Big issues

The world faces a huge electricity demand challenge in the coming decades. As well as more energy, the world needs cleaner energy and smarter energy. Investment, affordability and delivery pose immense challenges. To see survey highlights on the big issues, click on the headings below

Huge demand growth

Growth in world electricity demand What policies are needed? Are we heading for a supply crunch?
World electricity demand is projected to increase from 17 200 TWh in 2009 to over 31 700 TWh in 2035.[1] The policy message from the industry to governments is a clear one – put potentially disruptive market reform on the back burner and focus on the promotion of a more certain and investment-friendly regulatory environment. The risk to security of supply is real. European and North American survey participants predict an increased risk of blackouts. In developing markets, industry sentiment is moving in the opposite direction.
World electricity supply and demand by sector in the New Policies Scenario What policies are needed to help meet world power demand growth in the period to 2030? Security of supply - will the risk of blackouts increase or decrease in the period to 2030?
[1] International Energy Agency, World Energy Outlook 2011, page 176, table 5.1.

Investment and affordability

A tough financing challenge Other big challenges Worries about energy affordability
Attracting investment is key to meeting the future electricity demand challenge. But more than twice as many survey participants say obtaining finance for generation and transmission is tough compared to those who are finding it relatively easy.  Tough as it is, financing is actually not the biggest challenge for power and utilities businesses as a whole.  Investment is running up against regulatory risk, price and affordability worries. Worries about energy affordability are emerging. 66% see the ability to recover costs fully from customers as a barrier to meeting demand growth. Half see a medium to high probability that the number of customers in fuel poverty will increase significantly over the next 20 years.
Extent of the financing challenge Finance vs. other challenges Probability scenario: The number of consumers in fuel poverty will increase significantly over the next 20 years

Cleaner energy

Grid parity for renewables? Decarbonising the generation mix Barriers to renewables
Many in the industry can see a time when renewable energy will compete without the need for subsidy – 80% plus think onshore wind, biomass and all forms of solar will not need subsidies to compete by 2030. But time is running out in the race to decarbonise and achieve the goal of limiting global warming to an average 2°C increase. Looking ahead, our survey participants anticipate a significant increase in the share of non-fossil fuels. But it won’t be enough for the 2°C target. Instead, it is closer to a 3.5°C degree warming trajectory. Major barriers remain in the way of renewables in the next decade. 75% of our survey participants point to the high cost compared with other generation as an important or very important barrier. 66% highlight the unwillingness of consumers to pay and 62% stress the cost and difficulty of grid connections.
Do you think renewable generation technologies will be able to compete without subsidy by 2030? Future fuel mix scenarios vs industry expectations [2] Ranking of major barriers to development of utility-scale renewables
[2] World Energy Outlook 2011, ps 546 (NPS) and 547 (CPS and 450 scenarios - generation).

Smarter energy

Smart grid opportunities Customer engagement Electricity storage breakthroughs
Smart grids and smart metering are high on the list of company investment priorities. The opportunity to get closer to customers and help them manage peak demand tops the list of reasons for such investment. But companies would be wise to be cautious about the customer opportunity.  Two thirds say there is a medium to high probability that the future technology will get installed but shortcomings in customer engagement will limit its potential. Breakthroughs in electricity storage could transform the power sector. Pumped storage remains the most mainstream large-scale technology. But nearly one in five in our survey point to the potential of a breakthrough in ‘gas to power’ solutions.
Smart metering and smart grid rationale Probability scenario: Smart metering and smart grid technology will be successfully in place by 2030 but its impact will be limited by shortcomings in customer engagement Top five forms of large scale electricity storage expected to be most in use by 2030

Company strategies

Investment in generation Go abroad strategies Competitive threats
68% of survey respondents are making major or very major investment in upgrades and replacement generation.  New gas generation heads the priority list for generation. Coal and nuclear generation are on the back burner for most. We are seeing active east-west investment momentum and ‘go abroad’ strategies from many companies and investors. China and other fast growth economies are priorities for expansion by survey participants. Only 12% ranked western Europe and 13% ranked North America as priorities. Striking, in a world where smart energy technologies permit greater interaction with the customer, more than one in four (27%) say that companies with powerful brands from outside the sector also pose a major competitive threat.
Where are you making major new generation and related investments? Top ranked territories for expansion priority Who poses the largest competitive threat