New Energy Paradigm Energy Transition

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1 New Energy Paradigm Energy Transition Dominique Fache Chairman of Board, Enel OGK-5 Club de Nice, December 3-5, 2012

2 Systemic Approach in Energy Catastrophes Hurricane Sandy in New York, November 2012 Damage costs $50 billion Killed more than 100 people Left 8,5 million people without electricity Gas Leak at Total s Elgin Platform in North Sea, March 2012 Damage costs $30 billion 240 workers were evacuated A sheen on the water was over 1.85m 2 and measures between 2 and 20 tones in volume 2

3 Storm Warning Investments in Infrastructure Source: Financial times, November

4 Systemic Approach in Energy Catastrophes Chernobyl Nuclear PP, Russia 1986 Explosion at Fukushima Nuclear PP in Japan, March 2011 Oil spill in the Gulf of Mexico, April 2010 Accident at Sayano-Shushenskaya Hydro PP in Russia, August

5 Contradictions of the Global Goals in Energy Energy demand growth, especially in developing countries Stabilizing global climate change to 2 C above pre-industrial levels to be achieved in the 21 st century New energy saving technologies Decrease in using of nuclear energy High cost of new technologies Climate change (increase in CO2 emissions) is one of the most difficult problems that the global community has had to deal with. Source: sciencebook.org and EIA, Global Energy Assessment, French Ministry of Ecology 5

6 Steadily growing world energy demand million barrels of oil equivalent a day Source: Energy Outlook 2030, BP, shell.com 6

7 Global Energy Demand: Main Contributors 45% of the global energy growth will be driven by China and India Source: 7

8 /MWh Intensity Energy Tariffs VS Energy Intensity Italy UK Germany France Russia Graphic shows schematic correlation 8

9 Potential New Energy Resources Potential of energy saving technologies: 40% economy of consumed energy 555 mln tones/year CO2 emissions reduction 2 TW/year power energy saving 1.5 bln barrels/year oil saving Source: International Energy Agency,

10 Potential of energy saving in Russia The Russian government approved a $300 billion energy-efficiency program. Russia is the world's biggest oil and gas producer, and cheap government-capped domestic energy prices have drained the motivation to conserve energy. Aim: make the country's economy 40 percent more energy efficient by Pilot eco-friendly families place solar panels on their country homes (Novosibirsk, Tomsk, Tatar Region). State goals in energy efficiency by 2020: To save 330 bln m 3 of gas To save 630 TWh of power energy To decrease CO2 by 409 mln tonnes, etc. Billionaire Mikhail Prokhorov's project to build a hybrid car plant in Togliatti (Russia's domestic auto capital). Source: World Bank 2008 and Business New Europe 10

11 New energy business model decentralized generation Bidirectional energy transmission Tendencies in decentralized generation development in Denmark consumers are becoming active players on the energy market Source: ABB research, Global Energy Assessment,

12 World Gas Development World gas consumption in 2035 will grow by 50%. World demand for natural gas will equal 5.1 tln m 2 in 2035 which exceeds the current level by 1.8 tln m 3 Russia, the Caspian region, the Middle East, China, North America, and Africa will be the main gas suppliers. BUT!!! : To day Coal/Gas Gas prices to decrease by 30% Coal prices to rise by 50% CO2 emissions costs to increase by 4 times 2012 gas consumption in Europe 460 bln m 3 Lowest in 12 years 2 means of transportation for reaching a country Pipelines Gas to become a global commodity LNG, GTL Source: International Energy Agency,

13 Shale gas in the USA and Canada Production of shale gas in the US is rapidly increasing Recent discoveries of shale gas in Canada have caused a sharp increase in estimated recoverable natural gas in Canada Source: EIA and neb-one.gc.ca 13

14 Shale gas in the USA and Canada Creates New Jobs As the share of shale gas production increases to 43% in 2015 and 60% in 2035, development of this resource will support more than 800,000 and 1.6 million jobs, respectively. Shale gas production supported more than 600,000 jobs in 2010 in US in France Deficit commercial=cost of Energy import Source: HS Global Insight study The position No Shale Gas in Europe is Short viewed It s important to work out common European Shale Gas Research Program New reserves evaluation methods, technologies, field management to be developed 14

15 New Energy Resources VS Geopolitics Shtokman Development AG between Gazprom and Total Participants: Gazprom 75% Total 25% In August 2012, Gazprom put the project on hold with a final investment decision on the first phase postponed until at least 2014, stressing high costs and low gas prices. Source: 2b1stconsulting.com 15

16 Increase in Coal Consumption & Production Million tones oil equivalent Source: 16

17 World Coal Reserves Consequences? CO2 emissions, negative impact on environment to be solved Failure in Copenhagen => New Kyoto protocol to be signed Carbon capture storage technologies to be implemented Coal will remain the main source of energy for non- OECD countries 17

18 Carbon Dioxide Emissions in the world Million tons per year Source: 18

19 Nuclear Energy As-Is Nuclear power stations Source: World Nuclear Association 19

20 Nuclear Energy Prospects China has 25 nuclear power reactors under construction, with plans to build many more In the US the licenses of almost half its reactors have been extended to 60 years, and plans to build another dozen are under serious consideration. Japan's 2011 Fukushima Daiichi nuclear disaster prompted a rethink of nuclear energy policy in many countries. Germany decided to close all its reactors by Italy has banned nuclear power. Following Fukushima, the International Energy Agency halved its estimate of additional nuclear generating capacity to be built by Source: 20

21 Renewable Energy Potential Power Generation Forecast Falling prices of solar panels are due to the price of silicon, the main ingredient used for manufacturing solar panels, has gone down to $25 per kilogram now from $450 per kg in Besides, getting cheaper, solar panels are also becoming more powerful. Source: Constellation NewEnergy 21

22 Renewable Energy: Key Challenges Problem of intermittent generation to be solved High investments to be introduced Government subsidies and incentive mechanisms to be used New psychology to be adopted New methods of energy storage to be developed 22

23 Smart Grid Technologies: vision and benefits Increase demand for electric cars in Europe and the US All-electric car sharing service has been launched Electric highway is coming to the US Multi-directional flows management Storage and Plug & Play technologies End user real time information and participation Electric Vehicles Central and distributed Intelligence Central and distributed resources integration LED Public Lighting Smart equipments and power electronics 23

24 Top 10 Smart Grid Federal Incentive Investments China: $7,323 in mln USD US: $7,092 Japan: $849 South Korea: $824 Spain: $807 Germany: $397 Australia: $360 UK: $290 France: $265 Source: Brazil: $204 24

25 New Solutions: DESERTEC Project in Sahara It currently costs around a billion EUR to build a 250 megawatt solar power plant with air cooling and heat storage tanks. Solar technology is improving at such a rate that it will soon be able to compete with fossil fuels. It will also be able to supply 100% of the world s energy in about 20 years. Ray Kurzweil, futurist 25

26 New Solutions: Solar Power Stations in the Space - Future is Possible Solar energy from space Japan project: 200 kw by 2015 and 1 GW by 2030 U.S. project: 200 MW by 2016 Russian scientists are also exploring the opportunities Revolution on Business model!! INTERNET Solaren project 26

27 3 proposals for New Energy Paradigm Launch of a Energy Cooperative Research Program in Europe till 2020 (shale gas development, new methods of energy storage, smart energy technologies, new means of transport) Global Energy Digital Training Initiative to attract, train and retain young talents within the future energy industry. A virtual multinational Energy University. New Energy Regulator on global level UNEnergy for decreasing geopolitical conflicts, prevent catastrophes, develop new forms of energy production, repartition and access. 27