As the world’s population continues to grow so too will the demand for power supplies. For power generators, the forecast paints a daunting challenge. By 2050, the world’s population is set to hit 9.7 billion, rising from 7.3 billion at the last count, according to the latest UN projections. Alongside this unprecedented rise, energy
demand is expected to increase by about 40% over the next two decades.
Much of this increase – both in terms of population growth and energy demand – lies in emerging markets such as China and India. Greater economic output and a rising middle-class demanding improved living standards are putting pressure on energy supplies. In China alone, for instance, energy demand is expected to increase by 75% in just two decades.
The question at the forefront of any power generating company is, can the world satisfy a growing demand for energy? Indeed, traditional means of energy are depleting and the challenge is now for power companies that want to remain competitive to find new and sustainable sources of energy or alternative methods of extracting traditional sources of fuel – and supply them at competitive rates.
New sources of oil and gas are being investigated as are renewable energy supplies such as wind turbines, solar panels and hydropower.
But the most sustainable of power supplies may not always appeal to businesses because of the costs. “Today the major problem is that authorities in a lot of EU countries penalise the investment/production of green energy,” says Carl Leeman, chief risk officer at international logistics service provider and port operator, Katoen Natie.
“Solar power production is heavily taxed and it is very difficult to obtain building permits for wind turbines.”
The other challenge is that these types of supplies are not “scalable” explains John Watson, chairman and chief executive at US multinational energy company, Chevron Corporation.
Addressing delegates at the Economic Club of Minnesota, Watson said: “Today’s energy mix already includes renewables that have proven to be economic – such as geothermal and hydro – and in some cases, wind, solar and biofuels.
“There has been some good progress in developing renewable sources. But progress here is a relative term.
“Even aggressive predictions expect renewables to account for no more than about 25% of the global energy mix a generation from now.
“This is because finding affordable alternative forms of energy that are scalable is challenging and takes significant investment in research and development.”
The other 75% to 80%, interestingly will continue to come from traditional sources – oil, gas and coal.
Even if renewable energy consumption increases three-fold over the next 25 years, the world is likely still to depend on fossil fuels for at least half of its energy needs, Chevron predicts.
The focus for the US energy firm and companies like it across the world is to now invest in new technologies to either extract traditional energy sources or find new supplies – or both. The key to meeting the energy demands of the future is a diversified portfolio of energy offerings.
“To meet the world’s growing demand, we will need all forms of energy – including oil, natural gas, coal, nuclear, renewable and alternative fuels,” advises Watson.
Innovation for the future
The power market is on the cusp of change and innovation is vital to develop the fuels of the future. Chevron is on a journey to scope out the best ways of meeting the global energy demands of the next few decades, investing billions on exploration and production.
For instance, it is using new technologies to see beneath the world’s surface to determine levels of existing crude oil and natural gas and it has built new geothermal businesses in Southeast Asia, specifically in Indonesia and the Philippines.
“We’ve spent significant sums researching non-food feedstocks and conversion technologies to develop advanced biofuels at a commercial scale – partnering with national labs, universities and other companies – evaluating more than 100 feedstocks and 50 conversion technologies,” Watson says.
But challenges remain. “The smartest minds in my company and others haven’t yet cracked the code on pairing the right feedstock, conversion technology and logistics in an economic and scalable package.
“I’m optimistic that with continued research, those focused on addressing this challenge will be able to identify and develop the new energy sources of the future.”
Indeed, the challenge, or perhaps opportunity, is there for the taking.