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The Future of Energy - Global Insights - June 2017

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The apparent speed of transformation in the world of energy is increasing. Declining solar costs, new alliances, energy security concerns, volatile markets and breakthroughs in storage, to name just a few, are accelerating the pace of change. Ahead of a workshop in Bangkok next month, we are sharing an updated view on some of the potential shifts taking place.

We have been exploring how changes from within and outside the energy sector could play out for some time. This new slideshare presentation collates many of these perspectives and will be used next month as the basis of a strategic foresight workshop in Bangkok.

While some of the views are clearly add odds with each other, there is growing consensus on some of the key shifts taking place. The perspectives we have curated have come from discussions with around 250 informed people around the world – in Europe, the US, Asia, Africa and the Middle East – and so these is clealy some variance in views on technologies, transition times and who will be the catalysts of change. However, grouped into four main themes there are several apparent moves afoot:

Macro Shifts: With a growing and increasingly urbanized global population with increasing energy demands, it is clear that resource constraints are a concern. As China becomes more influential, energy security becomes a common issue and most of the world responds to the climate change challenge, who gets access to what type of energy is evidently in flux.

Technology Changes: In an increasingly connected and digital world, many are seeing the increasing automation and machine learning will have a significant impact on energy use. At the same time, the falling cost of solar, hope for fusion success, rapid improvements in energy storage plus advances in carbon capture and HVDC transmission are all coming to the fore.

Potential Disruptions: In an increasingly uncertain world, there is a growing list of potential disruptions. From more flooding and self-insurance to the rising influence of cities to drive change, especially around air quality, many seem probable. Others such as changes in G20 subsidies, the end of IP and greater female influence in the sector could deliver equally significant transformation.

Changes in Business: With a shift in investment to renewables evident, other moves within the energy sector include potential growth in both hydro and nuclear, the support of a more distributed, smart supply and an increasingly transparent cost of supply in a progressively circular economy. Coupled with deeper collaboration and more purpose driven companies, other moves having impact include the speed of EV adoption, new business models, the influence of standards and new forms of organization.

Together these and other changes are seen to be driving a potential transformation of this critical part of the global economy.

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The Future of Energy - Global Insights - June 2017

  1. 1. The Future of Energy Insights from Mul0ple Expert Discussions Bangkok | 23 July 2017 The world’s leading open foresight program
  2. 2. Looking Forwards Organisa0ons increasingly want to iden0fy and understand both the an0cipated and unexpected changes so that they can be beHer prepared for the future.
  3. 3. Future Agenda The Future Agenda is the world’s largest open foresight program that accesses mul0ple views of the next decade so that we can all be beHer informed and s0mulate innova0on.
  4. 4. Future Agenda in Numbers The first Future Agenda programme engaged a wide range of views in 25 countries. Future Agenda 2.0 doubled the face-to-face interac0on and significantly raised online sharing, debate and discussion. Future Agenda 1.0 1 HOST 16 TOPICS 25 COUNTRIES 50 WORKSHOPS 1500 ORGANISATIONS Future Agenda 2.0 50 HOSTS 24 TOPICS 35 COUNTRIES 120 WORKSHOPS 5000 ORGANISATIONS
  5. 5. The World in 2025 This is a summary of what we heard about the future energy from mul0ple voices around the world – on how it is changing, what is driving the change, where will be the impacts and how they may evolve over the next decade.
  6. 6. The Future of Energy In discussions on each con0nent, we iden0fied drivers of change for the world of energy across four broad themes – macro shi]s, technology changes, poten0al disrup0ons and changes in business. All have major poten0al impact. Technology Change Macro Shi]s Changes in Business Poten0al Disrup0ons
  7. 7. This Document The insights in this document are designed to be used as the core s0mulus for a workshop that explores future possibili0es, iden0fies the areas of greatest poten0al change and the details specific impacts and their implica0ons.
  8. 8. Macro ShiPs Driving Energy Demand
  9. 9. Growing PopulaSons By 2050 we may add another 2bn people to the planet, most in places least able to accommodate them. While some regions face declining birth rates, most maintain current levels and experience major popula0on growth.
  10. 10. Living Longer The global popula0on adds another 2 billion people but it is rapidly ageing: a child born next year will live 6 months longer than one born today. While migra0on helps to rebalance, increasing dependency ra0os challenge many.
  11. 11. Working Longer People are having to work for longer to support longer re0rements. Flexible working prac0ces and policies are emerging, but some employers con0nue to remain ambivalent about older workers.
  12. 12. Rising Youth Unemployment With unemployment rates over 50% in some na0ons, access to work is a rising barrier. Especially across North Africa, the Middle East and southern Europe, a lost genera0on of 100m young people fails to gain from global growth.
  13. 13. EducaSon RevoluSon Broader access to improved educa0on acts as a major catalyst for empowerment, sustained economic growth, overcoming inequality and reducing conflict. A digital educa0on system levels the global playing field.
  14. 14. Increasing UrbanisaSon By 2050 over 70% of people will live in a city. The growth of mega-ci0es is crea0ng a new wave of urbanisa0on. Such mass urbanisa0on increasingly requires a rethink about how we plan, design and use ci0es.
  15. 15. Access to Transport The widespread need for individuals to travel short distances becomes a key feature of urban design and regenera0on. Planners use transport infrastructure to influence social change and lower carbon living.
  16. 16. Key Resource Constraints Economic, physical and poli0cal shortages of key resources increase and drive increasing tension between and within countries. As we exceed the Earth’s natural thresholds, food and water receive as much focus as oil and gas.
  17. 17. True Value of Water As water stress impacts 40% of the world, we have to pay the true value for this resource. In a more water-conscious world, the cost of water is recognised, footprints are measured and companies reduce consump0on.
  18. 18. Planetary Nexuses More eco-friendly opportuni0es, and trade-offs, on energy supply and use emerge from considering the nexuses of core resources such as food, water, energy and land with a growing popula0on. Water Food Land Energy
  19. 19. Increasing Energy Demand As countries grow economically so does their energy consump0on. Energy demand per capita rise with GDP un0l the point where enough is enough – but that point varies significantly by region and leveling off early is the ambi0on for all.
  20. 20. Fossil Fuels Dominance With gas growing faster than oil, fossil fuels remain the dominant source of energy powering the global economy, providing around 60% of the growth in energy and s0ll accoun0ng for almost 80% of total energy supply in 2035.
  21. 21. ShiPing Power and Influence The centre of gravity of economic power con0nues shi]ing eastwards, back to where it was 2000 years ago. Recent superpowers seek to moderate the pace of change but the reali0es of popula0on and resource are immoveable.
  22. 22. China’s Extending Influence China is opening up and wants the natural privileges a leading economy might expect: A big say over global rules of finance and trade are increasingly linked to taking the lead on key issues such as climate change.
  23. 23. China as Asia’s Voice Despite growth of other ASEAN na0ons, China remains the clear economic leader in the region – becoming more influen0al as the primary source of capital and the voice of Asia on the world stage.
  24. 24. Declining Government Influence Na0onal governments’ ability to lead change comes under greater pressure from both above and below - mul0na0onal organisa0ons increasingly set the rules while ci0zens trust and support local and network based ac0ons.
  25. 25. Declining Energy Intensity As major growth regions invest in lower-carbon supply op0ons and priori0se energy efficiency, we see an associated decline in energy intensity in the economy – achieving reduc0ons of up to 10% over the next decade.
  26. 26. Energy Efficiency – The Invisible Fuel The cheapest and cleanest form of energy is the energy we don’t use. Adop0on of effec0ve energy efficiency measures and careful management of energy demand will play a key role in crea0ng a clean, low cost energy future.
  27. 27. Energy Security Faced with both increasing na0onalism and rising tension between key energy suppliers, more high energy consump0on countries seek to ensure 100% energy security - even if it comes at a price.
  28. 28. Support for Paris With a few excep0ons, global support for implemen0ng the Paris COP Agreement drives faster and greater mi0ga0on. The threats of poten0al 3C and 4C of global warming s0r ac0vity to achieve a credible 2C target.
  29. 29. AdaptaSon to Climate Change While mi0ga0on of climate change remains at the fore for some countries, for more adapta0on to the impacts of 3C and 4C of global warming start to take priority. Resilience planning and regulatory change accelerate.
  30. 30. Infrastructure Deficit Infrastructure again becomes a source of compe00ve advantage. Emerging economies invest in new railroads and highways for more effec0ve movement of people and goods, while developed na0ons suffer from poor legacy.
  31. 31. Millennial Mindsets Established businesses struggle to adapt to an alterna0ve set of values and aspira0ons. Adap0ng to a more flexible, transient workforce forces many to seek to reinvent the employer / employee contract.
  32. 32. Technology Changing the Industry
  33. 33. Everything Connected Over 1 trillion sensors are connected to mul0ple networks: everything that can benefit from a connec0on has one. We deliver 10,000x more data 100x more effec0vely but are concerned about the security of the informa0on that flows.
  34. 34. Industry 4.0 Smart factories use cyber-physical systems that share data and cooperate with each other with excep0onal levels of produc0vity and quality. By 2030 manufacturers go from idea to product in a frac0on of the 0me today.
  35. 35. The Rise of Machines The growth in the intelligence and capabili0es of machines presents both a threat and an opportunity: Greater AI and automa0on free up 0me, but also threaten jobs - both low skilled and managerial / administra0ve roles.
  36. 36. Machine Learning Taking Control With the rise of AI and autonomous compu0ng, machine learning is increasingly put in control of managing our energy systems – quickly realizing efficiency savings of around 50% in some sectors.
  37. 37. Falling Cost of Solar The consistent decline in the cost of solar PV modules over 0me follows a 20% reduc0on for every doubling of produc0on. At 2c per kWh, solar takes off to become the world’s leading energy source with two decades.
  38. 38. Nuclear Fusion Breakthrough The promise of intrinsically safe, clean and limitless energy comes true. The ITER programme delivers maximum power ahead of its 2035 target, spurring the roll-out of Nuclear Fusion across partner na0ons.
  39. 39. Energy Storage Storage, and par0cularly electricity storage, is the missing piece in the renewables jigsaw. If solved, it can enable truly distributed solar energy as well as accelerate the electrifica0on of the transport industry.
  40. 40. High Performance Ba]eries Major improvements in improvement in energy density for lithium-ion and lithium-air baHeries all open the door to longer las0ng, smaller baHeries - and so accelerate the shi] to renewables.
  41. 41. Successful CCS A]er years of research, full scale carbon capture and storage systems finally prove their worth at unsubsidized industrial scale: Investment in CCS as an interim solu0on for the transi0on to renewables increases significantly.
  42. 42. HVDC Transmission Advances in high voltage DC transmission create the lower-cost / lower-loss power super highway. Long distance transmission changes supply dynamics and supports concentrated solar power and massive off-shore wind farms.
  43. 43. Space Based Solar Some accelerate investment in the key technologies that will enable the deployment of space based solar energy systems. New funding mechanisms, energy sharing partnerships and regional alliances come to the fore.
  44. 44. Autonomous Vehicles The shi] to fully autonomous transport is an evolu0on via truck platoons on highways and small urban delivery pods. Logis0cs organisa0ons create the network and test the technologies for the revolu0onary driverless experience.
  45. 45. Smart Grids Pervasive smart meters, smart appliances and dynamic pricing drive a reengineering of the electricity supply sector. Mul0ple fully inter-connected energy systems reduce waste, increase reliability and improve resilience.
  46. 46. Rise of the Micro-Actors We see a blurring of energy consumers and producers – to ‘prosumers’ who do both: A move to mul0ple micro-actors working individually and collec0vely - supported by new technological developments, including storage.
  47. 47. Data Ownership Individuals recognize the value of their digital shadows, privacy agents curate clients’ data sets while personal data stores give us transparent control of our informa0on: We retain more ownership of our data and opt to share it.
  48. 48. PotenSal DisrupSons to Consider
  49. 49. Instability, Conflict and Event Risk There is an end to the equilibrium with increasing regional vola0lity and instability. Power, migrants and trade move to those states best able to build adap0ve capacity, func0onal redundancy and resist protec0onist pressures.
  50. 50. Flooded CiSes The vast majority of our ci0es are not prepared for flooding. Many districts and households can no longer get flood insurance and are in jeopardy. Many of the world’s major popula0on centres face regular floods.
  51. 51. More Self Insurance As more weird weather becomes the norm, insurance companies withdraw cover from vulnerable loca0ons. Communi0es respond by self-insuring for major risk and replicate the approaches taken by many oil majors.
  52. 52. Air Quality As more experience asthma and other breathing difficul0es, urban air quality becomes a visible issue and the major catalyst for change – in transport policy, in energy supply and in city design.
  53. 53. Last Mile Grid ConnecSvity Private / public collabora0ons give another 100m people in India access to electricity via connec0on to the grid - but 250m people con0nue to use wood, diesel and kerosene to cook and light their homes.
  54. 54. Universal Basic Income Following successful trails, the adop0on of universal basic income is embraced by many growing economies. All ci0zens receiving a regular income enables many to access the growth ladder and is a protec0on from automa0on.
  55. 55. Influence of Key CiSes Ci0es are more important than countries and increasingly influen0al. O]en centres for innova0on, their reach stretches far beyond the confines of na0onal boundaries as they posi0on themselves as centres of excellence.
  56. 56. Spliang of the EU Driven by the decreasing global influence of the Euro, the EU splits into two. A Northern Deutschmark zone powers ahead leaving southern na0ons seeking independent collabora0on rather than falling behind.
  57. 57. Growing Cyber Terrorism The energy system becomes an increasingly popular target for hackers and cyber terrorists. Pervasive connec0vity and weak security provide increasingly open back doors for sustained denial of service.
  58. 58. Leapfrogging to Leaders Some emerging economies do more that catch up. As with mobile telecoms, they adopt new energy systems early, leapfrogging the West with some rapidly becoming leaders in low-cost services to a growing middle class.
  59. 59. Greater Female Influence As more women lead companies and governments, the nature of energy supply and the sector itself may change. We see new priori0es, more effec0ve approaches and different areas of focus all coming to the fore.
  60. 60. Future Role of the US Although the US Federal Government seeks to delay progress on the switch to renewables, US states, ci0es and companies con0nue independently. US energy innova0on seeks to keep pace with the rest of the world.
  61. 61. G20 Energy Subsidies Decades of G20 subsidy for alterna0ve energy systems come to an end. Greater compe00on is driven by more transparent pricing, global investment and socio-poli0cal advocacy.
  62. 62. Banning of Diesel Led by key ci0es such as Paris, Mexico City and Athens, the mayors of the worlds largest urban districts proac0vely ban diesel cars from 2025. Na0onal governments follow suit offering subsidies for EV alterna0ves.
  63. 63. The End of IP Intellectual property is increasingly seen as a barrier to collabora0on, and rapid technology change. More companies share IP or don’t file patents in order to accelerate shi]s in key sectors.
  64. 64. Eco-CivilisaSon Over the past 40 years China has grown apace, mostly without concern for long-term environmental impacts. However, now faced with major challenges, sustainable development is at the fore and driving global change.
  65. 65. Off-Grid People living off-grid, by inequality or choice, can exacerbate societal division or improve privacy, health and wellbeing. Either way, doing so provides fer0le ground for innova0on.
  66. 66. AcceleraSng Displacement Climate change, conflict, resource shortages, inequality and poli0cal elites unable to change all trigger unprecedented migra0on to the North. Over the next 50 years, as many as 1 billion people could be on the move.
  67. 67. The Changing Business Environment
  68. 68. ShiP in The Investment Landscape As renewable / storage technologies become cost compe00ve we see a sustained shi] in investment sen0ment towards cleaner energy solu0ons. Developing countries’ investments con0nue to surpass those of the West.
  69. 69. Energy Price VolaSlity More vola0lity of energy prices produces greater cost, increased project 0meframes and wider skills gaps. This makes a ‘guessing game’ of long-term economics for energy providers which, in turn, makes it difficult for users to develop reliable plans.
  70. 70. Changing Energy Risk Profile The impact of natural disasters, wider acceptance of the need to avoid a warmer world and increased risk of cyber-crime to our infrastructure all lead to a deeper understanding of the risk profile of different energy solu0ons.
  71. 71. Hydro Revival In response to rising CO2 and pollu0on as well as associated health concerns, China will con0nue to influence the funding and willingness to build large-scale hydro solu0ons, especially in the developing world.
  72. 72. Nuclear Growth More see nuclear energy as a significant piece of the core future energy mix – driven by slower than needed transi0on away from fossil fuels. But many are unprepared with regard to skills, policy and public debate.
  73. 73. Distributed Energy Supply Key developing economies invest heavily in lower-carbon, distributed energy with integrated storage to deliver more reliable and affordable power. This is supported by beHer market pricing and smarter subsidies.
  74. 74. Increasing Value of Data As organisa0ons try to retain as much informa0on about their customers as possible, data becomes a currency with a value and a price. It therefore requires a marketplace where anything that is informa0on is represented.
  75. 75. MulSnaSonal Indians The global influence of Indian companies grows as innova0ve, low-cost, mass scale solu0ons gain trac0on. From a strong IT base, mul0na0onal Indian companies have impact across healthcare, energy, transport and media.
  76. 76. Big Business Defines the Future Large mul0na0onal energy consumers define the future energy mix. 100% renewable energy becomes the norm for key sectors and spurs development ahead of government and energy suppliers’ expecta0ons
  77. 77. Circular Economy Growth There is widespread applica0on of processes focused on keeping resources in use for as long as possible - extrac0ng the maximum value from them while in use, then recovering and reusing materials at the end of each service life.
  78. 78. Full Cost Increasing transparency of society’s reliance on nature, intensify requirements for business to pay the true cost of the resources provided by ‘natural capital’ and so compensate for their nega0ve impact on society.
  79. 79. Companies with Purpose As trust in ‘business’ declines, structures and prac0ces of large corpora0ons are under scru0ny. Businesses come under greater pressure to improve social and environmental performance - achieving both purpose and profit.
  80. 80. Human Touch As service provision and consump0on becomes ever more digital, automated and algorithmic, those brands that can offer more emo0onal engagement and human-to-human contact become increasingly aHrac0ve.
  81. 81. OrganisaSon 3.0 New forms of flaHer, project-based, collabora0ve, virtual, informal organisa0ons dominate - enabled by technology and a mobile workforce. As such the nature of work and the role of the organisa0on blurs.
  82. 82. The Talent Challenge As the global workforce becomes more mobile, organisa0ons struggle to aHract and retain top talent. Governments seek to provide ci0zens with the relevant educa0on that will allow economies to thrive.
  83. 83. Digital Money Cash con0nues to be gradually replaced by digital money, providing consumers with more convenience and choice – and organisa0ons with lower cost transac0ons. Wider adop0on enables new offers to proliferate.
  84. 84. Dynamic Pricing The algorithms of Amazon and Uber cross over to affect more businesses, from energy use to parking. Real-0me transparency allows beHer purchasing at the same 0me as margins and yields are automa0cally enhanced.
  85. 85. Standards Driving Trade Most interna0onal regula0on is progressively aimed at freeing up trade and making it simpler and less bureaucra0c – but there are a number of agreements and standards that some are seeing as increasingly constraining.
  86. 86. OpSmising Last Mile Delivery Seamless, integrated and shared last-mile delivery replaces inefficient compe00on and duplica0on of goods distribu0on. Greater efficiency in moving things is as important as moving people and a focus for innova0on.
  87. 87. AcceleraSng EV Share of Market Leading OEMs see that, by 2030, around 3 in 10 new vehicles being sold globally are EVs. This view has changed from 1 in 10 twelve months ago. The most probable lead markets are seen to be US, China and Europe.
  88. 88. Access Not Ownership The growth of leasing, car sharing, pooling and on-demand travel is driven by innova0ve business models, disrup0ve start-ups and more flexible mobility solu0ons. Vehicle ownership declines significantly, especially in urban areas.
  89. 89. Peak Car (in US and EU) The distance travelled by car and the number of vehicles on the roads in the EU and the US has passed its maximum. Although the total number of vehicles in the world doubles from 2010 to 2030, the growth is all in other regions.
  90. 90. Second GeneraSon Biofuels With the food vs. fuel challenge of 1st gen biofuels evident, the shi] to 2nd gen accelerates. The 10% transport mix mandate spreads globally as cellulosic bioethanol and advanced biodiesels become compe00ve around 2020.
  91. 91. Speed to Scale Greater global connec0vity, growing consumer wealth and broader reach all combine to accelerate the 0me to 1bn customers and a $10bn valua0on for start-ups and new corporate ventures alike.
  92. 92. The Real Sharing Economy Increasing collabora0on drives organisa0ons to reconfigure based on social networks and impact. Real sharing enterprises, not driven by profits, seek to share resources, knowledge, and decision-making responsibili0es.
  93. 93. Deeper CollaboraSon Partnerships shi] to become more dynamic, long-term, democra0sed, mul0-party collabora0ons. Compe0tor alliances and public par0cipa0on drive regulators to create new legal frameworks for open, empathe0c collabora0on.
  94. 94. USING THIS MATERIAL These are informed views from around the world. Some will have greater poten0al impact than others. The challenge is to work out how, where and with what implica0ons to your strategy and underlying assump0ons
  95. 95. Future Agenda 84 Brook Street London W1K 5EH +44 203 0088 141 futureagenda.org The world’s leading open foresight program What do you think? Join In | Add your views into the mix www.futureagenda.org
  • SmartPatel

    Oct. 9, 2017

The apparent speed of transformation in the world of energy is increasing. Declining solar costs, new alliances, energy security concerns, volatile markets and breakthroughs in storage, to name just a few, are accelerating the pace of change. Ahead of a workshop in Bangkok next month, we are sharing an updated view on some of the potential shifts taking place. We have been exploring how changes from within and outside the energy sector could play out for some time. This new slideshare presentation collates many of these perspectives and will be used next month as the basis of a strategic foresight workshop in Bangkok. While some of the views are clearly add odds with each other, there is growing consensus on some of the key shifts taking place. The perspectives we have curated have come from discussions with around 250 informed people around the world – in Europe, the US, Asia, Africa and the Middle East – and so these is clealy some variance in views on technologies, transition times and who will be the catalysts of change. However, grouped into four main themes there are several apparent moves afoot: Macro Shifts: With a growing and increasingly urbanized global population with increasing energy demands, it is clear that resource constraints are a concern. As China becomes more influential, energy security becomes a common issue and most of the world responds to the climate change challenge, who gets access to what type of energy is evidently in flux. Technology Changes: In an increasingly connected and digital world, many are seeing the increasing automation and machine learning will have a significant impact on energy use. At the same time, the falling cost of solar, hope for fusion success, rapid improvements in energy storage plus advances in carbon capture and HVDC transmission are all coming to the fore. Potential Disruptions: In an increasingly uncertain world, there is a growing list of potential disruptions. From more flooding and self-insurance to the rising influence of cities to drive change, especially around air quality, many seem probable. Others such as changes in G20 subsidies, the end of IP and greater female influence in the sector could deliver equally significant transformation. Changes in Business: With a shift in investment to renewables evident, other moves within the energy sector include potential growth in both hydro and nuclear, the support of a more distributed, smart supply and an increasingly transparent cost of supply in a progressively circular economy. Coupled with deeper collaboration and more purpose driven companies, other moves having impact include the speed of EV adoption, new business models, the influence of standards and new forms of organization. Together these and other changes are seen to be driving a potential transformation of this critical part of the global economy.

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