Power and renewables

The energy transition: Fast, but not fast enough?

Welcome to the final episode of the latest series of the DNV GL Talks Energy podcast, hosted by Mathias Steck, Executive Vice President, DNV GL – Energy. Each week, we have been joined by the world’s leading energy experts to discuss their insights and opinions on how governments, business leaders and wider society can help accelerate the energy transition.

The energy transition: Fast, but not fast enough?

According to DNV GL’s recent Energy Transition Outlook 2019 report, the world needs five times more wind power, ten times more solar power and fifty times more battery storage if we are going to limit global warming by 2030.

In this last episode of the current series, Lucy Craig, Vice President of Technology & Innovation at DNV GL – Energy, looks back at some of the topics discussed during series 8 to determine what the future really holds for the renewable energy sector.

Concluding that we already have the technologies required for change, Lucy explains that the focus should now be on scaling-up existing technologies, as well as introducing the extraordinary policy action needed to support their uptake. With ten years left to prevent the catastrophic impact of climate change, now is the time to act by ensuring that we accelerate the changes that we are already seeing today.

Read the transcription of this episode here

Transcript:
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NARRATOR Welcome to the DNV GL Talks Energy podcast series. Electrification, rise of renewables and new technologies supported by more data and IT systems are transforming the power system. Join us each week as we discuss these changes with guests from around the industry.
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MATHIAS STECK Welcome to a new episode of DNV GL Talks Energy. Our guest today is Lucy Craig, Vice President and Director of Technology and Innovation at DNV GL - Energy. Welcome Lucy.
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LUCY CRAIG Hello Mathias. It's a pleasure to be here.
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MATHIAS STECK Lucy, you have an incredible background in the industry. You have a PhD and an Electrical Power Engineering. You have worked for renewables for 30 years, including wind and solar, and you have been heavily involved in DNV GL's Energy Transition Outlook, but there is so much more you have done than the things I've just mentioned. So, it would be just great if you could give us a little bit of your background.
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LUCY CRAIG Thank you, Mathias. Well, I started working in the wind energy industry about 30 years ago and at that time, wind was really at the very beginning of its development. Wind turbines at that stage were rated at 300 kilowatts, so they were farm-like, robust machines, but we have seen over those 30 years a tremendous development in technology. And then I started working in solar about 15 years ago and at that time, really, solar was not considered as a commercially viable technology without substantial support from feed-in tariffs. So, we have seen both those technologies really development dramatically over the time that I've been working. It's been a very exciting path to watch.
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MATHIAS STECK All right. So, I mean, definitely, the industry has come a long way since it started and it's now part of the energy transition to mitigate climate change, but how does your day-to-day work with regards to DNV GL's Energy Transition Outlook and what is actually the Energy Transition Outlook's purpose with regard to economic, environment, and social matters?
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LUCY CRAIG Well, DNV GL has an overriding purpose to safeguard life, property and the environment and then 70% of our business is related to energy, across the sectors that we're working in, maritime, oil and gas, and the power and renewable sectors. And so, we first started issuing the Energy Transition Outlook three years ago, this year is our third edition, because we could see that the very rapid changes we're going to see in the energy sector will have an important impact on our customers and other stakeholders across the industries where we're working. However, these changes will also have an important impact on our own business. So, while we see it as important means of discussing with stakeholders the changes that will happen, it is also informing our own strategy within DNV GL.
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MATHIAS STECK Lucy, since this is the last episode of this series, that gives us the great opportunity to look back a little bit on what the colleagues from the industry have shared with us. So, what are the topics standing out for you in the transition?
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LUCY CRAIG Well, of course, we need to see a very rapid increase and we will see a very rapid increase in the development of wind. I mentioned earlier that I've been working for 30 years in the wind industry and so, it may seem that we are now reaching maturity, but actually, if we look forward over the next three decades, we will see that there will be a huge uptake in both onshore, but particularly offshore wind. And the technology that I mentioned 30 years ago is now much more sophisticated and we will continue to see it developing in sophistication and reducing in cost, but also solar. In fact, we will see an even more rapid uptake in solar PV technology. And with these variable renewables, we will also see a rapid increase in energy storage because as variable renewables have a larger impact on the electricity system, we will need to have storage mechanisms to be able to compensate the variability of those resources. And then we see new technologies such as electric vehicles and that will play an important part in the flexibility of the demand as well as providing storage capability for the electricity network. So, all the technologies that we have looked at through the podcast series will be very relevant for the energy transition and we studied them in the Energy Transition Outlook.
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MATHIAS STECK Three important pillars the energy transition is built on; policy, investment, and technology. The following, I would like to look into these in a little bit more detail starting with technology. We know as you also just elaborated, we do have the technology to generate renewable energy. We do have the technology to store it, but now it's all about to scale it and to scale it even faster than you foresee it in the Energy Transition Outlook to finally close the gap which is still left to 1.5 degrees. So, what are the requirements do you think to make this scaling happen?
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LUCY CRAIG Well, what we set out in our report this year is that, of course, there will be a very rapid change, but if we carry on on the current trajectory, it's not sufficient to meet that one and a half degree temperature rise. In fact, we're on track to have a temperature rise by the end of this century of around 2.5 degrees C. So, we really need to have very fast action over the coming decade to reduce that temperature rise. And that means an even more rapid increase in the installation of wind. We have carried out calculations which indicate that we need to increase wind around five times to three terawatts. We need to increase solar ten times to five terawatts by 2030 and we need to increase the production of batteries for electric vehicles and for storage by 50 times to meet the requirements that we will have for extended energy storage over the coming decade.
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MATHIAS STECK So, this whole transition will cost a tremendous amount of money. As we have learned in the past from renewables, when it started it was dependent on subsidies and feed-in tariffs. How do we incentivize investors to actually invest into this transition? Where is the money coming from, these large amounts of money?
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LUCY CRAIG Well, I think the first point I'd like to make is that, actually, the reason why we see this very rapid uptake in wind and solar is because these technologies are now the lowest cost way of meeting the rising demand from the growing world's population. So, our Energy Transition Outlook is based on matching the growing demand with the most economic form of supply. So, wind and solar in many parts of the world are already the lowest cost form of generation and during the coming decades will become even more so across the globe. Of course, this very rapid uptake in wind and solar will mean huge investment in transmission and distribution networks, and we have also looked in some detail at the extent to which new transmission distribution networks will be required and the level of investment needed. I think the overriding outcome is that the actual percentage of GDP spent on the energy sector will be less in the coming decades than it has been up till now. So, huge investment needed, but because of the growth of GDP and because these technologies are actually very cost-competitive, in fact, it will be a lower percentage of the economy than it currently is. We've estimated that the investment in grid infrastructure will be about 1.3 trillion euros. That will be needed to build new HVDC transmission lines bringing, for example, large amounts of offshore wind onto land, also to interconnect markets in Europe, but also in Asia and across the globe, and then a very large investment in the distribution networks. We're able to see increasing demand, for example, from electric vehicles, but also, the increasing generation that will be embedded in the distribution networks.
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MATHIAS STECK So, we have the technology. We are relatively optimistic on the investments. Do you think it is enough to now leave it to the traditional market forces to kind of make this change happen or do we also need policy?
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LUCY CRAIG Well, I mentioned earlier that if we are really to limit temperature rise to 1.5 degrees C then we need extraordinary policy and actions. And that policy is needed in many different areas to ensure that we have energy efficiency measures and I think a very good example of where policy is being effective is in electric vehicles. So, where we see the uptake of electric vehicles is in Norway leading in Europe, in China, of course, the country where we have more electric vehicles on the road than in the rest of the world combined. And in both those countries, we've had clear policies to encourage the uptake and that is what is needed, but not just for electric vehicles, for all the different measures that we have identified in our ETO.
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MATHIAS STECK So, on that basis of all what you've just described, we have established that we still do have a gap. What would be your call for action to industry investors, governments to make that gap at least smaller?
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LUCY CRAIG Well, in 2018, the UN sent out a warning that we had 12 years left to prevent catastrophic climate change. We now have ten years left and so, we are the last generation that can really prevent this catastrophic impact of climate change. And so that is my call to action. Now is the time to take action and ensure that we accelerate the changes that we are already seeing.
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MATHIAS STECK Thank you, Lucy. I have one final question for you. So, DNV GL has now published this Energy Transition Outlook third time in a row. So, how do you harness this new collective focus on climate emergency and help to progress on the energy transition?
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LUCY CRAIG Well, we in DNV GL are working with stakeholders across the energy value chain. We work with governments and regulators. We work with OEMs. We work with project developers. We work with financiers. We work with utilities. And so, when we are working with all of those stakeholders, we are supporting them in their work to accelerate the energy transition.
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MATHIAS STECK Thank you very much for your insights, Lucy, and thank you very much for listening. That was Lucy Craig, Vice President and Director of Technology and Innovation of DNV GL - Energy.
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NARRATOR Thank you for listening to this DNV GL Talks Energy podcast. To hear more podcasts in the series, please visit dnvgl.com/talksenergy.

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