Mechanical Technology March 2015

⎪ Power, energy and energy management ⎪

WEC Issues Monitor 2014 Energy leaders see energy price volatility and the future of a climate framework as their top critical uncertainties, according to the latest research by the World Energy Council.

port highlights the uncertain impact of volatile energy and commodity prices, which has now established itself as the number-one issue for energy leaders worldwide. Energy leaders are worried about the recent sharp plunge in the oil price to its five-year low. They are kept busy by the continual reduction in the cost of renewable energy technologies, which have increased their share in the energy mix, but have also put strains on the energy system. In some parts of the world that do not have viable energy storage solutions, the grid is not yet able to cope with large shares of intermittent forms of energy and lacks effective mar- ket signals to deliver back-up capacity or storage.  Frei added that price volatility has become the “new normal” facing energy leaders. “This is the context in which we expect them to take investment decisions at an unprecedented scale. The unprec- edented uncertainty, the need to redefine infrastructure resilience in response to emerging risks, the expectation of chang- ing market designs and evolving business models, as well as the changing geopoliti- cal balance have all placed energy among the top strategic issues globally for at least the next decade. The importance of choosing smart policy options and in- novation strategies has become greater than ever, and balancing the energy tri- lemma – energy costs, security of supply and carbon emissions – must be at the very centre of efforts of energy leaders,” explained Frei. After price volatility, the Issues Monitor finds that climate framework is perceived as the next most critical global uncertainty ahead of a climate agree- ment being reached at the Conference of the Parties meeting (COP-21) in Paris at the end of this year. African leaders see the climate framework as “a critical uncertainty” but this issue is considered to have lower impact as they are more worried about the physical impacts of climate change, such as extreme weather events, rather than about the uncertain outcomes of climate negotiations. The 2015 World Energy Issues Monitor says about Africa: The main contextual observations for this year’s Issues Monitor in the region demonstrate that Africa’s economy is successfully weathering the global recession, and is taking tentative steps towards more sustained growth. The US is showing growing interest in Africa, scaling up the

T he seventh annual edition of the World Energy Council’s Global Issues Monitor, ‘Energy price volatility: the new normal’ , is a barometer of the top issues set to shape the energy sector for the year ahead. This year the report has gathered the views of more than 1 000 energy leaders, includ- ing ministers and chief executives from nearly 80 countries. The Africa Energy Indaba, held annu- ally in Johannesburg, is the African re- gional event of the World Energy Council – and 2015 is the Council’s ‘Year of Africa’ , which kicked off at the Sandton Convention Centre when the Indaba took place during the week of 17 February. The report was presented and debated in detail during the Indaba, with the Chair of the World Energy Council, Marie-José Nadeau and secretary-general, Christoph Frei, as well as a number of global energy luminaries attending the event in South Africa, placing the nation’s critical energy future in the global spotlight. In Africa, market-distorting energy subsidies and difficult access to capital

markets are key issues. In South Africa, energy leaders recognise the potential impact that unconventional gas (shale gas, for example) could have on the economy but there remains significant uncertainty with regards to the mineral bill and also the geological reality of the resource. This uncertainty is only height- ened by the sharp drop of the oil price over the last year.  Christoph Frei, secretary-general of the World Energy Council, commented ahead of the Africa Energy Indaba that “Africa is at the centre of a new energy opportunity. In sub-Saharan Africa alone, about US$1-trillion will be invested in electricity generation by 2050, while it has already seen almost 30% of global oil and gas discoveries in the last five years. The key challenge for Africa is to ensure that this new energy opportunity is unleashing the local value chain. This is the crucial issue that we will be ad- dressing with ministers and business leaders at the Indaba,” said Frei prior to the Indaba. The 2015 World Issues Monitor re-

WEC’s Global Energy Issues Monitor 2015: highlighting 40 issues and their perceived impact, uncertainty, and urgency for global energy leaders and experts.

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Mechanical Technology — March 2015