Part 3: Grids from a box and solar as the new oil: The emerging energy players

As Secretary General of the World Energy Council, Christoph Frei has spent a decade defining the world energy agenda and bringing together energy leaders and decision makers to build a sustainable future. In the third of a three-part series, Frei talks about impending energy revolutions in Asia, Africa and South America. 

 

By Marc Engelhardt

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Energy Stories: Christoph Frei, this year’s triannual World Energy Congress is taking place in Abu Dhabi. The Gulf region has long been all about oil and gas, but which new drivers for the energy transition in the Middle East and Gulf states do you expect?

 

Christoph Frei: The biggest success story that I expect in the Middle East is obviously solar. Over the past five years, cost has gone down by 80 percent. Two years ago, the cheapest solar energy was produced in Chile with a price below 3 cents per kilowatt-hour. Now the front-running projects today produce a kilowatt-hour for less than 2 cents. And the Middle East and the Gulf states obviously have very high solar exposure. They also have land that’s easily accessible and diligence in implementation of those projects. The region is looking for diversification strategies from traditional resources and will take advantage of new opportunities in the renewable space.

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China is on course to become the world’s biggest economy – which trends do you see there?

 

China has a multitude of drivers. Decarbonization is a big issue, with nuclear being built like nowhere else in the world and with the greatest ambition in electromobility. China is also looking at smart infrastructure and digitalization in a very systematic way. So, there’s an amazing innovation push coming from China, but it is also still building new coal plants with a global effect. However, China is very conscious about pollution and health, so it understands it needs to get out of coal in the long term.

And the rest of Asia?

 

India has really pushed the energy access agenda in a broad way, and they have also formulated a huge renewable objective of 175 gigawatts by 2022. When I met the minister of power recently, he told me that they might actually reach more than 200 gigawatts. And the industry is busy implementing these projects. Last but not least, we have all the smaller players. Singapore invests massive amounts in digitalization, particularly in modern cities and rethinking how cities can work better. So a lot of innovation could also come from there.

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Let’s look at Africa, a continent where many see huge potential for decentralized power sources. Do you share that expectation?

 

Definitely. Decentralization in Africa is not only an opportunity, but also a necessity. In rural Africa, central infrastructure can be 100 kilometers away, so the delivery of energy becomes a leapfrogging question. In western Kenya, for example, you have rural families living on 2 to 3 dollars a day, spending 80 cents of that for kerosene or other ineffective power sources. Now if we can offer to that family something from renewables that doesn’t cost more, they will go for it.

 

Is that already happening?

 

Yes! Some regional companies have come up with leasing models for plug-and-play boxes. They come with a solar cell, a battery, sockets and a cell phone charger. All in all, it is a highly optimized DC set delivered for somewhere between 300 and 600 dollars. You lease that over three years at a very small premium, so leasing rates are around 40, 50 cents per day and directly deducted from your cell phone. And there are similar models which are even more lucrative if you have a critical mass, somewhere from ten households. If you can then connect just one additional household, the gains are so high that you probably pay only 20 percent for it. So there are plenty of business models, and they are evolving quickly.

In Latin America again, it’s a different picture. What challenges do you foresee?

 

In a way, Latin America is spoilt for choices. Today, it’s a largely hydro-exposed continent, Brazil in the most extreme way, but it’s true for many other countries. The recent dramatic El Niño phenomenon has shown that with this massive exposure also comes fragility – if, for example, you have droughts affecting your storage basins or huge flooding in the coastal areas. So one discussion that has moved much higher on the agenda in Latin America is regional integration, because that’s how you can solve this risk. If rainfall patterns differ from one country to another, then you can compensate by reach and integration. Regional integration is critical for the ability to continue using the existing hydrosystem and expand it further, obviously with some more renewables built on top of that.

 

Looking ahead for the next ten years: Will energy transitions worldwide be a success?

 

There’s so much inspiration, so many ideas and positive dynamic coming out of the broad industry innovation capability that I’m deeply optimistic that if we unleash this even further and apply the right policy framework, then there’s going to be amazing progress over the next ten years. If one thing has brought us closer to seeing the climate challenge solved, it is the surprising speed of innovation.

 

And what is the third scenario like?

 

The third route is one where we do not put as much muscle into the international agreements and we end up in a fragmented, national-resource-oriented context. There would be no guidance from an internationally agreed carbon price. Also, if you only use local technologies, you will use second best, and they will probably be neither cheap nor clean.

2019-08-08

Marc Engelhardt reports from Geneva on the UN, international organizations, and global developments in economics, science, politics and energy. He has worked as a correspondent for a number of media outlets, including the Neue Züricher Zeitung, ARD and Die Zeit.

 

Combined picture and video credits: World Energy Council, Raphael Zubler 

About

Dr. Christoph Frei was born in Switzerland in 1969. He holds diplomas in electrical engineering and econometrics as well as a Master in energy systems and in applied ethics. Frei received a PhD from the Swiss Federal Institute of Technology in Lausanne in 2001 and has an assignment as Adjunct Professor at his alma mater. His work and his publications have covered energy scenarios, climate and labor market policy, energy water nexus and the future of utilities. Frei speaks English, French, German and some Italian and Spanish. He is married and has three children. In April 2009, he became the World Energy Council’s fifth Secretary General.

 

With more than 3,000 members from government, private and state corporations in over 90 countries, the World Energy Council is the biggest network of leaders and practitioners in the energy field. It was founded in 1923 by visionary energy leader Daniel Dunlop who brought together 40 countries to discuss the problems then facing the global energy industry. Its aim, now and back then, is to provide impartial information for energy strategies on all levels, focusing on three main challenges: energy equity, including access and affordability; energy security and growth; and environmental sustainability, including mitigation and adaptation. The World Energy Congress is its triennial flagship event: In 2019, more than 200 speakers contributed to discussions in Abu Dhabi. Annual reports include the World Energy Issues Monitor and the World Energy Trilemma Index.

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