Mechanical Technology March 2015

Mechanical Technology — March 2015

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Power, energy and energy management

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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 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

WEC’s Global Energy Issues Monitor 2015: highlighting 40 issues and their perceived impact, uncertainty,

and urgency for global energy leaders and experts.