Trends and drivers of the world in 2015
In the globally networked world of today even slight changes of influencing parameters can have a huge effect on the development of society. With the fast changing political scenery, the soaring economic development and ongoing leaps in technology, a forecast into the future is a risky undertaking. Nevertheless, as the future development of the world’s energy is one of the backbones of the global society, the need for reasonable planning is obvious. Utilities need to make long term investment decisions for their power generation portfolio as well as the transmission and distribution infrastructure, providers of alternative energy solutions seek a sound decision platform and, last but not least, industrial groups and their suppliers want to know where market and technological development will lead.
six prominent trends with strong influence on the upcoming needs of people and requirements of the industry. These trends address- Changes in the global society
- Globalization
- Energy industry restructuring
- Primary energy concerns
- Electrical energy needs
- Environmental issues
With world population currently at 6.5 billion and rising by 75 million a year, changes in the structure, values and relations within and between societies are the driving force behind all other movements that shape the world we live in.
Globalization is driven by new technologies, new economic relationships and the national and international policies of a wide range of actors, including governments, international organizations, business, the media, labor and civil society. The impact of globalization on individual societies is multi-faceted. The mechanisms by which the flow of trade, capital, ideas and people cause economies and societies to change are highly complex.
The world economy is projected to grow by about 40 percent between 2005 and 2015, and average per capita income by 25 percent. Large parts of the world will enjoy unprecedented prosperity, and a middleclass population could be created for the first time in some formerly poor countries
The global energy industry is undergoing continuous restructuring. Processes like liberalization and deregulation, market consolidation, the spread of wholesale energy trading and the commoditization of electricity and gas are changing the very nature of energy trading. Large-scale investment in renewable forms of energy by oil and gas majors, the development of enabling technologies for ultra high voltage transmission and the storage of electric power, combined with political intervention by governments to stimulate or discourage trends and technologies are all influencing the energy industry
A key factor affecting the structure of the world energy industry is the liberalization and privatization of electricity and gas markets. However even after almost 25 years there is still no clear picture of the effects of these actions. Market liberalization is opening up a new era in wholesale electricity trading. European countries are not liberalizing at the same tempo, which means there is considerable variation in power trading arrangements, ranging from central dispatch to exchange-based models. The ultimate objective is a market in which gas and electricity are traded as commodities with flexible and innovative products and services.
Another factor that drives the restructuring of the energy industry is the need for additional investment in energy infrastructure to meet the growing demand for energy services worldwide. Investment is required to replace capacity that is being retired, expand supply where needed, and cover the cost of cleaner energy systems.
Politicians drive restructuring by using subsidies and taxes, supported by corresponding laws and regulations, to develop and encourage the use of renewable energy, increase environmental awareness and promote energy savings.
However, small-scale renewable power generation is unlikely to have a major influence on the structure of the energy industry in the medium term. Another driving force is the lack of supply reliability that the various blackouts of 2003 revealed. The fact that energy security has many dimensions such as safe energy supply based on market economics; technological, environmental, social and cultural aspects, as well as being of military strategic importance, adds to the complexity of the restructuring process.
The primary energy resources of oil, coal, natural gas, and uranium will all still be available in 2020 and beyond. The International Energy Agency (IEA) estimates that a total investment of $16 trillion will be necessary over the next three decades to meet the expected surge in demand for energy, of which 60 percent will be required for power plants and transmission and distribution networks.1)
The correlation between primary energy and gross domestic product has been strong in the past but is expected to lessen over time with the in-creasing use of energy-efficient technologies in some regions. Nevertheless, global economic growth as a whole will still proceed hand in hand with a rising demand for energy over the next 20 years.
Covering almost 38 percent of world energy consumption oil is expected to remain the dominant energy source in the next two decades, even though more than 30 percent of the resources required have yet to be discovered. Natural gas remains an important source of energy for power generation (about 30 percent). Because it produces lower CO2 emissions, natural gas is an attractive choice for greenhouse gas mitigation.
Nuclear power may again become popular in the mature economies after a period of stagnation. Other primary energy resources like wind, wave, geothermal or solar energy will become part of the energy mix but are not expected to contribute significantly to global energy supply in the next 15 to 20 years. Many of the alternative technologies to fill the potential gap in energy supply are still at the development stage and might not become economically viable for some time. Energy savings, especially in the transportation sector, could significantly extend the availability of oil. Biofuels of different types will also reduce this sector’s dependence on oil.
In summary, uncertainty about primary energy resources is driven by:
- Limited accessibility to energy resources for political reasons
- Limited availability of economically viable technologies for exploiting future resources
- Limited availability of alternative energy resources to replace traditional sources to a sufficient extent and at an affordable cost
- Limited use of fossil fuels to prevent impacting the environment and at affordable cost.
The growth in new business opportunities is compounded by uncertainty about the future of primary energy resources. This is likely to intensify research into technologies for generating renewable energy and the use of alternative bio-fuels in the transportation industry. In recent years, the technologies used to burn fossil fuels of all kinds have improved tremendously. This applies to oil, gas and coal as well as to combustion engines in cars.
Nevertheless, the development of new technologies will most likely be driven by the tradeoff between the cost of these technologies and the various benefits they offer – tax breaks, lower emissions, reduced fuel consumption, and longer service life.
The renewed interest in building nuclear power plants may inhibit the spread of alternative forms of power generation. The tradeoff between clean energy restrictions and economic growth is, however, complicating the implementation of measures especially in the rapidly emerging countries.
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