Power and renewables

Securing our renewable energy future

Welcome to the latest series of the DNV GL Talks Energy podcast, hosted by Mathias Steck, Executive Vice President, DNV GL – Energy. Each week, we will be 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.

Securing our renewable energy future

In 2019, the Saudi Arabia oil facility attacks raised huge questions about energy security - with the incident wiping out nearly half of the country’s estimated output and 5% of global production.

In this episode, Keisuke Sadamori, Director of Energy and Security Markets at the International Energy Agency (IEA), explores energy security in the age of renewables. He explains that incidents of extreme weather are destabilizing renewable energy systems and infrastructures around the world, and this will likely become a major energy security concern in future.

In addition, Keisuke also examines how digital technologies may be opening the door to a new mix of cyber threats, which could impact on the renewable energy industry and the rate of its adoption.

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. My guest today is Keisuke Sadamori, Director, Energy, Markets and Security of the International Energy Agency (IEA). Welcome Keisuke.
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KEISUKE SADAMORI Thank you very much for including me.
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MATHIAS STECK Keisuke, we want to talk about energy security today. But before we do this it would be great if you could give us a bit of background of yourself and tell us about IEA’s mission.
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KEISUKE SADAMORI Okay. So, IEA’s mission is to ensure the secure, affordable and the sustainable supply of energy. And also, these days it is important for us to reach out to the non-member countries, in particular the emerging economies around the world, as they are increasing presence in the global energy markets. My role as the Director of Energy, Security and Markets, so, I'm responsible for the short-term market analysis and also the energy security issues, which includes the management of an emergency response system by the IEA member countries.
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MATHIAS STECK We had very recently attacks on two major oil facilities in Saudi Arabia, which I know IEA has monitored closely. What does this tell us about the current security of our modern energy systems and how worried are you about how volatile the world feels right now?
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KEISUKE SADAMORI The recent attack on the Saudi Arabian oil facility, this was a real wakeup call for the need for the oil supply security system by the IEA. The incident happened in the context of a very well-supplied market as the OECD industry inventory level is close to 3 billion barrels. And in addition to that, our member countries, they have the dedicated strategic emergency reserve of around 1.6 billion barrels. So, in the end, thanks to the very quick recovery by the Saudi Aramco in production capacities, we did not need to use this emergency reserve. But the existence of this cushion in supply and also the willingness of the IEA and its member countries to consider using the emergency reserves in case of necessity did give assurance to the market and avoided the somewhat panicked reaction in the oil market by the global market players. So, we consider that the IEA’s oil response systems will continue to be important in order to ensure the stable supply of global oil.
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MATHIAS STECK So, threats on the security of oil or around oil have always been there, but we now see quite a shift, the rise of renewables in the energy transition. How do you see the energy security changing in this scenario in terms of who key players would be, how security could be breached? And would you think that a world with more renewables is rather safer than a world as we have it today?
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KEISUKE SADAMORI Of course, renewables are mostly domestic resources and therefore will not face the supply security threats like the case of oil. But on the other hand, the high share of variable renewables in the electricity systems bring in a totally different type of security issues, which is the need for ensuring the stability of the electricity markets and also, in the longer term, need to ensure the needed investments in order to provide flexibility to the entire electricity supply systems. And also, we are seeing somewhat kind of different trends as well, as we are seeing more digital technologies brought into the energy systems and that opens the door to cyber security threats as well. And therefore, we consider that the electricity security issues responding to this new type of supply security threats are very important. And so, the IEA is now working focusing on these new types of electricity security matters.
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MATHIAS STECK Keisuke, as you already mentioned when you introduced the mission of IEA, IEA works to ensure reliable, affordable and clean energy for its 30 member countries around the world. In DNV GL’s recent Energy Transition Outlook we call for five times more wind, ten times more solar and 50 times more batteries for EVs by 2030 to limit global warming. What are your members doing to help with this over the next 11 years?
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KEISUKE SADAMORI So, IEA’s flagship publication, World Energy Outlook has what we call the sustainable development scenario which shows what is needed to ensure that the global energy development follow the path consistent with the Paris Agreement, climate change and other global sustainability goals. And in the scenario, we also expect a massive amount of new deployments over the variable renewable generation sources and also, this calls for new technologies like the storage at the very massive scale. So, in that respect, we are also drawing a needed picture for achieving the sustainable energy development path toward the future.
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MATHIAS STECK I’d like to challenge you a bit on the criteria to become an IEA member. Like, before becoming a member of the IEA today, a country must demonstrate that it has crude oil and product reserves equivalent to about 90 days of the previous year's net imports, to which the government can have immediate access. But now, when we change to renewables, how will your criteria evolve in that energy transition? For example, could you think about a 90-day oil test be replaced by a 90-day renewables test?
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KEISUKE SADAMORI This 90-days oil test cannot simply translate to the renewable requirement as renewable is a kind of domestic sources and it continues to flow to all member countries. So, it doesn’t require any imports from foreign countries and there is no risk in terms of trade supply routes. So, that’s a kind of a totally different story. Having said so, when I come back to this 90-day requirement, as I said, the oil continued to be the very crucial dominant fuel for the transportation system for a while. There are some moves like the new technologies like the electric vehicles, but all in all it takes a long time to replace the oil’s role in the transportation systems, in particular the long-haul trucks or ships or even navigations. So, we consider that oil will have a role to play in the coming decades. And also, it is very important to know that the oil demand in the petrochemical sector will grow quite strongly. And therefore, at least for a while, in the coming decades, we consider that this 90-day requirement for oil will continue to be very important for the entire energy security.
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MATHIAS STECK Dr Birol, the IEA’s Executive Director recently discussed the fact that power systems need to become more flexible and market designs adapted in order to avoid unintended impacts on electricity security. How vulnerable are our energy grids to extreme weather?
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KEISUKE SADAMORI Recently my home country, Japan, was hit by a very strong typhoon which caused massive trouble in electricity supply. So, there are some outages in some parts near Tokyo and they took a long time to fix the trouble. And there is also the wildfire happening in California. So, I see that the extreme weather events are impacting the energy security, in particular the stability of the electricity supply systems and the infrastructure. And we’re also seeing the increasing temperature affecting the operation of the power generation sources, for instance. So, at the very height of the heat wave, which attacked France, the river temperature increased. So, one of the nuclear power plants had to shut down because of the lack of cooling capacity. So, all in all we are seeing kind of increasing impacts and effects from the extreme weather events. So, I think that the resiliency against such climate change and increasing extreme weather events has to be discussed in order to get better prepared for such threats on the energy systems.
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MATHIAS STECK Any transition involves change and disruptions. How do you see that the energy transition is impacting on investors and their ability to make investment decisions in these turbulent times?
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KEISUKE SADAMORI We’re seeing that more and more investors are trying to incorporate the sustainability concerns in their investment decisions. But at the same time, we need investment to ensure that energy supply in all fields will continue to be ensured towards the future. So, as we presented in recent investment reports and also the World Energy Outlook, the necessity of ramping up the investment is crucial. In particular, low carbon generation sources like the variable renewables wind and solar, they all require the large amount of investment at the outset. And those investors will need to recover the money by the long-term operations. So, we need a very good framework in order to ensure the investor confidence in the energy infrastructures.
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MATHIAS STECK Keisuke, I have one last question. What is IEA doing to harness the new collective focus on climate emergency to progress the energy transition?
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KEISUKE SADAMORI So, IEA has recently been working on what is called the Clean Energy Transition Programme and this is the capacity building training programme for the emerging economies non-member countries. And so, the basic goal is to support those non-member countries in the area of energy efficiency, renewable deployments and adoption of various low carbon clean energy technologies. In terms of the analysis, the IEA released the World Energy Outlook 2019 last November and this includes the sustainable development scenario which shows what actions are needed in order for the governments around to world to stay on track to achieve the sustainability goals including the climate change mitigation, air quality and energy access for old people. So, all in all, we would like to work with the member governments and also the major non-member governments to accelerate the transition process for cleaner and more sustainable energy systems.
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MATHIAS STECK Thank you very much, Keisuke, for these valuable insights on energy security. And thank you very much for listening. That was Keisuke Sadamori, Director, Energy, Markets and Security of the International Energy Agency.
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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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