A new report compiled by the World Energy Council (WEC) states that power utilities will need to invest between $35tn and $43tn until 2060 to meet growing energy needs.The report notes that as the global power market shifts away from fossil fuels, significant investment will be required to satisfy demand for electricity, which is expected to double by 2060.
According to The National, the World Energy Council says that power utilities need to “revamp their business models or face extinction.” [Engerati’s round up: Navigating grid modernisation in an evolving electric sector]
"Historically people have talked about peak oil, but now disruptive trends are leading energy experts to consider the implications of peak demand," said Ged Davis, executive chair of scenarios at the World Energy Council.
[quote] The UAE relies on natural gas for 97% of its power generation, while fossil fuels made up 81% of the total energy consumed two years ago.
The WEC added that more renewable energy and increasing energy efficient applications could change that ratio with fossil fuels making up as little as 50% of primary energy.
The International Energy Agency said that by deploying more efficient digital technologies, such as smart grids or the digitalisation of a utility network, could reduce projected peak demands by 13% to 24%.
Digital technology deployment
The Dubai Electricity and Water Authority for example is reported to have installed 200,000 smart meters in January with the goal to have over 1 million by 2020. [Mexico’s CFE selects Honeywell for grid modernisation]
A greater effort among other countries has occurred as governments and companies looking for more measures to curb climate change, particularly after last year’s Paris Agreement was signed by 195 nations.
The National adds that consultancy Accenture Strategy warns that if policies and business strategies aren’t revamped, a greater risk will appear.
"Misspending including misallocation of capital has always been a risk for energy assets, and will continue to grow due to fundamental shifts in the industry," said Nuri Demirdoven, managing director at Accenture Strategy.
"Leading companies across all scenarios will be those that adapt quickly and take two urgent steps: rethink the balance of their energy portfolio, and utilise business and digital technologies to transform how they deliver work and organise and manage performance across their businesses."
WEC’s Mr. Davis added that the underlying drivers will reshape the economics of energy.
"We are entering a world where the concern is no longer just about stranded assets but also the impact of stranded resources on nations," he said.