Energy & Utilities

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Urban water: Crucial challenges and drivers

In light of key trends and challenges, what is the future outlook for urban water utilities?

There have been lots of changes in urban water utilities due to industrialization and consequential urbanization. Due to the water intense industries, utilization of water has increased abnormally and excessive withdrawal of water from the ground has depleted ground water in many areas due to insufficient surface water availability. Drawing water from the ground requires more energy to be used, and in turn, a lot of water is needed for generating energy. Many Government regulations have been enforced to combat this situation, such as rain water harvesting and the recycling and reuse of water in industries and common effluent treatment plants, etc. In some coastal areas, desalination plants have been installed to treat seawater in order to make it drinkable, and although the cost of treatment is high, there is no other place to go to get fresh water. Awareness of water utilization needs to be increased and the practice of conservation of water to be cultivated in people. People need to be aware of the consequences of having no water or less water in the future and thus act accordingly for optimum utilization of water. There is a need for the water authorities to brainstorm for the solutions for future urban water utilities by bringing water experts together and taking necessary precautions now to experience a better outlook in future for urban water utilities. Funds need to be allocated accordingly to balance the water utilities in urban areas.

What opportunities do innovations in nano and biotechnology present for the water sector?

A recent buzz word in various fields is nano technology, and there has been a lot of work happening in the research of nano technology within the water sector. Nano materials are being developed to remove harmful constituents from water. Most of the research in nano technology is happening in the area of water treatment rather than water conservation. Nano materials are developed and used for the removal of pesticides, Arsenic, lead, iron, etc. There is ongoing research for further advancements in this area.
There are a lot of opportunities in the field of water for biotechnology, especially for the treatment of waste water from industries and domestic applications. This will enable people to use the treated water for industrial and other applications, helping to reduce fresh water usage.
Using nano technology and biotechnology, water intense industries can treat their effluent efficiently and reuse the treated water for process and other applications. Industries should aim for Zero Liquid Discharge concept to protect the fresh water contamination, thereby reducing the disease burden on people. More and more technologies need to be developed for water treatment for the removal of total dissolved solids for drinking water applications. Presently people are using Reverse Osmosis technology, which generates a lot of waste water during the process. There is an urgent need to develop alternative technology to Reverse Osmosis where conversion should be closer to 100%. Increasing research in biotechnology to develop new crops which do not require so much water is vital, as agriculture is the major consumer of water.

The global population is expected to reach around 9.5 billion in 2050, which amounts to an estimated 90% population growth in the cities of the developing world. What challenges does rapid urbanisation pose to water utilities, and how will they adapt to manage rising demand and depleting resources?

It is very important to think of future problems regarding water availability due to increasing population. The quantity of total water remains the same and hence there is urgent need for alternate arrangements for water conservation. Increase of population leads to more demand for water for their use. This also increases the industrialization and consequential demand for more water for making more products. Industries need to optimize their utilization of water per product produced. There should be normalization on this aspect for the total water management in industries. Some countries face problems with leakage of water during distribution, a problem which needs to be addressed with new technologies and mitigative measures. Governments of every country need to plan and allocate funds and technical people to think of the solutions for the issues presented by population increase and thus higher demand for water. Resources need to be planned in advance, there should be strict regulations for the proper utilization of water, and Zero Liquid discharge needs to be implemented by regulators and strictly followed. Incentives need to be planned for the industries for their good work in the field of water conservation.

In addition to population growth, what other social, economic and environmental factors are driving the water utilities industry?

Primarily, industrialization due to urbanization is driving the water utilities industry. Agriculture is the major consumer of water and the requirement of water needs to be optimized for this purpose. New industries are evolving day by day to meet the demand of the requirements of the increasing population. Every day, new chemicals are introduced to the environment and these are entering the water bodies and contaminating the water. Most of the water then becomes unfit for drinking due to the increased industrialization and release of contaminants to the water bodies, be it surface water or ground water. Water availability per person is decreasing day by day due to population increase.
Increase in population has a tremendous impact on the water utilities industry with regards to meeting the expectations of people on water supply. Treatment of water is becoming more costly and also has a definite impact on the water utilities industry. Availability of fresh water is depleting due to industries and changing evironmental factors, and rains are decreasing over time due to increased environmental changes.

“Transforming Wind Power: Technological drivers and critical challenges” interview with Rod Poublon

What is the current outlook for the wind power industry?

Wind power has become the most affordable and versatile form of renewable energy, and has reached vastly diversified sites, from agricultural land to mountains, from sea to desert, from single units to gigawatt plants, from industrialised to developing countries around the globe. More than 51GW were installed in 2014 to reach 370GW in total, China having installed almost half of the new global capacity, followed by Europe with a quarter, and North America with almost a sixth. The growth has been sharp and steady over the last 15 years, and should carry on, with new dynamic areas in emerging markets such as China, Brazil, Turkey and Chile compensating for phases of regional slowdowns such as in many European countries (for example, Spain, France and Italy) due to a change of regulatory framework.

What technological innovations will transform both the installation and the physical form of wind turbines?

The transformation of the installed turbine has been related more to scale rather than to the form itself, at least in power-plant scale facilities: hybrid towers (see below) higher than 160m; blades longer than 80m thanks to new profiles, materials and moulding technologies; generators able to produce more than 8MW per unit. Nevertheless an increasing number of segments have appeared to deliver solutions with a specific blend of the core features matching special requirements such as complex topography, low or turbulent wind resource, limited accessibility, far sea, and specific regulatory or technical frameworks. In the future, the diversity of the available machines will further increase, the bar being raised in terms of size for sites that require it. The deepest physical transformation is perhaps to be seen under water, as the support structure (between the turbine and the foundation in the sea belt) is a major area of innovation and technical breakthrough, with a panel of currently available solutions ranging from monopole to tripod, lattice, gravity, and floating structures being in development.

New logistical concepts are being developed to bring ever larger turbines to increasingly difficult sites e.g. in mountains or at sea. Hybrid concrete and steel towers, typically for hub height greater than 100 meters, enable the transportation of heavy steel sheets for the upper part of the tower only, while having the bulky tower base locally produced in concrete. In offshore sites, much is done in the harbour to avoid difficult and risky works at sea. In mountains, on the contrary, parts are brought by new, smaller and more agile trucks and assembled on site. New cranes enable us to build higher, faster, and in a more mobile fashion in order to be ready sooner for the next turbine.

How will the wind power industry evolve to overcome financial obstacles and the issue of unpredictability and intermittence in power supply?

The goal of the industry is to achieve sustainability with as little financial and regulatory support as possible. This depends on the design of the power market, decided by the regulator and government of each country, pushing wind power in or out, depending on whether it honours the availability of power or the production of energy.

The integration of wind power into the current energy-driven market designs requires a power production that would be dispatchable in reasonably predictable volumes convenient for consumption and trading (like conventional power plants). Amongst the various options explored to achieve this goal, the bundling of several facilities of various technologies into virtual power plants (the flexible facilities such as hydro or biomass plants smoothening the less actionable wind power curve) and the addition of energy storage systems combined with smart grid integration, are the most promising.

What is the position of wind power in the future global energy market compared to alternative renewable energy sources?

The advantages of wind power (e.g. high installed power with reduced land use, price) make this technology very versatile and compatible with the current land use of a large number of areas close to energy needs around the planet. It will continue to play a dominant role in terms of new installed capacity, and even more in terms of produced energy. According to EIA, wind power should surpass hydro power within 25 years in terms of installed capacity, becoming the first source of clean power in the world. Solar power should grow at a higher rate but starts from a much smaller base.



How oil and gas producers can take advantage of the new energy environment in 2015?

For many years the discussion on climate change has been on the table. It is obvious that the earth’s climate is changing. The real question is, is it a natural behavior of our solar system or is it triggered by humans and the industry?

Physics tells us that energy cannot be created nor destroyed, it can only be transformed into various forms, such as heat (e.g. steam or hot water), electrical energy, gases (various hydrocarbons in gas or liquid forms). We see this clearly in the operation of nuclear power plants where the heat generated in the nuclear reactor is transformed into electrical energy.

Almost every transformation of energy will have undesired by-products or lost unusable energy forms. The challenge now is to reduce, or avoid, undesired by-products and energy forms. Politics urge the industry to reduce their emissions, particularly CO2 (Carbon-Dioxide, which should force the “Global-Warming”), and many other emissions (like SO2 (Sulphur-Oxide) and NOx (Nitrogen-Oxides) which also have an impact on our climate. The major complication is that these emissions don’t stop on national borders, they move across them, dependent on the weather system which exists at the time. A small difference is between local micro climate, which might be influenced locally only, by small emissions, and the larger influence of large emissions, which may have a regional or a global influence.

This means, in order to archive any success in protecting the earth’s climate, which is changing due to forced industrial emissions and the wasteful use of energy in homes or buildings, we need everybody to participate. This might be difficult to achieve right away, but to start with those which are already known as the biggest waste and emission producers could help significantly.  Having a 70% to 30% rule or an 80% to 20% rule is better than a 100% rule with no result at all.  Bringing ~7 billons humans under one umbrella is nearly impossible, not to mention the different industries at the same time.  This needs to happen gradually over a longer period of time; political rules and economics have to meet in an acceptable way.

As we all know, the primary energy form is oil or coal, but more and more electrical energy is coming from wind driven generators and solar panels.

To produce the equipment that is needed to transform wind or solar energy to electrical energy, will also use energy to be made and will produce unwanted waste. But the real questions are:

  • How long can these equipment’s be economically used?
  • What kind of waste will be produced after decommissioning?

Some other energy forms are also under development like “Hydrogen” (to produce hydrogen, is also energy intensive; you need electrical energy or a lot of heat, to transform other energy forms to hydrogen). It is clear, using “Hydrogen” as clean fuel, has a positive effect on the micro climate where it is used, but not on a larger scale, because of the amount of energy which has to be used to come to the energy form of “Hydrogen”.

The question here is:

  • Can “Hydrogen” be produced with low emissions that are less than the amount of emissions hydrogen creates when it is burned? It will produce nearly 100% water.

There is a large amount of research necessary to find technologies that make other energy forms usable without having a lot of undesired effects and wastes.

A good and feasible alternative could be the use of natural gas (Methane), which is available in many regions across the globe. But of course, there is also a lot of energy needed to get the natural gas out of the ground.

You have to drill and you may need compressors to operate to get the gas out of the grounds. And be sure the natural gas has some other gases, which are coming out of the ground with it (like H2S (Hydrogen-Sulfide), which needs to be removed and safely destroyed. In addition, to store natural gas under atmospheric conditions is not easy. There mainly two possibilities, (1) in a high compressed version and (2) in a liquefied version.

Using the high compressed version (several hundred bars) is used to supply cars, but the amount of gas which can be stored is still limited and it doesn’t matter if it is in the automobile or in the industrial environment. The distribution of high compressed gas is done by special trucks which can transport this form of gas and deliver it to the end user distribution terminals (some gas stations are already selling natural gas). The challenge for producers is to build more stations which sell natural gas. In the end, we need a dense network to make natural available to end users. The other challenge is for car makers since the distance you can drive with one load of compressed gas is not long enough for most users. For drivers in cities, it is already quite convenient with today’s cars. But driving long distances may still take a long time in regards to developments for both car makers and gas distributers.

One option is using natural gas to make electrical energy with gas turbines and attached generators, then using the waste heat for district heating. These combinations currently have an efficiency factor of ~61.7% and soon above ~62%. Gas turbines are very efficient to make electricity, but the current economic situation show that other primary energy forms are cheaper, so the option does not foster political desire.

Another option is using liquefied natural gas which is already utilized in the Oil & Gas industry, because it is the only form where natural gas can be stored and transported in large quantities. The disadvantage lies in the fact that natural gas needs to be cooled down to -162 °C to store it in a liquid form. Not to mention the cooling process also requires a certain amount of energy with another small amount of energy required to keep it cool.

In addition, to get the liquid natural gas back into a form of gas that can be used by end users it needs to be evaporated again. Again, this process will need some energy to make the natural gas available for commercial or industrial use.

But overall, “Natural Gas,” is the cleanest burning hydrocarbon gas of all, as it burns to water a lower amount of CO2. Natural gas can be produced, stored and transported in large quantities which is economically feasible. This should be the favored form for Oil & Gas companies.

Another possibility is the distribution and use of refinery produced gases like “Propane” and “Butane”. These kinds of gases have been used for decades now, but the widespread use has not really been seen.  There is also LPG (Liquefied Petrol Gas) which is offered at gas stations in many different countries and is used in vessels for cooking and many other applications.

LPG for cars is becoming more and more popular, due to the fact that it is much cheaper than gasoline or diesel. Due to the fact that is liquid under the conditions it is stored and sold, cars need to be modified to use it for the engine. Engines can burn only gasified products otherwise they wouldn’t work. 

With the all these options, it is clear that “Natural Gas” seems to be the future for Oil & Gas companies, as it has a positive impact on climate change and yet, is still economically feasible.

In conclusion, the “Full Energy Balance” for all kinds of energy forms and transformations needs to be achieved by oil and gas producers. This includes the investigation of all forms of losses and wastes or by-products, as well as a declaration to make the best and most economical form of energy, always in conjunction with the protection of our climate and, in general, our world.

“Oil & Gas – Ever changing market insights” Interview with Mr. Sapan Dalal

This interview was conducted May 14th 2015

What is the state of the Oil markets? More specifically, how are politics and the global macro events trumping supply and demand in the trading of the Oil futures markets?

In late 2014, Saudi Arabia kicked off a crude oil price war in quiet recognition that US shale represents an existential threat. Now the pressure on shale companies is starting to show results.

When Saudi Arabia realized that US shale had the potential to become the new “swing producer” for global oil supply, there was really no alternative to price war. The old playbook was torn up forever with the presence of this new force in markets. In the old pre-shale days, Saudi Arabia could keep the oil price high – or at least stabilize it – by cutting back supply when demand softened. This worked because Saudi production closed the gap in the global supply and demand balance for crude. By making adjustments, the house of Saud could turn marginal pressure on crude oil prices into marginal support, by way of restricting supply until demand levels slightly exceeded supply levels once again.

With the new producers on the scene, however, any cutback in Saudi supply would simply be met by a US shale supplier. Let’s say there is global equilibrium between oil supply and oil demand at 90 million barrels per day. If demand levels slipped to, say, 89.5 million barrels per day, that would produce downward pressure on the price of oil… until the Saudis cut 600,000 barrels per day worth of production, bringing supply a notch below the new demand level. But now you have US shale fracking on the scene providing an extra couple million barrels per day. With the addition of U.S. shale, Saudi cuts would NOT bring supply and demand back to balance. Supply levels would remain above soft demand levels regardless. Now, any supply cut by the Saudis, would only be giving money to the U.S. shale producer, filling in as the new global oil “Swing Producer”.

Another way to understand OPEC, both pre- and post-shale, is to think in terms of price collusion. When a few companies (or countries) dominate a market, they can get together and decide to keep prices above a certain level. If just one player decides to break the pact, however, they can sell with size at lower prices than everyone else, and prices are forced down across the board. The U.S. shale fracking industry was the odd man out and basically, threw in a huge monkey wrench for the colluders.

What are the key opportunities and challenges facing the Oil & Gas industry?

There are several opportunities and challenges facing the Oil & Gas industry. When the US shale boom arrived in and ramped up US crude oil production by nearly 4 million barrels in five years, the Saudis knew their control regime was in serious trouble. From a long-term perspective it was clear that, if U.S. shale just kept pumping, the oil price could fall drastically. Furthermore, oil prices could then stay low permanently. Imagine a world in which global oil supply consistently exceeded demand, by a few million barrels per day, for years on end. That would be a nightmare for OPEC. The Saudi solution is to kill off high cost producers sooner rather than late, and make sure they are good and dead.  This will ensure U.S. production so that current production is scrapped and new production is mothballed. Theoretically, enough short-term pain could give the Saudis their swing position back. If short-term pain is great enough to bankrupt a whole slow of producers and shutter a hundred-billion-plus worth of longer term projects then at some point down the road, the global supply / demand balance will favor supply again, and the Saudi financial future will be better assured. The plan only makes sense, however, if the Saudis finish what they started. Saudi Arabia will not let the oil price rise too much now, after investing so heavily in a strategy to crush the shale enemy. However, given this threat, opportunities have arisen to produce a barrel of oil more efficiently and to enter different markets through acquisitions. This efficiency, is a result of better bargaining power from producers, technological advances that produce efficiencies, strategic acquisitions of producers by larger better capitalized companies, for example, Shell’s acquisition of BG Group. As always in the oil and gas industry challenges yield innovation and opportunity.

According to Daniel Yergin, vice chairman of IHS, the Oil market is “going to be a lot more volatile.” Do you agree with this statement, and if so, why?

Yes, I absolutely agree with Mr. Yergin. The retreat in U.S. oil drilling is a prime example of how the market will play out in the future. Oil prices began collapsing in September, and yet U.S. producers didn’t really start pulling rigs out of fields until December. When prices rebound, their return to shale fields will again take months.

OPEC, but more so, the Saudis, could snap their fingers and make prices rebound by tomorrow. Hence in essence there is a whole sector of a couple hundred companies, countries, and political regimes, looking out for their own self-interests. Throw in the cross current effects of global currency moves and their impact on oil priced in dollars and the uncertainty only grows. With so many forces at play, the end result is a volatile market that is at the mercy of such forces.

The International Energy Agency noted that competing forces are still playing out in the market, making the direction of prices difficult to discern. With this said, how sure can we be on our predictions?

The International Energy Agency is correct that competing forces are still playing out in the market, making the direction of prices difficult to discern. As for predictions in prices, we can’t be sure, since any change in regulations, geopolitics, M&A activity, global growth or lack thereof, global interest rates and moves undertaken by global central banks would have a material effect on oil price predictions. Unless, you can predict every single political event outcome, adjust for the different political regime agendas, and account for how global central banks will leverage interest rates and their respective currencies to stimulate their economies, you can’t predict global energy prices with great certainty and be 100% confident in your price predictions.

As international sanctions have sharply reduced Iran’s sales of Oil, what would be the potential effect on Oil supplies if the proposed nuclear accord with Iran eases and/or lifts those sanctions?

A huge uncertainty in the oil market is the potential effect on oil supplies of a proposed nuclear accord with Iran, a major producer. International sanctions have sharply reduced the country’s sales of oil, and an accord is expected to ease, or lift, those sanctions. However, the U.S. Senate has just passed a bill that would require congressional approval and review on any deal with Iran. In addition, since Congress imposed many of the sanctions on Iran, any lift of Iranian sanctions imposed by Congress, could not be bypassed by president Obama through the U.N. The bill passed the Senate with bipartisan support and should easily pass the House of Representatives, with its GOP majority.  Therefore, this deal is very much up in the air.

However, if an accord was to be reached and sanctions were lifted so that Iran could legitimately sell its oil in the global market, it would take time for Iran to organize the enormous investment that would be required to sustainably bolster its production capacity; the country might be able to make short-term changes to increase output and exports relatively quickly.

Iran has 30 million barrels of oil stored on tankers, which could quickly feed an increase in exports. It has also been estimated that Iranian oil fields could ramp up production to as much as 3.6 million barrels a day, a 29 per cent increase, within months of sanctions being lifted.

Under the pressure of sanctions, both Iranian production and exports have been curbed. Many reporting agencies state that Iranian exports are down about 50 per cent since 2012, to an average of around 1.1. Million barrels a day, although some reports state they rose to 1.3 million barrels a day in March on high demand from China.

The issue I see here is the one of geopolitics. First, with the U.S. shale already threatening Saudi price dominance, surely Saudi would not be pleased with Iran pumping crude back onto the global oil markets thereby, further threatening Saudi pricing power. Secondly, there is the proxy war being fought by Iran backed Houthi rebels, and the coalition of Saudi, Egypt, Israel and other countries. None of the coalition countries want Iran to have access to more funding to support its proxy war. This is secretarian conflict for some of the countries involved, but for Israel, its very existence it feels is in question. So the question is if sanctions were lifted and Iran benefited from the renewed source of revenue, how would the coalition countries respond? Would it trigger a nuclear arms in the Mideast, as most of the countries in the Mideast believe whatever nuclear deal is reached that Iran would cheat, just it as has had on previous agreements. Would it be the final indicator that prompts Israel to take matters into its own hand and bomb Iranian Nuclear sites? The short term impact on the oil market should there be a nuclear deal, might be more oil supply from Iran thereby further depressing crude prices but this could change on a dime depending on the reactions of the coalition countries. I think supply/demand are indicators that are certainly the crux in the formation of a commodities price but with Oil, geopolitics are the dominant theme to be followed closely in the formation of short, medium, and long term outlooks.

What will be the top opportunities and challenges faced by global clean energy market in 2015?

The sharp and sudden fall in international oil prices in recent months has generated a radical change in the global energy market. With low oil prices equations are rearranged and new winners and losers emerge along the entire value chain, not only of petroleum products but also of substitute products and secondary energy markets.

In recent years, clean energy sources have gained importance in the global energy scene; clean energy has achieved broader participation in energy portfolios around the world. However, in order to identify opportunities and challenges that arise in this industry globally, it is important to make two clear distinctions: First, it is not possible yet to speak of a global clean energy market, as it happens with other primary energy sources such as oil, coal or some refined products. In this regard, clean energy still does not constitute a global market as such; ie markets of clean energy remain local and in few cases regional. Second, it is important to point out what is considered as clean energy; in other words, there is still no consensus of the energy sources that are considered clean energy. In general nuclear energy is considered clean energy, although there are detractors that still do not consider it as clean energy. Also, in the case of biofuels there is a strong debate on the environmental effects of biofuels along its entire life cycle.

Considering the above, it is difficult to establish general recommendations and points of view for a clean energy industry as a whole. Nevertheless, it is possible to point out some general rules of thumb. In the case of renewable energies, such as wind and solar, currently these sources are almost entirely focused on power generation that in most cases are direct competitors of other conventional power generation technologies, such as natural gas or fuel oil. On the opportunities side, the sale of renewables and other clean energy, these sources are often favoured for their zero variable cost, so they are the first to be dispatched and therefore gets the highest kw/hr rate.

Strategically speaking, in the case of hydroelectric or nuclear power, in many cases these represent strategic and national security investments that vary from country to country. Their investments constitute decisions that take into account levelled generation costs that are modulated by the cost of the externalities associated with the project and their role in public policy.

As mentioned before, in general terms, the challenges and opportunities for clean energy depend largely on regional or local conditions. In the case of countries in which low oil prices have a negative effect on their economies, it is expected that their levels of public investment and economic activity be affected. Economic constrains can lead to austerity programs and general savings that can cut subsidies and opt for electricity generation projects with the best economic options in the short term. Furthermore, some renewable projects, in many cases have to be developed together with additional backup generation capacity, which implies extra costs. Nevertheless, opportunities arise with projects such as distributed power generation projects that in many cases increase reliability and bring cost reductions. In this sense, renewable energy projects represent a viable alternative that replaces or complements other transmission and distribution projects for remote or difficult areas to access.

On the other hand, countries in which their economies are favoured by low oil prices, opportunities emerge as result of greater economic activity and industrial development, which results in greater electricity demand, expansion, and the development of less vulnerable systems to external volatility.

The consumption of electricity around the world keeps growing, although at lower rates, but this together with the current energy market situation, represents a clear opportunity to evaluate the high vulnerability that today’s oil-driven economy is facing. Now, more than ever, a balanced portfolio of clean energy represents a viable alternative to establish energy models with less susceptibility and focused to the long term growth, that also takes into account the reduction of greenhouse gases.

Which trends will impact the gas trading industry in 2015?

The global natural gas industry is in a period of great change and growth, driven in part by growing demand in Asia. Liquified Natural Gas (LNG) will play an increasingly important role in supplying these markets, and new players from North America are competing to deliver some of that supply. Europe is in a period of uncertainty, with missed transition to renewables being complicated by fears of supply uncertainty due to Russia’s recent conflicts with Ukraine and supply deals with China.

  • Asian Growth Is Driving Demand
    • Post-tsunami Japan is the world’s largest LNG consumer with over 75 million tons per annum (Mtpa) as nuclear plants remain idle
      • Some nuclear plants may be restarted, but demand will remain high
    • Together, Japan and Korea account for about half of the world’s LNG imports
    • Global LNG market is expected to double from 35 Bcf/D to 74 Bcf/D (240 to 500+ Mtpa)  by 2030
      • China, India, others will drive new growth
        • Pace of Chinese development of domestic unconventional gas and recent supply agreements with Russia could impact LNG demand growth
      • Proposed new projects would oversupply demand, many will not happen
    • “Window” of opportunity may be tight for new contracts, but growth in developing world has been underestimated before
  • LNG Suppliers Are Changing
    • Private suppliers are aiming for a significant share of market
    • Qatar is biggest now at ~ 10 Bcf/D
    • Australia is projected to overtake Qatar by 2016, increasing from slightly over 3 Bcf/D to 10+ Bcf/D
      • Labor costs have spiraled
      • Queensland projects supplied by coal seam gas (CSG) are struggling to meet supply volume targets on time
  • New entrants?
    • United States is poised to enter the market
      • Over 20 projects have been proposed, many are approved and under construction
      • Brownfield conversion of import sites will be the first to enter the market around 2016
      • Gulf Coast, East Coast and Oregon projects are planned
      • Marcellus shale gas needs more outlets from bottle-necked northeast U.S.
      • Alaska is emerging as an option to supply Asia
      • Panama Canal route to Asia is a challenge, what about Europe?
    • Canada wants in on the action
      • 19 projects proposed on BC Coast to take advantage of high-quality resource stranded by loss of U.S. demand for Canadian gas
        • Projects proposed would equal current world market, all will not happen
        • Serious global players like Petronas, Shell, Chevron, Exxon are in mix
        • First significant projects won’t be operational until 2019 or later
        • Canada’s target is Asia, BC has a significant location advantage
        • East coast sites are being considered which would likely use U.S. gas and export to Europe
    • Mozambique offshore discoveries could be fast-tracked for LNG export
  • What About Europe?
    • Demand has levelled off due to growth in renewables
    • Ukrainian crisis heightens concerns over dependence on Russian supplies, as does new Russian commitments to China
    • Can North American LNG be meaningful to European market?
      • Good outlet for Marcellus shale gas
      • Eliminates LNG traffic jam though Panama Canal
    • LNG for power generation could help Europe meet GHG emission targets as bridge fuel
  • Other Factors Worth Considering
    • World LNG prices linked to oil prices seem to be changing
      • Gap between Japan LNG, European, North American prices is glaring
      • Recent dip in oil prices is causing concern for new projects committed to oil index
      • New U.S. contracts in Gulf Coast are being linked to gas trading hub prices
    • Unconventional gas is an untested source of supply for LNG projects
      • CSG is stumbling in Australia
      • U.S. shale gas revolution is foundation for new U.S. supplies, ditto for Canadian unconventional sources, like the Montney formation
      • I think it is reliable and will work, but needs to establish a track record
      • Domestic unconventional gas will displace LNG markets in China over time
    • Natural gas is a good transition fuel for reducing global GHG emissions
      • Evidenced by reduction in emissions in U.S. by displacing coal for power production
      • Will do the same for China and India
      • Will provide good base load generation for combination with growing renewables in Europe

The global natural gas industry is taking shape. It may begin to look more like the global oil industry, with prices tied to global indices, rather than regional hubs. The shale gas “revolution” has allowed North America to enter the global export market, and may ultimately bring competition for those markets as others, like China, start to develop their domestic shale resources. Natural gas has a competitive “bridge fuel” advantage in the short-term as we move towards a future with an increasing supply from renewable resources.

What are the top 3 global trends in the smart grid industry?

Smart grids are a concept that is slowly starting to take shape. Smart Grids can be described as an upgraded electricity network, enabling two-way information and power exchange between suppliers and consumers, thanks to the pervasive incorporation of intelligent communication monitoring and management systems.

That which is usually called a smart grid can be divided into smart grids and smart energy systems. A smart grid contains the whole environment in which smart grid components are implemented, however this can be a hybrid system, in which legacy SCADA systems are part of it. A smart energy system is a specific network, developed as a dedicated smart energy system. Old fashioned legacy systems are not part of the smart energy system. It will be clear that in a world of energy utilities and grid operators, where lead times of 20 to 60 years are normal, a conversion to dedicated smart energy systems will take a long time.

For Smart Grids to deliver their envisaged benefits however, the realization of physical infrastructures alone will not be sufficient and must be complemented with the emergence of new business models and practices, new regulations, as well as more intangible elements such as changes to consumer behavior and social acceptance. Many different stakeholders are involved in this process and different forms of cooperation are already arising.  Many challenges arise to create a smart (energy) world.  I will limit this article to three trends in the smart grid industry.

#1: Consumers are more and more willing to turn into prosumers. It is a combination of the fact that climate change is becoming increasingly visible to everyone. This encourages the sentiment of a necessity to invest in environmentally friendly energy sources. The industry is rapidly developing new smart grid components which support the needs of the consumer while the products are continuously developed and the prices, due to increasing production facilities, are lowering. For example, solar panels are becoming affordable. Government subsidies support the purchase of sustainable energy sources. The public view the effort of the development of smart energy systems in urban areas and centers, and it encourages people to participate in energy saving measures themselves and to invest in environmentally friendly energy sources.

#2: Energy system manufacturers feels the need to smart grid certification. A few years ago security was not an issue. Power-producing companies and grid operators used dedicated networks. Nowadays, so called SCADA networks are connected to office automation and often to the internet. Security has become an important issue. Privacy-related data is transported over the communication infrastructure.  With the development of security risk assessments specific to smart energy systems (encouraged by the US government and the European Committee) and standardized security requirements, it will pave the way to think about certification standards against ones which are yet to be determined. (e.g. NISTIR 7628, ISO/IEC 27019 etc.)

#3: Expansion of existing networks and the conversion to digital networks. The automotive industry, driven by the Kyoto protocol, is quickly changing to more sustainable cars. More full electrical cars and hybrid cars are developed and brought to the public. Some countries subsidize any form of electric transport. The challenge, however, is to expand the current “simple one-direction” power grid to a smart grid environment that has the capacity to supply all the vehicles with energy at the moment the customer needs to refill his vehicle. The largest problem is the small range of full electric vehicles which can be driven in combination with the amount of time to refill the car. Fully digital-controlled networks can provide the load and balance on the net which is necessary to guarantee a reliable grid. Grid operators are working hard on these improvements, however it will still take years to achieve the desired situation.

What key trends will shape the global Solar Energy industry in 2014 and which regions will have the most growth potential?

Key trends: 

Solar vs. Utilities (grid parity, distributed generation, energy storage)

For years, utilities thought of solar as an ‘eco-geek’ gadget and ignored it. But the costs of solar energy have dropped each year and in 2013, solar energy reached grid parity in several markets around the world. In those markets, solar no longer needs public support to exist. It’s a first choice generation technology, especially for customers who want to generate energy for their own use (distributed generation).

Because solar is now gaining momentum, you can observe utilities trying to fight it, especially in the US, Spain and Germany. US utilities, through their Edison Electric Institute, realized that distributed generation is a serious threat to the revenues of utilities. The Institute even published a report about it: “Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business”. In Germany and Spain, they lobbied for and succeeded in national government backing of solar incentives.

The utility companies are not only losing the battle, they will lose the war in the long run. A utility company that makes it harder for customers to connect PV systems to the grid will only entice and encourage them to invest in energy storage and go completely off-grid.

Fortunately, some utility companies, instead of fighting the inevitable, understand what is really happening. Right now they are re-inventing themselves and trying to benefit from the solar PV technology. German RWE admitted that they invested in solar too late and are redefining their strategy now. Finnish Fortum integrated solar into their sustainability commitment and are now discussing the creation of a “solar economy”.

In 2014, the PV industry will be shaped by solar companies offering even more affordable solutions for distributed generation and energy storage.


  • UK

The UK is the best solar market in the EU right now. The government is specifically focused on solar. In April, the UK government published its solar strategy focusing on distributed generation and innovation. With a stable economy and confident investors, the government’s goal of 2.5 GWP of solar per year is achievable.

  • US

It’s a huge market that has only recently began to develop. As SolarCity surmised in its report: We haven’t even scratched the surface yet. Wall Street is realizing it should de-invest from utilities and focus on solar PV solution providers.

  • China

The country is developing very quickly and is hungry for energy. China’s PV manufacturing capacity is enormous. Some claim it is even too big. The government doesn’t want its companies to go out of business so it is subsidizing huge PV projects in China.

  • India

India is a huge market and has very good solar resources. Solar distributed generation allows for the delivery of power despite a poor electric distribution network.

In conclusion, 2014 will be a very interesting year for the PV industry. It will establish a new balance of power with the utilities, especially in the aforementioned markets.  

What is the outlook for the shale gas industry outside of the US over the coming 3-5 years?

Victor Hugo’s sentence “Nothing is stronger than an idea whose time has come” also counts the same way for a technology. Even if there are strong market participants, who want to protect their ground for the usage only of conventional natural gas; and even if these are in some countries with some public opinions against shale gas, there will be at least one company in one country who will break this fragile price / quantities construct by using fracking. The consequence will be a continously decreasing price level, down to a point where the demand (maybe of power production) will be strong enough to pick up all the big quantities.