Interesting information for those who is interested in analytics and statistics. International organizations are watching closely what is going on in the world in the context of the implementation of alternative energy programs. Second part. First part here.


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Energy Efficiency

Growing investment into energy efficiency

Investment in energy efficiency once again expanded, despite persistently low energy prices, reaching $231 billion in 2016.While Europe spent the most on energy efficiency 2016, the fastest growth occurred in China, where a strengthening of energy efficiency policies is helping to reduce the energy intensity of the economy, alongside structural changes. Globally, most investment – $133 billion – has gone to the buildings sector, which accounts for one-third of total energy demand.

Room for improvement in performance standards

While the energy performance standards of equipment and appliances in emerging economies are gradually tightening, there is still a lot of room for improvement. For example, new air conditioners sold in 2016 will add up to 90 terawatt hours (TWh) of power demand globally and 10 TWh in India alone, exacerbating peak loads. This could have been 40% lower if the highest efficiency standards had been adopted in all countries.

In 2016, the numbers of heat pumps sold grew 28% and electric vehicles (EVs) grew 38%. These technologies improve overall efficiency and if co-ordinated with renewables deployment could help decarbonise space heating and mobility, though so far their impact on oil and gas demand is small. The 750 000 EVs sold in 2016, another record year for EVs, are expected to reduce transport oil demand by only 0.02%.

The role of digital technologies in the energy sector

The future role of digital technologies for generating, handling and communicating data has taken centre stage in energy discussions. Approximately $47 billion was spent in 2016 on infrastructure and software directed towards digitalisation of the electricity sector to facilitate more flexible network operation, demand management and integration of renewable resources. Meanwhile, the oil and gas industry is scaling up its utilisation of digital technologies to improve performance of its operations while keeping costs under control.

Spending on energy research and development remains flat

Information on research and development (R&D) expenditures per technology area is scarce, especially for private sector spending. However WEI 2017 tracks $67 billion of spending on energy research and development worldwide in 2015, based on a bottom-up assessment of spending by public and private bodies.

Analysis of this total reveals some important trends. Most critically, despite growing recognition of the importance of energy innovation, spending on neither energy technology generally nor clean energy specifically has risen in the past four years.

Europe and the United States are the largest spenders, each accounting for 28% of the total, whereas China is the highest spender on energy R&D as a share of GDP, after overtaking Japan in 2014. Although public and private sources each represent around half of the R&D total, most private R&D goes to oil, gas and thermal power generation, whereas most public R&D is devoted to clean energy technologies.

Important carbon, capture and storage projects, largely financed by companies, are starting operation in 2017, but current policies do not support a significant uptick of spending in this decade on these long lead-time projects, as evidenced by the lack of new projects entering construction.

Implications of energy investment

Falling investment points to future energy security risks

An 18% decline in global energy investment since 2014 has not yet raised major concerns about the adequacy  of energy supplies in the short-term, but falling investment points to a risk of market tightness and undercapacity at some point down the line.

Energy investmenthas been eased by excess capacity in global fossil fuel supply and electricity generation in some markets as well as cost deflation in many parts of the energy sector.  A drop in upstream oil and gas activity and the recent slowdown in the sanctioning of conventional oil fields to its lowest level in more than 70 years may lead to tighter supply in the near future.

Given depletion of existing fields, the pace of investment in conventional fields will need to rise to avoid a supply squeeze, even on optimistic assumptions about technology and the impact of climate policies on oil demand. The energy transition has barely begun in several key sectors, such as transport and industry, which will continue to rely heavily on oil, gas and coal for the foreseeable future.

Electricity sector flexibility remains a concern

Continuous investment in flexible assets to ensure system adequacy during periods of peak demand – and to help integrate higher shares of wind and solar PV capacity into the system – is essential to energy security. Yet it is unclear if today’s business models are encouraging the necessary investment in flexible electricity assets.

The bulk of the flexibility that has been introduced so far has come from existing assets, primarily dispatchable capacity (mainly gas-fired plants and hydropower) and transmission interconnections. In 2016, the amount of new flexible generation capacity plus grid-scale storage that was sanctioned worldwide fell to around 130 GW – its lowest level in over a decade. This reflects weaker price signals for investment stemming from ongoing regulatory uncertainty and flawed market designs.

For the first time ever, this capacity was virtually matched by the 125 GW of olar PV and wind commissioned in 2016, whose construction times are generally a lot shorter. The 6% increase in electricity network investments in 2016, with a larger role for digital technologies, supports grid modernisation and the ongoing integration of variable renewables. However, new policies and regulatory reforms are needed to strengthen market signals for investment in all forms of flexibility.

Slowing low-carbon generation

Although carbon dioxide emissions stagnated in 2016 for the third consecutive year due to protracted investment in energy efficiency, coal-to-gas switching and the cumulative impact of new low carbon generation, the sanctioning of new low-carbon generation has in fact stalled.

Even though the contribution of new wind and solar PV to meeting demand has grown by around three-quarters over the past five years, the expected generation from this wind and solar capacity is almost entirely offset by the slowdown in nuclear and hydropower investment decisions, which declined by over half over the same time frame.

Investment in new low-carbon generation needs to increase just to keep pace with growth in electricity demand growth, and there is considerable scope for more clean energy innovation spending by governments and, in particular, by the private sector.


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