Cracking the Code for the Emerging Energy Sector


World Future Council, January 16, 2016. Image credit: Axel Schwenke

Delegates from more than 130 countries and world`s leading renewable energy experts meet for the next three days to discuss the global energy transition. The annual Assembly of the International Renewable Energy Agency (IRENA) has become one of the most important gathering. In fact, the way energy is produced, distributed and consumed in our societies is undergoing fundamental changes. With the majority of energy investments already going into renewable energy, we are doing more than substituting oil, gas, coal and nuclear with free energy from the wind and the sun. We are in fact building an entirely new global energy sector with a completely different DNA.

How does this new DNA of future energy markets look like?

The paradigm shift we are observing is the transition from a vertical to a horizontal structure – from a centralized, hierarchical, supplier-centric energy infrastructure to decentralized, customer-centric and participatory energy models. Most of the existing energy markets are characterized by complex centralized infrastructures, a vertical supply chain, and dominated by few big utilities, whereas future energy markets will be decentralized, with a horizontal supply chain and where benefits are widely distributed among new actors and stakeholders, including individual citizens and small businesses.

An example of this can be found in the Energiewende in Germany: More than one third of the electricity consumption is coming from renewable sources with onshore wind (12%) and solar PV (6%) being the major contributors. If one looks at who owns, finances and runs these new Gigawatts of capacity, one finds that it is primarily citizens, energy cooperatives, farmers and small and medium sized companies that are driving the energy transition. In 2012, 47% of the installed capacity was in the hands of communities and individuals. Only 12% was invested by the conventional energy utilities. And as a German study revealed, projects that were partially or fully owned by local investors generated some 5.4 billion € and created a total of about 100,000 jobs in 2012 in both the construction sector and operation.

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