Subm 1 megatrends in energy and energy security risk net gl v1 170228

Sub-module

Megatrends in energy and energy security

Module: Energy Security and policies

The objectives of this submodule •

To discuss and to analyze concepts of megatrends and their role in energy • To identify the role of energy megatrends in sustainability approaches and sustainability related risk analysis.

Control questions • Before you start this sub-module, please answer to yourself the following questions: i) Megatrend is almost a buzzword in nowadays. So think about the megatrends that can be important for your future profession and you future workplace. You should identify at least 5 megatrends. ii) Write down your identified megatrends (and prioritize them, where 1 is your top priority megatrend. iii) Think carefully about how every of listed megatrends will affect you personally.

Megatrends

Megatrends Megatrends are long-term processes of transformation with a broad scope and a heavy impact.

They are considered to as drivers of global changes and powerful forces that shape the future.

megatrends are seen as transformative, global forces that define the future world with far reaching impact on business, societies, economies, cultures and personal lives� (SITRA, 2015).

Examples of megatrends (1 of 2) 1) DEMOGRAPHIC CHANGE 2) SOCIAL AND CULTURAL DISPARITIES 3) REORGANISATION OF HEALTHCARE SYSTEMS 4) TECHNOLOGY CONVERGENCE 11)GLOBALISATION 12)UPHEAVALS IN ENERGY AND RESOURCES 13) CLIMATE CHANGE AND ENVIRONMENTAL IMPACTS 14) URBANISATION 15) NEW POLITICAL WORLD ORDER 16) GLOBAL RISK SOCIETY

Examples of megatrends (2 of 2) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20)

GLOBALISATION KNOWLEDGE-BASED ECONOMY BUSINESS ECOSYSTEMS CHANGES IN THE WORK WORLD NEW CONSUMPTION PATTERNS UPHEAVALS IN ENERGY AND RESOURCES CLIMATE CHANGE AND ENVIRONMENTAL IMPACTS URBANISATION NEW POLITICAL WORLD ORDER GLOBAL RISK SOCIETY

In general, 4 dimensions of megatrends • • • •

Energy and Environment Social and Health Economics and Politics Technologies

It has to be stated that despite of the fact that energy is related to the first megatrends, the energy issues impact on all other dimensions

How megatrends impact on sustainability ‘Sustainability is like happiness – everyone believes in it and everyone has a different definition.’

Sustainable development Humanity has the ability to make development sustainable – to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs.

G.H. Brundtland, ‘Our Common Future’ (1987) MEGATRENDS IMPACT ON OUR ABILITY ”TO MAKE THE DEVELOPMENT SUSTAINABLE’’

Sustainability and long-term human needs Energy and fuel Raw and processed materials

Population

Waste and pollution

Long – term human needs

Climate and water

Food

Health Urbanization

The criteria for future scenario selection • What is possible?

• What is feasible?

• What is desirable

Based on those criteria we can select the most posible, feasible and desirable future scenario and we can prepare the action plan for executing the selected scenario:

We can actively design and implement (?!) the future (this is all about the futures and foresigh)

Megatrends in energy

5 megatrends for a global energy transition • The WWF and German renewable power provider Lichtblick have joined forces to produce an overview of five ways in which the entire world is transitioning to renewables. • There can be no doubt that renewable energy is entering an era in which growth depends more on market forces and less on policy support.

1. The beginning of the end of the fossil era is here • In 2014, greenhouse gas emissions were stable for the first time in 40 years although the global economy grew. In China, coal consumption dropped.

• Since 2012, India has abandoned six times more coal plant projects than it has completed.

• The EU and the US have also closed more coal plants since 2000 than they have opened • 80 percent of the known fossil reserves need to be left in the ground to prevent the worst consequences of climate change.

2. Renewables are being built faster than coal, gas, and nuclear together • Wind power has grown from 47 to 370 gigawatts since 2004.

• Solar has grown from 3.7 to more than 180 gigawatts in the same timeframe.

• More money is also now spent on building renewables than conventional energy.

• For instance, 80 percent of power investments in the EU were devoted to green electricity from 2000 to 2013, compared to 19 percent for fossil power plants and only one percent for nuclear.

3. The cost of renewable energy is falling • The cost of a solar array fell by around 80 percent from 2005 to 2014, and costs will probably be cut in half again by 2025. • By midcentury, solar power in the best locations (such as Dubai) may only cost two cents per kilowatt-hour. Wind power remains even cheaper than solar, making these two sources the least expensive ways of generating low-carbon electricity.

4. The energy future consists of a large number of distributed generators, not a small number of central-station plants • Germany already has more than 1.4 million solar arrays, and the number in the US has reached 675,000. • For developing countries, where 1.5 billion people do not have access to the grid, distributed energy means they will not have to wait until the government decides to build a central-station power plant and expand the grid. • The people themselves can start building their own microgrids, which are increasingly more affordable than grid expansion. In 2014, developing and emerging countries invested 131 billion US dollars, nearly as much as industrialized countries at 139 billion.

5. The energy future is digital • The merging of IT and energy will enable 100 percent renewable electricity, and we already have all of the technologies we need.

• French energy giant Engie (formerly GDF Suez) now speaks of the “miniaturization of the energy sector,” explaining that “the new era is distributed, carbonfree, and digital.”

• Many experts doubt that there is any role to play for conventional energy providers in this future. Critics have held that a breakthrough is needed for power storage, but prices are currently plummeting.

Energy producer’s (FORTUM) perspective and possible reaction to the megatrends

MEGATRENDS • • • •

Climate change and resource efficiency Urbanisation Active customers Digitalisation, new technologies

Climate change and resource efficiency • 2/3 of global emissions are from the production and use of energy (Source: World Energy Outlook Special Report on Energy and Climate Change, IEA, June 2015) • 2/3 of global power production from fossil fuels (Source: Bloomberg New Energy Finance)

Urbanisation • 2/3 of the world's population will live in urban areas by 2050 (source: World Urbanization Prospects by United Nations, Department of Economic and Social Affairs, Population Division, 2014)

Active customers • More conscious customers, an increasing share become prosumers producing their own energy

Digitalisation, new technologies • Rapid technology development is fundamentally changing the way energy is produced and consumed

The Impact

Climate change: Impact on the industry • Transition to low-carbon and renewable generation; high emissions and/or inefficient generation losing value • The rise of a circular economy • New renewable technologies maturing and becoming cost competitive • Need for higher overall system efficiency • Policy development

Urbanisation: Impact on the industry • Demand for sustainable, efficient and reliable utility services grows faster than the economy on average • High emissions from inefficient heating, cooling and electricity production; inefficient use of energy • New solutions needed for urban problems, e.g. waste, transportation • Increased pace of electrification

Active customers: impact on the industry • Demand for new innovative services to manage energy consumption • Demand for own/decentralised production and demand-response • New technologies and applications; new companies entering the market, start-ups

Digitalisation, new technologies: impact on the industry • Rapid development and cost decrease of new solutions in, e.g., wind, solar and storage, demand-response • New digitally-enabled solutions • New ways to produce, market, sell and deliver products and services • New technologies and applications; new companies entering the market, start-ups

The response

Climate change: the response • Cleaner, smarter and more efficient solutions for production and use of electricity, heating and cooling • Enhanced use of waste and biomass in energy generation • Investments in wind, solar and hydro • Development of new energy-saving and lowemitting technologies and customer solutions • Improved productivity, availability and profitability of production (hydro, gas, nuclear) • Proactive suggestions to drive market-based solutions and emissions trading scheme

Urbanisation: the response • Clean, efficient and reliable energy • Integrated customer solutions, e.g. smart heating, cooling and electricity solutions for homes, demand-response aggregation, solar kits, heat pumps • Development of waste-to-energy solutions • Smart charging solutions for electric vehicles

Active customers: the response • Enhanced understanding of customer expectations and preferences; development of the customer experience • Development of smart solutions, services and applications (e.g. demand-response, open district heating) that give customers choices and help them better manage their energy consumption; customer access to flexibility markets • New energy ventures to increase the speed of innovation

Digitalisation, new technologies: the response • Strengthened in-house focus on innovation • Intensified cooperation with start-ups, research institutions and technology companies • Development of new digital touchpoints and solutions for customers • Use of digitalisation to enhance productivity of the production fleet • Drive wide acceptability of new solutions among politicians and

Sub-module control questions After you completed studying this sub-module, please answer to yourself the following questions: i) Can you foresee some new megatrends besides the discussed? Write down them (you should write down a least 3 new megatrends). ii) How they can impact your countries energy future and your personal future?

Thank you and good luck!

Instructor of the module: Ass. Prof. Gintaras Labutis Military Academy of Lithuania