The energy trilemma that the energy industry is facing is grappling with energy security, renewable energy sources, sustainability, and affordability. The Russia-Ukraine conflict has highlighted the vulnerability of global energy security, leading to the resurgence of coal power and increased pressure on renewable projects. Simultaneously, energy consumers are burdened with rising costs. As the industry transitions, a decarbonized energy system can harmonize these competing priorities through innovative scaling and implementation strategies.
DNV recently conducted its thirteenth global survey, featuring over 1,300 senior energy professionals and in-depth interviews with leaders in power, renewables, oil and gas, and energy-consuming sectors. This comprehensive study provides insight into the global energy landscape, capturing confidence, sentiment, and priorities for the upcoming year (source: Energy security is top priority in the energy trilemma for 2023).
Despite the complex challenges faced by the energy industry, optimism remains prevalent. However, only 39% of respondents feel optimistic about achieving their organization’s decarbonization targets, with 29% feeling pessimistic.
What are the key challenges in the energy industry’s shift to a decarbonized system and their solutions?
Some of the key obstacles to decarbonization include the intermittency of renewable energy sources, a lack of infrastructure for electric vehicles, and a need for more effective carbon capture technologies. Each of these issues is being addressed in various ways. For instance, energy storage technologies such as batteries and pumped-storage hydroelectricity are being developed to handle the intermittency of renewables. Infrastructure for electric vehicles is being built in many parts of the world, often with government support. Moreover, carbon capture technologies are being researched and implemented, with many promising advances in recent years.
The energy transition has accelerated due to the COVID-19 pandemic and the ongoing energy crisis, creating numerous obstacles across transmission and distribution systems, supply chains, permitting and licensing, financing, infrastructure, and workforce development. Although barriers may slow the transition, momentum is growing to overcome these hurdles as societies experience the impact of climate and energy crises.
Oil and Gas
Anticipating Peak Profits The oil and gas industry expects increased investment in the coming year, refining profit expectations after a record-breaking year. However, the sector’s focus on decarbonization has diminished compared to 2022, with companies slowing their diversification efforts.
Renewables
Accelerating Despite Challenges The renewables sector continues to expand rapidly, overcoming obstacles such as grid capacity limitations, energy price volatility, inflation, supply chain disruptions, regulatory constraints, and infrastructure project delays.
Energy Industry
Balancing Growth and Pressure The proportion of power sector respondents optimistic about industry growth has significantly declined. Consequently, 50% prioritize short-term strategies over long-term planning, up from 34% the previous year (source: Global Electricity Review 2023).
Investment Trends
Embracing Clean Energy The energy industry expects substantial investment in clean energy sources, carriers, and enablers. Half of the surveyed professionals anticipate investment in low-carbon hydrogen/ammonia (52%), wind (49%), and solar (46%). Additionally, 37% foresee increased investment in carbon capture and storage (CCS), with 57% predicting rapid CCS expansion within the next five years.
Solution: Building a Resilient Energy System
As the energy trilemma persists, stakeholders must prioritize resilience and adaptability in their strategies. A robust energy system should account for geopolitical challenges, climate change impacts, and evolving consumer demands while ensuring energy security, sustainability, and affordability.
What are some innovative strategies for balancing energy security, sustainability, and affordability?
Innovative approaches can take various forms, such as the development of smart grids that use digital technology to manage energy resources better. These can enhance energy security by reducing dependence on a single source and allowing for a more flexible and responsive grid. Additionally, investment in energy storage technologies can help ensure that renewable energy sources, which are often intermittent, contribute to a reliable energy supply. In terms of affordability, innovation in energy-efficient appliances and insulation can help to reduce energy usage, thus lowering costs for consumers.
Digitalization and Innovation
Embracing digitalization and technological advancements can help mitigate the trilemma’s effects. The industry can optimize energy distribution, reduce costs, and improve efficiency by investing in innovative grid technologies, energy storage, and advanced data analytics.
Collaboration and Policy Support: Public-private partnerships and international cooperation are essential in addressing the energy trilemma. Governments must provide supportive policies and incentives to encourage clean energy investment, while private entities can drive innovation and bring new technologies to market.
Workforce Development and Education
Developing a skilled workforce is crucial for the energy industry’s transition. Companies and educational institutions should collaborate to provide training and resources, equipping professionals with the skills required to excel in a rapidly evolving energy landscape.
What skills and resources should companies and schools offer to train a workforce for the changing energy sector?
Building a workforce that can support the energy transition requires a focus on skills in areas such as renewable energy technologies, energy efficiency, data analysis, and grid management. To develop these skills, companies and educational institutions may need to offer specialized training programs, create apprenticeships, and encourage lifelong learning. In addition, resources such as up-to-date textbooks, online courses, and access to the latest research can help ensure that the workforce is equipped with the most current knowledge and understanding of the field.
Final Thoughts
In conclusion, the energy industry’s trilemma—energy security, sustainability, and affordability—presents significant challenges. However, stakeholders can navigate these complexities by adopting innovative approaches, embracing digitalization, fostering collaboration, investing in workforce development, and creating a more resilient and sustainable energy future.
