” notes C40’s Skoula.

To combat urban heat islands, Medellin, in Colombia, planted trees and other vegetation alongside roads and waterways. The city says the average temperature in its new “green corridors,” which were concentrated in areas lacking green spaces, has declined by over 2°C. The new greenery is also a matter of social equity given that in Medellin—and many other cities around the world—lower-income people tend to live in neighbourhoods with less vegetation and higher temperatures.

ROOFS AND PAVEMENTS Cities are not only expanding areas dedicated to greenery and planting trees in the ground but also putting vegetation on rooftops. According to the US Environmental Protection Agency, green roofs can be up to 20°C cooler than conventional ones during the daytime, helping to reduce building temperature, cutting overall energy use and reducing peak energy demand.

Green roofs also have non-energy benefits, improving aesthetics, reducing noise and helping with stormwater management. They also tend to last longer than conventional roofs.

Many cities have approved regulations or provided incentives to encourage their use.

Known as the “green roof capital of Europe,” Stuttgart, Germany, has subsidised green roofs since 1986, while Basel, Switzerland, has made green roofing mandatory for new buildings and retrofits with flat roofs for over a decade. Toronto, Canada, made green roofs mandatory on larger new developments in 2009. Since 2017, San Francisco has required most constructions to cover up to 30% of rooftops with either vegetation or solar panels.

Indeed, in addition to providing clean energy, solar panels are an effective cooling technology as they absorb solar radiation and prevent rooftop heat gains. Green roofs and cool roofs can also increase the yields of solar panels, researchers have found. Cool roofs are designed to absorb less heat by using reflective coatings, shingles or tiles, and lead to lower building temperatures and energy requirements. They are frequently white or a light colour.

According to the urban heat island group at the Lawrence Berkeley National Laboratory in the US, on a typical summer afternoon a clean white roof reflecting about 80% of sunlight will be roughly 31°C cooler than a traditional grey roof that only reflects 20%. While winter heating costs may go up in colder climates, the winter heating penalty is typically small compared to the summer cooling benefit.

In 2017, authorities in Ahmedabad, India, launched a cool roofs initiative to paint hundreds of roofs in heat-vulnerable slums with white lime paint. In New York City, the NYC CoolRoofs campaign aims to cover a million square feet of rooftops with reflective white coating.

The city claims every 2500 square feet of rooftop that is coated can reduce its carbon emission by one tonne of CO2. • Adapted from an article originally published in FORESIGHT Climate & Energy

FORESIGHT DIGEST

Enter E.ON ectogrid

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any ways to solve city heating and cooling are simple—but that does not mean basic approaches cannot be improved. A route taken by E.ON is to add intelligence to one of the simplest concepts around: district cooling.

Like other district cooling systems, E.ON’s ectogrid™ uses water to cool buildings down.

But the system has intelligent controls to ensure excess heating or cooling capacity in one part of the network gets used elsewhere.

The technology improves efficiency and cuts energy consumption. Further efficiency is said to come from balancing cold and hot water flows.

Each building linked in the closed E.ON ectogrid grid has heat pumps and cooling units to finetune interior temperatures, reducing the need for energy to heat or cool the balancing unit.

In a city’s electricity grid, systems such as E.ON ectogrid can act as giant thermal batteries, storing excess energy when available and powering down to reduce load when demand is high. These kinds of systems are scalable, serving anything from a few buildings to an entire city quarter. They can also be powered with renewable energy, where available, to reduce emissions.

In Italy, an E.ON ectogrid is planned for the Milan Innovation District on a former Expo site.

Construction is due to start in 2022 on the system, which will provide 41 megawatts (MW) of cooling and 30 MW of heating. And in Lund, Sweden, an E.ON ectogrid is already providing district heating and cooling across Medicon Village, a life sciences research park.

The E.ON ectogrid connects 15 commercial and residential buildings and aims to cut the heating and cooling energy requirements of the campus by 60%. “E.ON ectogrid is an energy solution that goes very well with what we want to be—a sustainable and inventive research park for science and innovation," says CEO Erik Jagesten of Medicon Village.

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OPINION Current policies around the energy transition place emphasis on the democratisation of power generation and the rise of prosumers. But while the energy system of the future may be decarbonised and digital, it will also be less decentralised than we envisage, say Thomas Boermans and Michael Stautz of E.ON

The energy transition needs a new definition of pretty

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he old energy world ran mostly on fossil fuels—coal, oil and natural gas—with a centralised structure. The paradigms for its design were to achieve a reliable energy supply with a regulated approach. The main actors were large companies running large, centralised assets and grids. This world will soon belong to the past.

What is considered the “new energy world” has, since the early 2000s, been widely acknowledged as a decarbonised, digital and decentralised energy system. Its key paradigms so far have been to develop a sustainable, reliable and affordable system with a market-driven, technology-neutral approach that fosters innovation.

The main actors in this pretty picture were to be private customers, to place “citizens at core,” as the European Commission phrased it, running small, decentralised assets and realising efficiency improvements. Energy companies were to play an important role in providing the backbone through utility-scale assets and grids. This view was alluring and meaningful—at that time. But what happens when the realisation of this new energy world just takes too long?

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Administrative hurdles for grid upgrades are high, rooftop PV is developing slowly, the renovation of buildings is not picking up and cities are stuck in discussions on how to develop their energy infrastructures around electricity, gas or district heat. The list is long. The 2050 climate target seems far away, but with energy infrastructure lifetimes of around 30 years we need to build the new energy world from tomorrow.

In addition, the war in the Ukraine and surrounding geopolitical tensions are increasing the pressure to increase independence from fossil fuel imports. The debate now must move from “how can we optimise the energy transition?” to “how can we move fast enough?”

SPEEDING UP So, what options do we have to increase the speed of the transition? We can go down the path of more restrictions and regulations: banning natural gas boilers or limiting opposition to infrastructure developments such as wind power projects or new overhead lines.

A recent study showed most of the younger generations FORESIGHT DIGEST

Thomas Boermans Head of Foresight at E.ON

Michael Stautz Senior Foresight Manager at E.ON

in Germany see sustainability as crucial, but only a minority is ready to give up near-term on comfort for the sake of the climate. On this point they do not differ from older generations.

This means climate protection will not come automatically via generational shift. It needs guardrails.

The success of green parties in favouring stronger regulations, for example in the German election at the end of 2021, points to an increasing acceptance of such rules. We can also give up on the prosumer focus and shift the balance more towards large-scale generators.

Analysis shows that a more centralised approach—compared to an only small-scale and private customer-driven approach—has the potential to be faster, cheaper and more convenient for customers. At the same time, not all citizens are enthusiastic about their own involvement or investments in the energy transition, while there is increasing interest in large companies doing the job.

Not going down such route is likely to increase pressure later to adopt controversial solutions, such as large-scale carbon capture and storage or nuclear power. There, we see discussion

around potential risks—that stored carbon would escape at a later stage or that there are hazards in nuclear operation and storage of waste over many generations.

FORESIGHT DIGEST

THINKING BIG In this future energy world, the need for speed in decarbonisation and in securing a resilient supply is everything. Paradigms must develop quickly, with no time for trial and error anymore.

As for the actors, operators of utility-scale energy assets and grids must take centre stage to develop, together with regulators and in swift, coordinated approaches, new infrastructure for the future energy world.

Consumers can retain the possibility of being prosumers, with customer-centric solutions that add to the sustainability and resilience of the system, but don’t have to lead the transition if they do not want to. Moving towards a more “industrialised” transition is not completely new—and has already started.

While holding firm on the target of a sustainable, affordable and resilient energy system, the realities we are facing require us to constantly challenge our manner of progress.• 15

TEXT Anna Gumbau PHOTO Bluedog Studio

BUSINESS

Energy transition faces a shortage of key workers A lack of skilled workers is one of the most underestimated barriers to the global energy transition. The renewable energy industry is struggling to find talent, while educational institutions are failing to keep up with such a fast-evolving environment

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enewable energy employed 12 million workers in 2020, according to a report by the International Renewable Energy Agency (IRENA) and the International Labour Organisation (ILO).

Under IRENA’s 1.5°C compatible scenario, this could rise to 38 million jobs by 2030 and 43 million by 2050, twice as much as under current policies and pledges. However, despite positive trends, “Skills gaps and shortages are increasing and likely widespread across countries unless proactive measures are taken,” the agency said.

The skills gap is particularly accentuated in the case of technical and manual workers in developed countries. According to IRENA and ILO’s Renewable Energy and Jobs Annual Review 2021, between 52% and 64% of the workers employed in the solar PV and wind sectors have “lower certification”.

EuropeOn, the European association representing technical workers installing, maintaining and repairing electrical infrastructure, says 60% of firms employing electricians in Germany currently have unfilled vacancies. Sweden expects to hire an estimated 28,000 electricians and other technical workers in the next five years.

Meanwhile in the UK, about 15,000 new apprenticeships will need to be filled in the next five years. “We need to install more heat pumps, we need more solar panels, EV [electric vehicle] charging points, but the workforce is not following,” says Julie Beaufils from EuropeOn. “This is a sector of around two million professionals across Europe, so it is extremely important. And we feel that, with the green and digital transitions, there are many challenges that will depend on us, because we are the ones implementing the deployment of renewable, clean and smart technologies,” Beaufils adds.

IRENA says that, without addressing the skills gap, countries will not be able to achieve their renewables goals. “Skilling policies must go hand in hand with measures to increase renewable energy deployment. Matching the skill supply with the anticipated demand requires an identification of skills needs, education and training pathways, and priority groups to be targeted,” IRENA says.

JOB ATTRACTIVENESS One of the reasons for this shortage is the lack of attractiveness of technical education, compared with university degrees. Lawmakers tend to prioritise higher education over vocational education and training, which is why an increasing number of European renewable industry groups are advocating for technical education to be a key component of the European Green Deal.

According to Beaufils, a career in a technical field creates opportunities for personal development in a fast-evolving field and even brings purpose to a career. “Technical education and careers are too often viewed as an option of last resort. We are striving to challenge this cliché and highlight that technical careers are changing really fast and should appeal to new generations because they are promoting a sustainable way of life,” says Beaufils.

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THE OLD AND THE NEW Purpose and meaning are precisely what the “millennial” and “Gen Z” workforces are after. Young people are refusing careers in oil and gas: a 2017 survey by consultancy EY found that 62% of teens aged 16 to 19 said a career in the fossil fuel industry was unappealing.

The oil and gas sector is also facing a transformation as the switch to clean energies risks making much of its workforce redundant. This is one of the biggest challenges that the energy industry is facing, says Thomas Berger from EIT InnoEnergy, an EU-funded technology development platform. “[Oil and gas companies] have huge transformation projects ongoing to shift their workers into renewable energy and [are] doing massive reskilling in solar PV or other domains to reshuffle engineers from one sector to a totally different one,” he says.

"There are many challenges that will depend on us, because we are the ones implementing the deployment of renewable, clean and smart technologies" Julie Beaufils — EuropeOn

A recent assessment by the Aberdeen-based training and consultancy firm RGU Energy Transition Institute found that 20% of the UK’s oil and gas task force has skills that are transferrable to other energy industries. And 70% have at least medium transferability, particularly to the offshore wind industry. These include planning services such as environmental and geological surveying.

EXISTING KNOW-HOW Manufacturing of foundations for wind projects already takes a lot of the existing know-how from offshore oil and gas. There are similarities in constructing and decommissioning foundations of offshore projects in both industries. The skills involved in the operation and maintenance of offshore assets are also transferrable.

The Market Intelligence report from the Global Wind Energy Council (GWEC) forecasts that wind capacity will grow by about 470 gigawatts (GW) by 2025 and bring total wind installations beyond the 1200 GW mark by the middle of the decade. Nearly half a million jobs will be needed to deliver this growth, says FORESIGHT DIGEST

BUSINESS

Jobs for all

IRENA estimates renewable energy could spawn almost 25 million jobs worldwide by 2050

Jobs million Geothermal

25

Offshore wind Onshore wind Solar water heater

20

Solar PV

SOURCE: IRENA Renewable Energy and Jobs Annual Review 2021

15

Marketing and administrative personnel

10

Engineers and higher degrees

5

Experts Worker and technicians

0 JOBS BY TECHNOLOGY

Jeanette Gitobu from GWEC. That makes the sector vulnerable to a skills shortage.

“Skills in project management, engineering and technical vocations will continue to be in demand within the global wind industry sector, among many others,” Gitobu says.

Encouraging students to nurture business and STEM (science, technology, engineering and mathematics) skills is key to address this. But technical and manual jobs will also be needed, as these fields are where most job opportunities for offshore wind are concentrated, she adds.

However, most workers in oil and gas still need reskilling to some extent and the high costs of retraining are shouldered by workers themselves. In a survey cited by IRENA, some 600 workers said they had spent an average of £1824 a year in training courses and certifications for new jobs.

IRENA found that, under a 1.5°C scenario, the number of workers in the oil and gas sector would decline by 6.9 million in 2030—but fewer jobs are lost in fossil fuels than are gained in alternative fields.

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OCCUPATIONAL PATTERN

NEW OPPORTUNITIES Progress in scaling up green hydrogen, electromobility and battery value chains will also provide new opportunities. EIT InnoEnergy, which is involved in the European Battery Alliance, says the European Union’s green battery plan provides a great opportunity for the development of workers. “We are talking more than 800,000 employees to reskill and upskill, to set up this battery value chain in Europe,” says Berger.

In a scenario where average global temperatures increase by 1.5°C, the number of workers in the hydrogen sector is expected to reach two million in 2030. That number will remain stable until 2050. Although in relative terms it is only a small share of energy jobs, IRENA says introducing more hydrogen capacity to the energy system can have ripple effects throughout the supply chain.

DIGITAL FOCUS The impact of artificial intelligence (AI), blockchain and digital technology on the world’s energy workforce remains to be 19

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Work to do

32%

22%

21%

RENEWABLE ENERGY

OIL AND GAS

WIND ENERGY

seen. IRENA says demand will increase in fields including AI, telecommunications and computer science and engineering.

Also, “The Internet of Things holds significant potential for new management and business model options due to its capacity to aggregate data,” IRENA says.

“Efforts to address emerging skill requirements in areas such as digitalisation, electric vehicles, energy storage, bioenergy, heating and cooling, manufacturing and energy access will be vital for avoiding skills shortages,” IRENA adds.

Robotics, too, is interesting for the wind industry, says GWEC’s Gitobu. “It provides an exciting opportunity for a new generation of tech-savvy professionals to innovate and make an impact while transitioning talent from sectors such as IT to help address the skills gap,” she says.

ADAPT AND ATTRACT Such a fast-evolving sector has made it hard for schools and universities to keep up. “Higher education is not adapting at the speed of industry demand,” says Berger.

“Because of the way the system works, it is not easy to keep up with this speed of transformation,” he adds. “If you want to introduce new studies at universities, it normally takes at least 20

three years to have a new curriculum out and then it needs to be implemented.”

Lawmakers can help detect skills gaps and put measures in place to attract talent within policy instruments such as the Fit for 55 climate and energy package, unveiled by the European Union (EU) in the summer of 2021. EuropeOn has suggested EU member states should provide the European Commission with an assessment of the gap between the available workforce at the national level and that needed to deliver renewable and energy efficiency objectives.

“These assessments could create a real wake-up call for EU member states to act, because when they see they are lacking, say, one million people to deliver on the objectives, they will have to take action,” says EuropeOn’s Beaufils. “And it is also a positive thing because this means you can create one million green jobs in your country.”

It is difficult to assess how much power lawmakers have in adapting education systems to fast-moving industry environments, says Berger. “But I think it’s good that there are a lot of funding programmes that try to stimulate transformation and adaptation to industry demands,” he says.

FORESIGHT DIGEST

SOURCE: IRENA Renewable Energy and Jobs Annual Review 2021

Renewables employ a higher proportion of women than oil and gas, but sectors such as wind still have a way to go

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"Strengthening the visibility of the diverse roles women are playing in the energy transition and helping women become agents of social and economic transformation can exert a strong influence on perceptions of gender roles"

International Renewable Energy Agency

GENDER EQUALITY If the energy industry is broadly male-dominated and if there is a clear shortage of workers, it might be possible to make jobs more attractive to female talent. IRENA’s surveys found that women are only 32% of the overall renewable energy workforce and 28% in STEM roles. In the case of wind energy, the figures are even lower: 21% of the overall workforce and 14% in STEM-related roles.

EuropeOn’s Beaufils says this is a matter of concern among energy contractors. “If we can’t find workers and 50% of the population is female, we should look at finding ways to attract women in this industry,” she says. “But it’s been a very much male-dominated trade for a long time, so there’s a need for a big change of mindset.”

GWEC’s Gitobu adds: “If women are to have a fair chance at occupying roles in the wind industry, where they are currently underrepresented, they must have greater access and incentive to enrol in engineering and STEM-related subjects.

This underrepresentation of women, particularly in STEM disciplines, occurs before they reach the job market as they enrol in tertiary education.”

Women still face several barriers to enter and advance careers FORESIGHT DIGEST

in the energy sector. IRENA says perceptions of gender roles persist. “Therefore, access to adequate education and training opportunities in STEM can be enhanced … through adjustments in curricula, targeted scholarships and internships, and vocational training opportunities, specifically for women,” it says.

“But, more importantly, challenging cultural and social norms is critical. Strengthening the visibility of the diverse roles women are playing in the energy transition and helping women become agents of social and economic transformation can exert a strong influence on perceptions of gender roles.”

A GWEC study conducted jointly with the Global Women’s Network for the Energy Transition has also found several barriers to the retention of female talent. These include a lack of flexibility, gender targets, mentorship programmes, parental leave, on-site childcare and fairness and transparency in internal policies.

“We need to make sure that technical careers are attractive to women and to young girls,” Beaufils says. “And then we need to make sure that there’s an environment which is really open to both sexes in the workplace.” • Adapted from an article originally published in FORESIGHT Climate & Energy

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INTERVIEW As members of the Foresight Academy, a cross-industry platform for customer foresight, Rupert Hofmann of Audi Business Innovation and Thomas Boermans of E.ON spend their time looking out for trends that impact their respective industries. With the automotive and energy sectors set to interact in a decarbonised future, we brought these visionaries together for a question-and-answer session on upcoming trends

M

oving from fossil fuels to electricity, from analogue to digital, from reactive products to intelligent ones. These trends could describe the automotive and energy sectors alike—and, indeed, there will be much more tying the two sectors together as the energy transition progresses.

To find out what the future has in store for both industries, FORESIGHT Digest spoke to foresight strategists Rupert Hofmann of Audi Business Innovation and Thomas Boermans of E.ON. This is an edited version of the conversation.

FORESIGHT: Companies such as Audi and E.ON are going to become more connected in future. How do you see the energy and transport sectors evolving?

Hofmann: The big opportunity we have as a mobility company and car manufacturer is that the car is a great mobile device.

It is functional and fascinating. If you have a way of sitting and moving at the same time, there is great potential. We are—relative to what will come—in a very initial stage of digital interac-

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tion, heading towards something like a perfect calm, cinema or communication space where you interact naturally.

That sort of interaction can be developed in any physical place, but a car is already well suited to it, particularly with autonomous driving. And there are so many people on Earth that don’t have cars, let alone premium cars, that there could be endless growth. The big problem, of course, is that the biosphere has its limits. That’s where the energy topic comes in.

Aside from very extreme scenarios, such as a nuclear war, the climate crisis is by far the biggest problem. And it’s a brutal reality. So, you can develop great and powerful mobility devices, where you have perfect technology and interaction, the best entertainment and a wonderful interior and exterior design, but success all depends on the question of making it truly sustainable. And in the first place this involves energy topics. Thus, Audi is heavily investing in this disruption and in exploring new solutions for the sake of sustainability.

Speaking as a citizen, the emissions policies and international treaties coming after the Paris agreement are crucial for humanity and for the future. I have been really shocked when FORESIGHT DIGEST

Interview by Jason Deign

Meeting of minds

Rupert Hofmann Strategic Foresight at Audi Business Innovation GmbH

Thomas Boermans Head of Foresight at E.ON

I recently also read about new numbers related to the sheer economic risks that climate change evokes.

Boermans: Obviously, electric vehicles are an important, new intersection between our mobility and energy systems. If mobility goes electric to a large extent, as we expect it will, for energy companies like us it is of course impactful.

In the short and medium term, there is huge impact. It does take and will take considerable effort to build convenient charging stations in the right places at the necessary level. It will require significant additional capacities of green electricity to fuel electric cars and it will need a build out and smart steering of electricity grids to always balance supply and demand.

This is lot to do for energy companies, but of course also a major business opportunity.

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So, the period where all of this happens will be turbulent for Audi, the automotive industry, and us. But imagine this has been done. The cars are electric, our grids have been strengthened and upgraded, the charging stations have been built, the new value chains are all in place. Then you could say “job done”. But there is more to come. What could carry on much further is changing business models. Future energy tariffs and mobility tariffs will probably be not that different, or may even partially merge, following individual patterns of demand. Specifically with future autonomous mobility, the business models around car ownership, charging and so on will have to be reshuffled. So, developments at this intersection will remain all but boring.

FORESIGHT: Now shifting from a sector view to individuals, what will your clients expect in ten years?

Hofmann: We are in revolutionary times, seeing disruptions in so many areas. When I started my PhD with Audi, 15 years ago, it was relatively stable compared to today. In recent years the culture has changed a lot. We have a much fiercer pace in terms of change. Our full model portfolio will be electric within the coming years. And we have much more customer centricity, or customer centricity played out in another way.

It had been the exterior design that was the dominant aspect within the car. But in our range now we have a clear shift to designing for use cases, from the interior to the outside, albeit that the exterior design keeps being quite important for us. We are also thinking more in-depth about premium individual mobility. Car design is space design, so we are talking a lot to visionary customers about how to interact within the car or how to be entertained, but also how to relax and shut off.

This involves the atmosphere and interfaces within this mobile and multi-optional space. What kind of screens and other ways of interaction by voice and movement do you want to have? It’s interesting to play with ‘the greenhouse’—how much glass do you want to have, so that you can feel rain at the same time as having a movie where you can experience rain? So much is imaginable and a lot of it is about the sensory experience.

Boermans: Whoever you ask, you always hear that that the new energy world will be decarbonised, decentralised and, of course, digital. Is this the likely outcome? Probably yes. But our clients don’t wake up to think they would like decentralised or digitised energy. They want convenient, resilient and sustainable solutions.

We also need to anticipate who our clients will be. In mobility, it will likely be companies that run autonomous fleets. For these, different from today, charging will not take place at home or at the office, as customers will just be picked up and dropped there. Instead, there will probably be in maintenance areas where the vehicles are maintained, cleaned and charged, all using automated, high-speed processes to minimise downtime.

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INTERVIEW

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FORESIGHT DIGEST

INTERVIEW

FORESIGHT: What do you think will have the biggest impact on your industry—new hardware or new digital solutions?

Hofmann: It’s really about sustainability and system intelligence and thus the interaction of both. There are so many new playgrounds and new business fields that are being developed. Many aspects simply haven’t been in the pattern of designing our business. System intelligence is very attractive for our customers.

As a customer, you want to have a great mobility experience, a great car experience, but you want that in a sustainable way.

One big part in energy systems is of course individual mobility and I think there will be a lot of new developments here, including smart grids and new urban mobility solutions. We are really in a relatively early phase of this, but this pattern of designing energy and mobility systems in new and intelligent ways won’t go away. There’s huge potential for new business models and new technological models on our way to a circular economy.

Many of the technologies that will be most successful here are just beginning—and some of them will take off.

"The emissions policies coming after the Paris agreement are crucial for humanity and for the future" Rupert Hofmann — Audi

Boermans: Digital solutions are an incredibly strong enabler to reach the above-mentioned customer drivers of sustainability, convenience and resilience. But let’s not forget that energy is still a physical product and needs a lot of hardware to run on. And the connection with mobility leads to even more intersections.

In the old times, you had the big oil companies that supplied gasoline and you just put it in the car. Beyond this there was little interaction. That will completely change. As Rupert points out, you will get a much more integrated system where the car, the data and the electricity system are woven together.

The trick will be to offer to clients a seamless experience where these intersections are organised in the background.

Strong cooperation between car manufacturers, the energy industry and tech companies will be needed to solve this equation for future clients. •

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CASE STUDY The quest for a sustainable energy system requires imaginative, joined-up thinking. That is why eastern Germany energy supplier enviaM collaborated with its mother company E.ON to make sure the business was ready to face up to the challenges ahead

Imagining the future

•

Supporting a consistent brand and portfolio for E.ON, making it more attractive to customers

•

Helping the company reach its long-term goals while remaining flexible in how to achieve them

•

Strengthening the links between staff and the company’s purpose

•

Attracting talent that can deliver impact against a clear mission

The approach is carried out in strategic portfolio workshops in which projects within an innovation portfolio of a business or 26

innovation team are compared to E.ON’s view on the future as described by the Trend Radar (see p4), anticipated future customer drivers and the company’s overall strategy. The approach was put to the test together with envia Mitteldeutsche Energie (enviaM), one of E.ON’s regional energy service providers, active in eastern Germany.

FUTURE OPPORTUNITIES As well as establishing that enviaM’s portfolio is well placed to address future opportunities, the workshop highlighted shortterm opportunities specifically in connectivity. These included, for example, developing digital infrastructures in the form of edge data centres that can deliver edge computing resources to nearby communities. Discussions also included topics such as how to get new data from drones—not just for electricity grid inspections but also as a diagnostic tool for the owners of forest and woodland that high-tension lines run through.

In addition, the workshop revealed opportunities in the heating sector or the negative emissions business.

“Many of the opportunities examined build on our #enviaM2030 vision and show that together we are on the right track, with additional opportunities we can tap into,” says Holger Heinze, head of strategy and corporate development at enviaM. “We continue to work towards a sustainable and digital living and energy landscape in eastern Germany.” • FORESIGHT DIGEST

PHOTO Olena Sergienko

T

he future is always easier to predict in hindsight. But that should not put businesses off trying to envisage what will happen tomorrow. Companies show better performance and receive higher valuations if they link their strategy, innovation and operations to a coherent picture of the future.

This finding has led E.ON Foresight to develop an approach to assessing its innovation and business development portfolios against the company’s strategy and view of the future. The work aims to deliver benefits including:

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FORESIGHT DIGEST © FORESIGHT & E.ON