This year’s Singapore International Energy Week explored the exciting possibility of cleaner and more affordable energy for everyone.
The 10th edition of Singapore International Energy Week (SIEW) marked a sea change in the way industry players and experts viewed the evolving global energy landscape.
Aptly themed “Rethinking Energy; Navigating Change”, the speeches and panel sessions by energy leaders from governments, industry and international organisations on the first two days of SIEW centred on the increasingly dominant role that renewables play in the global energy mix.
Talk of oil prices was replaced by optimistic discussions over the potential of clean and sustainable energy sources such as solar and wind energy to power our homes and cars. More ambitiously, some believed that the emergence of renewables could help realise the vision of giving people around the world access to clean and affordable energy.
“Major changes are happening in the energy landscape. These require a rethink of how we approach energy,” declared Mr Teo Chee Hean, Deputy Prime Minister and Coordinating Minister for National Security, in the Singapore Energy Lecture that marked the opening of SIEW on 23 October.
The trends are clear to see. In 2015, global renewable capacity additions surpassed those of fossil fuels and nuclear for the first time, according to the International Energy Agency's (IEA) World Energy Outlook 2016 report. The IEA expects renewables to overtake coal as the largest source of electricity globally by 2030.
“Renewables has moved to the centre stage of energy in recent years. More than half of all power capacity additions last year were from renewables, which is a record. And the shift to renewables in emerging economies is dominant over developed ones,” said Mr Adnan Z. Amin, Director-General of the International Renewable Energy Agency (IRENA), in a keynote address at the Singapore Energy Summit.
Interestingly, he noted that several countries leading the renewable charge are major oil and gas exporters. The United Arab Emirates, for instance, has embarked on an ambitious programme to build clean cities and power generation facilities driven by renewable energy.
The Cost Effect
Much of this progress has been driven by the rapidly falling costs of renewables, largely due to large-scale deployments of clean energy solutions and technological progress. Bloomberg New Energy Finance, a research firm, expects solar to be cheaper than coal in China and India by 2021, and that by 2040, each dollar can buy 2.3 times as much solar energy as it does today.
Batteries and energy storage costs have also fallen to about a quarter of what they were in 2010. The ability to store renewable energy is critical in addressing the problem of intermittency when it comes to renewables.
Renewable energy will also be a key source for generating electricity going forward. Solar photovoltaic (PV), wind and hydropower will account for 85 percent of global electricity production by 2050, according to DNV GL’s “Energy Transition Outlook 2017” report.
Meanwhile, advances in technology and digitalisation are helping to reduce overall energy consumption, as ever smarter appliances become more energy efficient. DNV GL expects final energy demand to plateau around 2030, at a level 7 percent higher than 2015, due mainly to greater efficiency of end-users, the declining use of fossil fuels and slower population growth.
“The biggest revolution is that we are now moving into a plateau in terms of energy demand. The fact that humanity is going to use less energy is going to have a profound significance,” said DNV GL – Energy CEO Mr Ditlev Engel at the launch of “Energy Transition Outlook 2017” at SIEW.
Battling Climate Change
While the focus on renewables and energy efficiency is good news in the fight against climate change, some participants questioned whether it was enough to turn the tide on global warming.
In a special address, Ms Christiana Figueres, the Former Head of the UN Climate Change Convention, argued that there was still a lack of urgency among global players in tackling the problem.
“The Paris agreement is not enough, there is still not a sense of urgency. By 2020, we must accelerate the energy transformation to the point where we can bend the global emissions curve to preserve the time needed to have a smooth transition to a de-carbonised world by 2050,” she said.
However, she was optimistic that these goals could still be reached, pointing to forecasts that showed the rising penetration of renewables, the decline of coal usage and the rapid adoption of electric vehicles expected over the next few years.
Speaking by her side was her brother José María Figueres, Former President of Costa Rica and Co-Chair of the Global Ocean Commission, who stressed on the ocean's importance in absorbing the rise in temperature as a result of global warming.
“In essence, think of the ocean as the kidney of the planet. That is the vital role that it plays. What premium do you want to pay on the risk of that not happening? The ocean provides 350 million jobs and accounts for 5 percent of global GDP. So those are the risks but also the opportunities,” he said.
Southeast Asia: A Heavyweight in Global Energy
Southeast Asia was also in the spotlight, as the International Energy Agency (IEA) launched its latest “Southeast Asia Energy Outlook 2017” at SIEW. The report highlighted the emergence of Southeast Asia as a major driver of global energy demand, together with China and India, and the challenges it faces in meeting this demand.
“Southeast Asia must meet these fast-increasing energy demands in an affordable cost point of view and also a sustainable way. As such, informed decisions are critical," said Mr Fatih Birol, Executive Director at the IEA, in a video address.
IEA expects Southeast Asia’s annual imports of oil, gas and coal to cost US$300 billion by 2040, equivalent to about 4 percent of the region’s total gross domestic product. However, Mr Birol noted that the rise of renewable energy and moves to increase energy efficiency could cut the import bill to as low as US$120 billion annually.
Gas is Still Key
Even as renewables hogged the spotlight at SIEW, many speakers believed that natural gas would still play a key role in meeting energy demand for many years to come.
At a panel session titled “Rethinking Energy”, Mr Masakazu Toyoda, the chairman of The Institute of Energy Economics, Japan (IEEJ), said that while renewable energy is important, its cost might differ from country to country. As such, fossil fuels like natural gas will still be important.
He also called for a new liquefied natural gas (LNG) Asian price index to be established to accurately reflect the supply and demand situation in the region. Most LNG contracts are still priced on an index based on crude oil prices.
In his keynote address, Mr Yuji Kakimi, the president of Japanese energy company JERA, said that the gas market is likely to have an abundance of supply until the mid-2020s due to the rise of US LNG exports and as more LNG supply projects have come online in recent years.
However, he noted that the drop in gas prices as a result of the oversupply would likely discourage new investment in production, resulting in another shortfall and higher prices by the mid 2020s.
“Now is the time for buyers and suppliers to work together to bring about FIDs (final investment decisions) so that supply can meet demand and stop this boom and bust cycle,” he said.
The Road Ahead
One clear takeaway from the first two days of SIEW is that the energy landscape has changed dramatically since the first edition of the event 10 years ago, and will continue to evolve at a rapid pace as technology progresses and industry players adapt. This will have significant implications that the industry will have to prepare for in the coming years.
Said IRENA’s Mr Adnan: “There is immense opportunities but also immense disruption that threaten business models of incumbent industries. If we are able to adapt in the right way, the next model of growth will be one that is low carbon and sustainable.”