Beatrice Shepherd, Frost & Sullivan’s Director CEE, Russia & CIS, in a presentation entitled "Energy Policy of the Future: Top Ten Global Trends" noted, "In today’s increasingly changing and competitive environment, market participants must continuously look for promising business opportunities. The energy industry, a key sector to the world economy, is particularly important and must be closely monitored in order to maximize investment returns by understanding what is impacting the market."
The main trend in the global energy industry is power demand growth, as the world energy consumption is projected to increase by 44 percent from 2006 to 2030, (Energy Information Administration, US, 2009). Europe, with its ageing fleet of power plants would require approximately 25GW of additional generation capacity annually up to 2020, according to Frost & Sullivan estimation. Demand for power in Africa, China and India will rise with rural electrification efforts. Developed countries will significantly support the energy demand by endorsing expansion of the electric and hybrid vehicles. Global electrification will reach 80 percent by 2020.
A new age of natural gas is coming with the massive boost in LNG availability. "The really interesting development is the quick rise in what is called ‘unconventional gas’ supplies," says Ms. Shepherd. "The US has already overtaken Russia in 2009 as the world's largest gas producer due to surging production of shale and coal seam gas." The search for unconventional gas is developing in China and Europe; however the procedures of extracting gas are still being considered.
Clean coal commercialization is the next important trend listed by Frost & Sullivan. "Clean coal technologies will continue to play an important part in the coal power generation industry over the next few years with increased investments in the area," notes Ms. Shepherd. Technologies that have a long-term potential are carbon capture and Integrated Gasification Combined Cycle (IGCC).
A global revival of the nuclear sector, mainly driven by China, India and Russia, is another significant theme in the energy industry. Nuclear energy is considered one of the most cost-effective technologies to meet the ever-increasing demand for electricity and also a crucial contributor to energy independence and security of supply. The number of partnerships and co-operation agreements is increasing along the entire nuclear value chain to keep pace with the strong global demand.
Governments around the world have declared policies supporting renewable energy development – the EU plans to achieve 20 percent of energy generation from renewable sources in 2020, 22 of the Unites States have 10-20 percent renewable targets while China aims at generating 100GW of renewable energy by 2020. These developments coupled with technology advancements will eventually result in "grid parity" – a point where cost of producing electricity from fossil fuels is equal or cheaper to the cost of producing energy from renewable sources. It is likely to happen in countries, where the renewable resources hold the important share in the energy mix. Countries with economies based on fossil fuels will reach this point in the much longer run.
The demand for electricity has far exceeded existing grid capacity and coupled with the rising number of decentralised energy generation units is forcing most of the utilities to improve their measurement and monitoring network structure by implementing smart technologies. Smart meters form an integral part of the bigger movement towards the "smart grid". USA and Europe have already started implementing smart meters, with Italy leading the race. "The smart grid is becoming a multi-billion dollar market, which is expected to scale unprecedented heights in the near future," adds Ms. Shepherd.
The next important drive in the energy sector is energy efficiency. Most developed countries are actively creating and implementing energy efficiency policies for appliances, regulating the minimum energy performance standards and associated labelling for a growing list of appliances. Technologies related to reducing fuel consumption and cutting carbon emissions such as energy management tools, green buildings and clean transportation are key enabling technologies that will bring about energy efficiency and cut down CO2 emissions.
Electric and hybrid vehicles and also renewable energy require efficient energy storage systems, which is the key enabling technology under development, according to Frost & Sullivan. Among the factors affecting the future potential of energy systems are the fundamental properties and nature of the storage systems and also the type of materials used. The biggest potential is seen in fuel cells with their flexible capacity and flywheels for a specific, narrow set of applications. The global storage market was worth $43.5 billion in 2008 and expected to increase to $61 billion in 2013.
The latest trend is the energy market is liberalization, which is limiting the activity of large energy monopolistic utilities and opening up the energy market for competition. A customer should be able to choose an electricity supplier. In fact, the idea of cross-border trading of electricity,, supported by the European Commission and implemented worldwide, could help pave the way for a continental high voltage direct current electrical (HVDC) grid capable of easily transmitting renewable energy across borders.
*Frost & Sullivan, the Growth Partnership Company