How energy choices today will shape tomorrow’s economies
The global demand for electricity was explored in the Strategic Panel ‘Electrification: critical innovations for our future energy systems.’
Francesco La Camera, Director-General of the International Renewable Energy Agency (IRENA,) presented a positive outlook, stating that renewable energies will take over in the future, and that there was no doubt that the world was moving in this direction.
“Last year, 23% of the world’s energy was electricity. The goal is to get this to 30% by 2030, and over 90% by 2050,” he explained.
“In my opinion, the trend is clear. We will see renewable energies conquer the world. Any country that delays their progress towards renewables will pay the cost with their economy in the next 10 to 20 years, as they will not be as competitive.”
Offering a different and somewhat provocative opinion, Doug Kimmelman, Executive Chairman & Founder of ECP, suggested that coal would be the “surprise piece of the equation” in the future of energy and electrification.
“Coal is going to be around longer than you would expect, because we need it to make energy reliable,” he declared.
“Believe it or not, the number one energy source on the planet is not oil. Coal is just in front, and whatever you think about it, we need it to keep people alive. We need to keep the lights on. We've got all this demand coming as well. As has been said before at this conference, it is no longer about the ‘energy transition’, but ‘energy addition’.”
When it comes to the question of how to close the gap between energy demand and supply, Dr. Michele Fiorentino, President of Energy Solutions at XRG said that the biggest problem was that the world’s energy grid and electron supply chain was deeply inefficient.
“The current demand for power is more than we can supply, but closing this gap is nothing we can’t do. Eventually, demand will equal supply, and then stranded projects will become another concern for investors.”
Dan Brouillette, 15th Secretary of Energy for the United States, said that the biggest challenge for energy projects in the U.S. was getting the required permits, adding that this was delaying projects.
“The U.S. is now the largest producer of oil and gas in the world, and the largest natural gas exporter in the world. We know how to produce electrons too, the challenge is getting them to market,” he said.
“This is because policymakers have tended to view energy from an environmental viewpoint, and this has slowed down the release of permits.”
Brouillette added that while all experts have different predictions and figures in mind, he believed that the U.S. should be generating around 80 gigawatts a year.
“We're not anywhere close to that today,” he said.
“Other countries, particularly China, are creating multiples of that. It’s lack of speed and scale that is holding us back. We need to move faster.”
Kimmelman listed a few sources of demand for electricity in the U.S., noting that some were quite unexpected.
“AI is not the biggest piece, which I think will surprise some people. Data centres take up about 2% of total power generation capacity in the U.S.,” he said.
“On top of that, we've got the onshoring of manufacturing. We have 200 industrial manufacturing facilities under construction in the U.S. today, and building them is very electricity intensive. Around 30% of our LNG production is also exported, and the liquefaction of LNG requires a lot of energy. Electric vehicles are not going away either, and cryptocurrency mining is another big source. In the state of Texas, more electricity is used for crypto mining than in the entire city of Houston.”
Talking about the price of electricity, Kimmelman concluded that higher prices might well be coming, but that this would be for the greater good.
“We have heard this week about how AI will improve intelligence and take us forward in education, health systems, and defense. For all this prosperity for the world, I don’t mind paying another 10 to 15% for my electricity,” he concluded.
“I also think hyperscalers will bear the brunt of the increase anyway, as their operating costs for electricity are currently only at around 10%. So, while higher prices may well be coming, I think it will come with a lot of other benefits for society.”
