Investment in innovation and education is a key to growth
Investment in education and research and development and an increased focus on emerging markets will define the renewables industry over the coming years, according to leading industry figures who gathered in Abu Dhabi for a high-level discussion at the World Future Energy Summit 2012. Speaking at the plenary session Business Leaders in Renewable Energy – Insights from the Executive Suite, nine senior figures from the energy sector agreed that 2012 was likely to be a challenging year – but that those challenges could be overcome by a commitment to strategic investment.
Steve Bolze, senior vice president, president and CEO of GE Power and Wind, said that only those companies that invested significantly in R&D and innovation will thrive. “Given the times, technology investment has to be the long-term differentiator in the sector,” he said. Bjorn Haugland, COO of Norway’s DNV, agreed, adding that his company is committed to investing 6 to 7 per cent of turnover to research and development. “The next ten years is going to be a major transition period,” he said. “We need to take the next generation of renewable technology from the drawing board, where it is now, to being fully scaled up.” Steve O’Rourke, senior vice president and chief strategy officer at Sun Edison said the challenge ahead for his company lay not with the science, but with implementation. “When it comes to photovoltaics, the science is already out of the equation,” he said. “What we now have is an engineering problem, and that’s what we must concentrate on. But, solving that engineering problem is very do-able.” James Brown, president, Utilities Business Group at First Solar said that despite the difficulties the industry is facing, innovation will continue to make renewables more attractive for end-users. “The industry was in chaos last year,” he admitted, citing the over-supply in the PV sector, but he added that tech breakthroughs, such as the record-breaking 14.4 percent efficiency in pholtovaltaic modules announced by First Solar at WFES earlier in the day, continue to be made, and will bring the cost of the renewable down further. He also said that emerging markets would be a focus for the company, “We have been slightly overweight in developed markets,” he said, adding that renewable energy is increasingly attractive for emerging markets as they seek to address long-term energy challenges.
Emerging markets are also on the agenda for Shell as it renews its focus on gas production as a replacement for coal in power plants. Mark Carne, executive vice president for Shell International, said the priority of Shell would be gas, the cleanest of fossil fuels. “Last year was the first year in this country’s 100-year history that we produced more gas than oil,” he told delegates. He flagged Iraq as a key area for gas development for the company. “700 cubic feet of gas per day is flared off in Iraqi refineries,” he said. Shell aims to capture this resource to use for Iraq’s internal energy needs. “This is a very exciting project that will make a real difference to the future of Iraq,” he said. Tulsi Tanti, chairman and managing director of Suzlon, India, said that despite the extremely challenging macro and micro economic environment, “emerging markets continue to show great potential.” He cited the fact that the costs of wind power were now at par with gas, and would catch up with coal by 2015. But he warned that education was not keeping up with growth in the sector. “Talent is simply not sufficient to support growth in the industry, so we need to make significant investments to boost that talent pool.” Jean-Pascal Tricoire, president and CEO of Schneider Electric, outlined his company’s four-point plant for 2012 and beyond: connect the company’s 40 sites in 25 countries to drive efficiencies of scale; connect the customer base to improve efficiency in transmission, by leveling out peak demands; improve access to energy in areas of operation and, lastly, to boost education in new technologies.
Frank Wouters, director of Masdar Power, said education remained a priority for the Abu Dhabi-based initiative, which also runs the Masdar Institute, a homegrown university dedicated to renewable and clean technology. He said that Masdar Power would use 2012 to build on its innovation breakthrough in 2011 – a concentrated solar power generator that harnessed the properties liquid salt to provide power generation 24 hours a day. “This year we will have the second generation on the drawing board – we see massive potential with this,” he said. Wouters added that Masdar will also seek to open new markets. “We need to be agile,” he said. “Overall, I’m not particularly pessimistic about the future, but you have to be able to tap into markets as and when required.” Under the theme of “Powering Sustainable Innovation,” WFES 2012 welcomed more than 26,000 attendees, including 3,000 delegates and 650 exhibiting companies over the four-day summit held at the Abu Dhabi National Exhibition Centre (Adnec). The summit is hosted by Masdar, Abu Dhabi’s long-term investment in the commercial realisation of renewable energy and sustainable technologies.
Earlier, in his keynote address today to the World Future Energy Summit, UN Secretary-General Ban Ki-moon called on governments, the private sector, and civil society to make significant commitments to action in support of his Sustainable Energy for All Initiative. His call to action underscores the importance of energy to sustainable development, and contributes to the global launch of 2012 as the International Year of Sustainable Energy for All. “This is the right time for this Initiative,” said the Secretary-General. “Across the world we see momentum building for concrete action that reduces energy poverty, catalyses sustainable economic growth, and mitigates the risks of climate change. Achieving sustainable energy for all is both feasible and necessary.
My Initiative will help us meet these objectives simultaneously. It can be a triple win for all.” The Secretary-General’s participation in the World Future Energy Summit marks his first visit abroad during his second term of office and highlights his commitment to sustainable energy as the key to powering sustainable development. The Secretary-General has designated sustainable development as his top priority for his next five year term. Globally, one person in five lacks access to modern electricity and twice that number, three billion people, rely on wood, coal, charcoal or animal waste for cooking and heating. In developed countries the problem is a substantial waste of energy. The Secretary-General articulated three complimentary objectives, all to be achieved by 2030. First: to ensure universal access to modern energy services. Second: to double the rate of improvement of energy efficiency. Third: to double the share of renewable energy in the global energy mix. The World Future Energy Summit serves as the global launch of 2012 as the International Year of Sustainable Energy for All, which was mandated by the UN General Assembly. The Secretary-General’s Initiative contributes to the International Year of Sustainable Energy for All by mobilising action from a range of key actors. The Secretary-General has appointed a high-level group of eminent global leaders from business, finance, government and civil society to mobilise action commitments that will help drive change on the ground, in corporate board rooms, and in policy portfolios around the world.
In Abu Dhabi, the group met and produced a framework for an action agenda, which proposes several high-value actions at the national and international level, including action to expand energy access, promote efficiency standards and policies, and strengthen investment in renewables. Towards the UN Conference on Sustainable Development (Rio+20) in June, the Secretary-General will officially launch the action agenda, publicising the commitments made by all stakeholders to the Initiative. In his welcoming address, Dr Sultan Ahmed Al Jaber, the CEO of Masdar, outlined the huge advances the renewables sector has made in recent years. “Over the last decade, the renewable energy sector has grown immensely,” he told delegates. “The production capacity for wind has increased by a factor of 10 to reach 200 gigawatts, while solar has increased by a factor of 30, to reach almost 35 gigawatts.
Production and technology advances have led to a sharp decrease in the cost of production, and the market value of the renewable sector has increased from one billion dollars to 211 billion dollars.” In his keynote address, the Chinese Premier, Wen Jiabao, praised the UAE’s vision and courage in the field of sustainable development. He outlined a four-stage process to address the world’s future energy challenges, with the priority being energy conservation and energy efficiency. “To save energy does not mean simply to cut energy use, nor does it compromise people’s quality of life,” he told delegates. “What is needed is to rely on science and technology to increase energy efficiency, build a circular national economy featuring low input, high output and low energy consumption and emissions, and drive sustainable economic and social development with minimum energy and resource consumption.” He also called on governments to “vigorously develop renewable energy and clean energy” as alternatives to fossil fuel, promote a “revolution of science and technology in the energy sector,” and finally, “effectively safeguard energy security”.
The Chinese Premier outlined the steps his own country is taking to address energy challenges, including shutting down coal fired generators, investing in wind, solar and hydroelectric power and increasing energy efficiencies in its traditional industries. Recognising the importance of the Middle East to the global energy equation, the Premier told delegates that China respects the independent choices made by the countries in the region, and supports their efforts in developing their economies based on their resources and strengths. He added that China, as a Permanent Member of the UN Security Council, would continue to work with the international community to promote peace and stability in the Middle East and North Africa.
In his own keynote address, South Korea’s Prime Minister, Kim Hwan-sik, stressed the need for active co-operation between developing and developed countries in expanding renewable energy resources. “To distribute renewable energy to the world, active financial support and technology transfers from developed countries to their developing counterparts are required,” he said. Kim also stressed the importance of “the peaceful usage of nuclear energy” under guarantees of “safety and non-proliferation” until alternative energy resources can fully replace fossil fuels. He pledged that South Korea would continue its efforts to become a leader in the field or renewable energy. “We will maintain close cooperation with the UAE to expand the spread of renewable energy as well as measures for green growth in the future,” Kim said.
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