Prioritization methodology  development  and priority areas identification for Energy Efficiency cluster Skolkovo January ...
Contents   <ul><ul><li>EE cluster priority areas determination – three main themes </li></ul></ul><ul><ul><li>Russian EE m...
Three main themes emerged from EE cluster priority areas determination   Themes Closing the gap with mature countries  <ul...
On the consumption side, compared to other developed countries, Russia is the most energy-intensive which creates large ma...
Russian energy market overview   2 Key sector observations <ul><li>World </li></ul><ul><ul><li>Generation </li></ul></ul><...
Russia’s generation and T&D efficiencies are below other countries benchmarks 1 9 5 11 6 11 6 13 6 17 10 177 459 93 462 36...
For T&D efficiency improvement Russia is turning to &quot;RAB&quot;  (rate-of-return) regulation 0 Technical losses Com- m...
The four most energy intensive sectors account for 60% of the total final energy consumption in Russia 0 Source: Rosstat F...
Methodology for prioritization of strategic directions for the Energy Efficiency cluster   SOURCE: Team analysis, Expert i...
Strategic directions prioritization matrix – Energy Efficiency    s SOURCE: Expert interviews, team analysis <ul><ul><li>S...
    SOURCE: Expert interviews, industry reports Short-list of priority areas of development of the energy efficient techno...
    SOURCE: Expert interviews, industry reports Short-list of priority areas of development of the energy efficient techno...
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Ee cluster foresight short 110131

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Ee cluster foresight short 110131

  1. 1. Prioritization methodology development and priority areas identification for Energy Efficiency cluster Skolkovo January 31, 2011
  2. 2. Contents <ul><ul><li>EE cluster priority areas determination – three main themes </li></ul></ul><ul><ul><li>Russian EE market overview </li></ul></ul><ul><ul><li>Prioritization methodology </li></ul></ul><ul><ul><li>List of selected priority areas </li></ul></ul>
  3. 3. Three main themes emerged from EE cluster priority areas determination Themes Closing the gap with mature countries <ul><ul><li>Foster development of areas that increase energy efficiency maturity of the country overall, especially in “social” aspects that address government agenda </li></ul></ul><ul><ul><li>Support areas that impact productivity increase in industries, especially in prevailing in national GDP i.e. oil&gas production and transportation, oil&gas downstream, metallurgy, where energy efficiency is one of the key factors of industry competitiveness </li></ul></ul>Rationale Example areas <ul><ul><li>Housing energy efficiency to pace utility bills growth </li></ul></ul><ul><ul><li>Pollution control </li></ul></ul><ul><ul><li>Central heating networks </li></ul></ul><ul><ul><li>Industrial energy efficiency </li></ul></ul>Enable participation in top global energy trends and innovation <ul><ul><li>Main global energy trends (e.g., energy storage) which can change the energy industry delivery model globally and the adoption is prerequisite to compete in the global economy </li></ul></ul><ul><ul><li>Some energy markets trends are enabling development of other industries and their adoption determines competitiveness of respective industries </li></ul></ul><ul><ul><li>The world R&D focus is usually on the areas with high disruptive potential. Russia must be part of that step change to remain competitive </li></ul></ul><ul><ul><li>Energy storage </li></ul></ul><ul><ul><li>CO2 capturing </li></ul></ul><ul><ul><li>Biogas, biocoal </li></ul></ul><ul><ul><li>Smart grid </li></ul></ul><ul><ul><li>Fuel Cells </li></ul></ul>Strengthening existing areas of competitive advantage <ul><ul><li>Support areas of traditional strengths for EE cluster with advanced, world-competitive “know-how”, market recognition, highly competent resources that could serve as platform for expansion into adjacent spaces </li></ul></ul><ul><ul><li>Existing competitive expertise can serve to attract key partners and investors in the energy industry in general </li></ul></ul><ul><ul><li>International recognition in few areas raises the prestige of the industry as a whole </li></ul></ul><ul><ul><li>Gas-steam plants </li></ul></ul><ul><ul><li>Energy efficient materials </li></ul></ul><ul><ul><ul><li>Thin films </li></ul></ul></ul><ul><ul><ul><li>Carbon </li></ul></ul></ul><ul><ul><li>Nuclear and helium generation </li></ul></ul><ul><ul><li>New generation hydro and gas turbines </li></ul></ul><ul><ul><li>Hydrogen technologies </li></ul></ul><ul><ul><li>Superconductivity </li></ul></ul>
  4. 4. On the consumption side, compared to other developed countries, Russia is the most energy-intensive which creates large market for energy efficient technologies 0 Source: Rosstat; MED; BP Statistical Review of World Energy 0.23 Russia 1.39 China 1.14 Saudi Arabia 0.86 India 0.75 Canada 0.48 Brazil 0.40 US 0.32 Finland Japan 0.19 Germany 0.19 -65% 1 In 2005 prices Northern countries Energy intensity of the GDP in 2007 Tce per EUR thousands of the GDP 1
  5. 5. Russian energy market overview 2 Key sector observations <ul><li>World </li></ul><ul><ul><li>Generation </li></ul></ul><ul><ul><ul><li>The energy market turns more into consumer market, with “digital” energy demand </li></ul></ul></ul><ul><ul><ul><li>Alternative energy sources development. For the last 5 years in the US and 9 years in EU wind share is the second highest among the new capacities installed . In 2009 USD 139,1 bln. Invested in “clean energy” . In January 2009 142 states created IRENA </li></ul></ul></ul><ul><ul><li>Transmission </li></ul></ul><ul><ul><ul><li>Decentralized paradigm, smart-grid and energy storage development </li></ul></ul></ul><ul><ul><li>Consumption </li></ul></ul><ul><ul><ul><li>Mobilization of consumer management technologies, i.e. “zero emission” houses and “smart cities” </li></ul></ul></ul><ul><ul><ul><li>Clean transport: hybrid and electric cars </li></ul></ul></ul>SOURCE: Ministry of Energy RF; MRSK Holding; FSK; Strategic Center North West Key sector observations <ul><ul><li>Russia </li></ul></ul><ul><ul><li>Generation </li></ul></ul><ul><ul><li>Russia is planning to build up to 170 GWt of installed capacity by </li></ul></ul><ul><ul><li>2030 </li></ul></ul><ul><ul><ul><li>Goal ~40 GWt </li></ul></ul></ul><ul><ul><ul><li>Gas ~70 GWt </li></ul></ul></ul><ul><ul><ul><li>Nuclear ~40 GWt </li></ul></ul></ul><ul><ul><ul><li>Renewables ~20 GWt </li></ul></ul></ul><ul><ul><ul><ul><li>Hydro ~12 GWt </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Other ~8 GWt (subject to favorable regulation) </li></ul></ul></ul></ul><ul><ul><ul><li>30% of installed capacity is older than 40 years with very low </li></ul></ul></ul><ul><ul><ul><li>efficiency </li></ul></ul></ul><ul><ul><ul><li>Average 37% efficiency requires modernization </li></ul></ul></ul><ul><ul><li>Transmission </li></ul></ul><ul><ul><ul><li>Electricity - 17% losses (~177 TWt hours lost per year) </li></ul></ul></ul><ul><ul><ul><ul><li>Limited new capacity installation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>USD 4-8 bln modernization program </li></ul></ul></ul></ul><ul><ul><ul><li>Heat – 24% losses </li></ul></ul></ul><ul><ul><ul><ul><li>No new capacity required </li></ul></ul></ul></ul><ul><ul><ul><ul><li>USD 10-15 bln modernization program </li></ul></ul></ul></ul>
  6. 6. Russia’s generation and T&D efficiencies are below other countries benchmarks 1 9 5 11 6 11 6 13 6 17 10 177 459 93 462 363 Losses in the grids Electricity consumption by power plants Japan EU-27 U.S. China Russia Source: IEA; Energy Strategy Institute of Russia Electric efficiency of thermal power plants Percent Electricity losses as a share of total production Percent, 2008 Total losses TWh, 2008
  7. 7. For T&D efficiency improvement Russia is turning to &quot;RAB&quot; (rate-of-return) regulation 0 Technical losses Com- mercial losses LV MV HV EU 7.3 0.4 3.7 1.8 1.4 Russia, potential inprove-ment 9.4 0.4 3.7 1.8 3.5 Russia, current 15.0 4.0 5.2 2.3 3.5 Source: IEA; OECD; RAO UES; Team analysis 1 No reliable data on T&D costs in Russia is available <ul><li>Current situation: High losses and low efficiency in transmission and distribution </li></ul><ul><ul><li>Losses: Status quo in Russia ~ 15% (vs. 7% in EU) </li></ul></ul><ul><ul><li>Costs: Status quo in Russia ~5,000 USD/km/year (vs. EU based benchmark 4,000 USD/km/year) </li></ul></ul><ul><li>Potential improvement </li></ul><ul><ul><li>Losses: potential to reduce losses to ~9.5%1 </li></ul></ul><ul><ul><li>Costs </li></ul></ul><ul><ul><ul><li>New RAB methodology was piloted in several regions in 2009 </li></ul></ul></ul><ul><ul><ul><li>Roll out of RAB methodology in all regions is planned in 2011 </li></ul></ul></ul><ul><ul><ul><li>Efficiency improvement in O&M depends on annual improvement factor, which is set by the regulator </li></ul></ul></ul>Losses in T&D Percent of final consumption, 2006 Situation
  8. 8. The four most energy intensive sectors account for 60% of the total final energy consumption in Russia 0 Source: Rosstat Final energy consumption 1 Mtce, 2007 Other Chemicals 70 Oil and gas Metals Residential Total 16 12 8 24 40 60% of total energy consumption <ul><ul><li>Metallurgy, oil and gas and chemicals are the most energy intensive industries in terms of final energy consumption </li></ul></ul><ul><ul><li>Residential sector is the biggest non-industrial energy consumer </li></ul></ul><ul><ul><li>Meanwhile power and heat sectors – the largest primary energy consumers </li></ul></ul><ul><ul><li>Other include trans-port, manufacturing, construction, agriculture, etc. </li></ul></ul>Share of total energy use Percent 1 Net of losses A B C D
  9. 9. Methodology for prioritization of strategic directions for the Energy Efficiency cluster SOURCE: Team analysis, Expert interviews Attractiveness Feasibility Criteria Criteria Weight, % Rationale Rationale Weight, % Industry R&D infrastruc-ture <ul><ul><li>Existing commercial infrastructure serves as proof-of-concept and stresses pre-sence of capabilities </li></ul></ul>25 Existing academic infrastruc-ture <ul><ul><li>Existence of world class research capabilities key to producing tangible R&D in the future </li></ul></ul>25 Talent pool <ul><ul><li>Existence of strong univ. programs and high level graduates is key to ensuring good human capital </li></ul></ul>25 Regulatory framework <ul><ul><li>Clear and favourable regulatory regime enhances ability to produce good R&D </li></ul></ul>15 Physical infrastruc-ture 10 <ul><ul><li>Presence of labs and equipments critical to conducting R&D </li></ul></ul><ul><ul><li>Demonstrates prior capability </li></ul></ul><ul><ul><li>Reflects commercialization potential (near term and future) and will be priority for potential investment partners </li></ul></ul>6 6 <ul><ul><li>Reflects where new money is flowing, higher potential partnership opportunities </li></ul></ul><ul><ul><li>Revenue pools generally easier to capture, depending on competitive landscape </li></ul></ul>6 6 Social and strategic importance <ul><ul><li>Indicates opportunity for greater public good and benefit </li></ul></ul>10 <ul><ul><li>Indicates potential level for State influence and support </li></ul></ul>State demand and support 15 Russia-specific requirements <ul><ul><li>Indicates Russia player specific competitive advantage </li></ul></ul>5 R&D spend <ul><ul><li>Indicates highest potential future innovation areas </li></ul></ul>20 Competitive Intensity <ul><ul><li>Reflects ease of entry and potential profitability </li></ul></ul>15 Synergy with other Skolkovo initiatives <ul><ul><li>Leverage full Skolkovo investments, lower costs </li></ul></ul>5 Time to commercialize <ul><ul><li>Lower time reduces go-to-market risk and increases NPV </li></ul></ul>6 Size of opportunity Relevance of opportunity Each potential strategic direction and priority area bucket scored on scale of 0 to 4 for each criterion and then summed and ranked for total attractiveness and feasibility. Attractiveness Russia base as a source of advantage Global potential Current market size Global Russia Market growth until 2015 Global In Russia
  10. 10. Strategic directions prioritization matrix – Energy Efficiency s SOURCE: Expert interviews, team analysis <ul><ul><li>Strategic directions identified based on market assessment and interviews </li></ul></ul><ul><ul><li>The top priority technologies are </li></ul></ul><ul><ul><ul><li>Energy storage </li></ul></ul></ul><ul><ul><ul><li>Central heating networks modernization </li></ul></ul></ul><ul><ul><ul><li>Steam gas plant </li></ul></ul></ul><ul><ul><ul><li>New generation gas and hydro turbines </li></ul></ul></ul><ul><ul><ul><li>Industrial waste heat utilization </li></ul></ul></ul>0 Feasibility 0.5 4.0 3.5 2.5 3.0 Attractiveness 0.5 4.0 3.5 2.5 Biocoal and fuel pellets Biogas Clean Coal Alternative car fuels 1.5 Gas turbines Coal generation Coal gasification Wind energy Boilers Heat exchangers Plastic windows Roofs and floor insulators LED Thermostats on radiators Mineral insulation Façade paint Smart grid Frequency regulators Energy Storage 2.0 HV equipment Metering Superconductivity Consumer Applications Network management Solar technologies 1.5 1.0 0 2.0 3.0 1.0 Sensors Generation Consumption Transmission I II III IV Associated priority areas detailed on next pages Approximate boundary of the area of focus Hydro turbines Steam gas plants Hydrogen reactors Green Central heating Solar panels APG Focus area
  11. 11. SOURCE: Expert interviews, industry reports Short-list of priority areas of development of the energy efficient technologies cluster (1/2) <ul><ul><li>Strategically important area </li></ul></ul><ul><ul><li>Potential for government support </li></ul></ul><ul><ul><li>High barriers to entry -- economies of scale , with dominant players already on the market </li></ul></ul>Brief description Selection Rationale <ul><ul><li>CCGT , Small-scale CCGT, Decentralization </li></ul></ul><ul><ul><li>New generation gas and hydro turbines, hydrogen reactors </li></ul></ul>Transmission electricity Generation 2 1 <ul><ul><li>Smart-grid </li></ul></ul><ul><ul><li>Superconductivity </li></ul></ul><ul><ul><li>Energy storage </li></ul></ul><ul><ul><li>High voltage transmission equipment </li></ul></ul><ul><ul><li>Metering technologies </li></ul></ul><ul><ul><li>Strategically important and globally relevant </li></ul></ul><ul><ul><li>High growth expectations, open for new entrants </li></ul></ul><ul><ul><li>Expectations of break-through technologies changing the shape of energy markets </li></ul></ul><ul><ul><li>Export potential </li></ul></ul>Area Transmission heat 3 <ul><ul><li>Materials and technologies optimizing central heating systems: pre-isolation, leakage detection, efficient repairs, pipelines cleaning, fortification and rehabilitation </li></ul></ul><ul><ul><li>Metering technologies </li></ul></ul><ul><ul><li>Strategically important (socially relevant) </li></ul></ul><ul><ul><li>High potential for government support </li></ul></ul><ul><ul><li>High volume market over the 20 years </li></ul></ul><ul><ul><li>Need for locally developed solutions and centers of competence </li></ul></ul>
  12. 12. SOURCE: Expert interviews, industry reports Short-list of priority areas of development of the energy efficient technologies cluster (2/2) Brief description Selection Rationale Industrial energy efficiency Housing energy efficiency “ Green Energy” 4 5 6 <ul><ul><li>Chemistry and petrochemistry: new generation catalysts (nano and bio), waste heat utilization, new process design </li></ul></ul><ul><ul><li>Oil and gas: oil&gas production efficiency , APG utilization, pumping and compressing technologies, waste heat utilization </li></ul></ul><ul><ul><li>Metallurgy: waste heat utilization, new process design, new types of equipment </li></ul></ul><ul><ul><li>Very attractive area, with uses of the same principle and equipment designs across industries, incl. transport, machinery etc </li></ul></ul><ul><ul><li>High commercialization potential driven by local market demand </li></ul></ul><ul><ul><li>Innovative insulation materials, hi tech façade materials and technologies </li></ul></ul><ul><ul><li>New generation of smart windows </li></ul></ul><ul><ul><li>New LED solutions, HID lights </li></ul></ul><ul><ul><li>Ultra efficient buildings (combinations of break-through engineering solutions) </li></ul></ul><ul><ul><li>High commercialization potential driven by local market demand </li></ul></ul><ul><ul><li>Large, fast-growing area </li></ul></ul><ul><ul><li>Solar: thin-film technologies, HCPV </li></ul></ul><ul><ul><li>Energy for cars (fuel cells, hydrogen, electric vehicles) </li></ul></ul><ul><ul><li>Fuel pellets and briquettes of biomass (biochar) </li></ul></ul><ul><ul><li>Biogas recovery plant </li></ul></ul><ul><ul><li>Clean coal: filters, compact CO2 absorbers, biomass CO2 absorbers (bio-organisms feeding on CO2) </li></ul></ul><ul><ul><li>Highest growth market </li></ul></ul><ul><ul><li>Global demand </li></ul></ul><ul><ul><li>Technology export potential if globally competitive </li></ul></ul><ul><ul><li>Many technologies have not delivered on promises yet, despite high R&D spend (solar) </li></ul></ul>Area

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