Knowing the reference context and identifying key trends in advance allows us to direct the business model and guide the ongoing energy transition. Macrotrends in a technologi cal context are driving a rapid electrifica tion of global energy demand, increas ingly linked to decarbonized sources. This need is particularly felt in many big cities the world over, in line with growth trends in the global population and ur banization. Key elements will be the development of urban infrastructures, increasingly sophisticated digitalized networks and suppliers of software plat forms that can meet the new needs of customers.
The World Energy Outlook 2018 (WEO 2018) of the International Energy Agen cy (IEA) has stated that the world is gradually building a different energy sys tem model, but with fundamental as pects that still have some weaknesses:
- affordability: wind and photovolta ic costs are continuing to fall, while oil prices went over 80 dollars a bar rel in 2018 for the first time in four years; moreover, in some countries, reforms concerning subsidies for the use of fossil fuels are at risk;
- reliability: oil and gas procurement risks are still present. At worldwide level, one person out of eight does not have access to electricity, and the electrical sector has to tackle new challenges, from a necessary flexibil ity to cyber security;
- sustainability: after three years with steady values, energyrelated global emissions of CO2 went up by 1.6% in 2017 and this trend was also con firmed in 2018, deviating from the trajectory consistent with achieving climaterelated goals.
Affordability, reliability and sustainabili ty are related and call for an integrated approach in terms of energy policy. In the WEO 2018’s New Policies Scenario (NPS), growing income and a 1.7 billion increase in the world population, main ly in urban areas of developing econo mies, will lead to an increase in energy demand worldwide by over a quarter from now until 2040. In the absence of continual improvements in energy ef ficiency levels, this increase would be twofold that estimated. Electricity is the undisputed lead player on the ener gy stage, and is a fundamentally impor tant driver of change to achieve many of the world’s objectives for sustainable development.
In advanced economies, despite a modest growth in demand for electricity, huge investments are necessary to support the evolution of the generation mix and modernization of infrastructures. In developing econo mies, with a demand for electricity that has increased twofold, strategies for economic development and reducing emissions must instead target electric ity that is clean, universally accessible and affordable.
In the New Policies Scenario, renewa bles take the place of coal in the elec tricity mix: the amount generated from renewables will go up from the current figure of 25% to approximately 40% in 2040; the trend instead will be reversed for coal. An increase in renewable energies, particularly photovoltaic and wind power, requires an electrical system that can operate flexibly, to guarantee continuity of supplies.
In 2017, for the first time ever, the num ber of people without access to elec tricity fell below 1 billion, but trends in access to energy are far from achieving global goals. In 2040, over 700 million people, particularly in rural areas of SubSaharan Africa, will still not have ac cess to electricity.
In this landscape, companies must adopt an integrated approach to man aging the impact of energy transition on the environment, people and com munities (the “just transition”). Climate change, social inclusion, the develop ment of new, innovative and sustaina ble products and services will become key aspects for managing growth and promoting the 17 Sustainable Develop ment Goals of the United Nations.
This approach must be taken by all players in volved and must follow a common path towards achieving sustainable develop ment for the planet.