Energy industries should learn from ICT sector – World Economic Forum
A new report by the World Economic Forum highlights the need for innovation in the energy sector in order to establish energy security for the future.
“The challenge of transforming the energy system is tremendous, given the size of the capital requirements, the need for new technology and market adoption. Our report not only demonstrates the importance of combining the forces of investors, technology providers and policy-makers to boost innovation, but signals the need to engage energy customers and learn from innovative experiences in other industries,” said Christoph Frei, Senior Director and Head of Energy Industries at the World Economic Forum.
Watch World Economic Forum interview with Christoph Frei.
The report, Solving the Energy Puzzle Through Innovation, was produced in partnership with Cambridge Energy Research Associates (CERA) and posed the main question: How can we deliver secure, affordable, low-carbon energy to a global population that is expected to grow from 6.4 billion today to more than 8 billion by 2030?
According to the authors of the report, the current energy path is unsustainable, which if continued unchanged would result in a 50% increase in demand by 2030, plus the associated carbon emissions.
“The key to getting the global energy system onto a more sustainable path is to break the links between economic activity, energy demand and GHG emission. This is by no means a trivial task and innovation will be key to solving this ‘energy puzzle’,” WEF said.
One of the key findings of the report draws a direct comparison between the high-tech industry and the energy sector.
The report says:
“Several interesting lessons flow from comparing energy to rapidly-changing high-tech industries:
• Incremental change is important. Disruptive technologies will take a long time to develop and take root. In the meantime, innovations within the current industry framework can be crucial. For example, the magic of cumulative effects allows an energy efficiency improvement of 2% per year to result in a 22% improvement over only 10 years.
• Open innovation serves to broaden the base of new technologies. No one knows which development will be the source of the next energy breakthrough. An atmosphere of open innovation is gaining ground and will be crucial to ensure that new ideas find applications in the energy industry. For instance, ICT technologies may help lower energy consumption.
• Opportunities exist for cooperation between incumbents and new entrants. Given the scale of growth in energy demand, there is room in the market for new entrants along with the incumbents. New entrants may rely on the incumbent’s infrastructure, and a culture of open innovation allows incumbents to take advantage of new entrants’ innovations.
• Energy customers will be part of the solution. Energy customers – individuals as well as commercial users – are the final arbiters of success for any innovative product. Technologies that allow better monitoring and the optimization of energy use can increase consumers’ involvement and change their behaviours. A shift towards increasing the “consumerization of energy”, similar to what has occurred in the ICT industry, would challenge traditional energy delivery models.”
Read my earlier comment on how the energy sector is starting to look increasingly like the IT industry with accelerated product development (new generation paradigms), market liberalisation (unbundling the power grid), and new business models (energy auctions and renewable energy certificates).
Related posts:
- Going green among top 10 trends for China’s ICT sector in 2008
- U.S. tech adoption led to dramatic improvements in energy efficient and productivity – ACEEE report
Category: Applications, Climate change, Global energy, Renewables
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