Part 2: From uberization to hydrogen: Trends shaping energy’s future

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 second of a three-part series, Frei talks about digitalization, uberization, sector coupling and must-know industry trends.

 

By Marc Engelhardt

Energy Stories: Christoph Frei, what key trends do energy leaders need to be aware of?

 

Christoph Frei: They need to be aware of the common trends revolving around decarbonization, digitalization and decentralization, the D3, all around the globe. But making them a reality is different everywhere. Take electrification for the last 1 billion people without access to power: Kenya, Bangladesh and Nepal are far ahead, but their strategies are all different. In Nepal it’s all about micro hydro, in Bangladesh about mini and micro grids and a stimulus on financing, while in Kenya it’s the rural entrepreneurs who come up with innovative solutions like micro leasing systems in collaboration with cell phone companies.

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Are regional differences as important when it comes to other trends?

 

Yes, look at resilience for example. There are three main resilience areas that we are observing: cyber risks, extreme weather and the energy-water-food nexus. Cybersecurity is the number one risk in regions where we already have a highly sophisticated, digitalized infrastructure: Europe, North America, some East Asian “tiger” states. Other countries, frankly, do not see that as a priority. We see huge weather exposure in Latin America and parts of the Gulf of Mexico, but also in the Middle East and parts of Asia, like the Philippines. The energy-water-food nexus again is a very big issue in Africa and the Middle East, and slowly we are seeing the water situation becoming more crucial in countries like Spain. After all, electricity production as we know it today is 96 percent dependent on fresh water supply. The dynamic of resilience is very different depending on exposure.

Let’s stay in the global North then while we look at those regional trends. North America for instance has both, infrastructural challenges and latest innovation. Which one will be shaping the future?

 

North America indeed is not one picture: You have the coal states and you also have cheap shale gas. In the Quebec region, you have one of the world’s emerging hydrosuperpowers. Generally, on the electricity side, the aging infrastructure context is important. But the necessary modernization opens up many opportunities to digitalize and introduce the latest technology. The Silicon Valley is a massive inspiration for the world when it comes to learning how to build powerful innovation ecosystems and connect those in a deep way to the industry.

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One innovative issue energy leaders talk about is the uberization of energy, introducing an entirely new way of buying or using energy. How could that possibly be a business case?

 

Take this example: You have 40 million households in Germany, and every household has a fridge. Let’s also assume it’s an energy-efficient fridge of only 100-watt usage. If you multiply these 100 watts by 40 million, that is 4 gigawatts or 5 percent of the peak load in Germany. If you could digitalize these fridges and strike a contract with the owners that says: Every time I’m going to switch your fridge off for a short period of time, you get some benefit – then you could become an aggregator of fridges. You could possibly switch them off all at the same time and move 5 percent of peak demand. That’s a hell of a battery. And of course I’m not only talking about fridges but also about cooling houses, water boilers, car batteries.

So using the capacity in the system could solve Europe’s rising storage needs?

 

It’s one factor, but then we haven’t talked about the gas infrastructure which is a sector capital. Coupling the sectors in a way that the flexibilities are used to its maximum in power-to-X processes will be very important.

Power to gas could push hydrogen as a possible missing link for the energy transition. Do you place high hopes in hydrogen?

 

Definitely. We are all excited about electrification of final demand because it makes electricity greener, but it’s critical to understand that it only solves 20 percent of today’s problem. Eighty percent of our energy footprint is still from fossil fuels. So even if we were to double electricity volumes over the next 20 years, which is by no means trivial, it would take us to a volume contribution of roughly 30 percent. Another figure: If you look at the 100 mega barrels of oil produced every day, translating that into an electricity equivalent would be about two to three times the electricity systems as we know them today – just the oil part! Again, that’s not a small venture. Also, half of the world’s capital is invested in energy and related infrastructure. So rather than kill the molecules, we better see them become green as well. Japan already retrofits existing coal plants to run with ammonia, a hydrogen liquid, NH3. You can use carbon capture and storage to produce ammonia, or even use renewable sources to create hydrogen and ammonia. 

Why is liquid ammonia more attractive than hydrogen gas?

 

You have probably a factor 300 or higher energy density in a liquid. It’s easy to transport through a massive supply chain that is already out there. We cannot manage the energy transition with electrification alone. Molecules will play a huge part for flights, for shipping or heavy-duty trucks. There’s also a role for them in heating cities wherever we have existing molecules infrastructure, and we can produce those molecules in an increasingly green way. It’s important that we go for solutions that are the easiest to implement.

 

Solar as the Gulf’s new oil, new players in Asia and surprising business cases in Africa – all you need to know about the future’s emerging players can your read in the third and final part of our interview series with Christoph Frei.

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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