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Understanding users is key to the evolution of the world’s energy systems

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Authors: Brian Motherway and David Shipworth

The choices made by individuals are having a significant effect on the evolution of the global energy system. Thanks to distributed renewables, users are no longer only consuming energy – they are also producing it. Shifts in consumer behaviour, such as a move toward electric vehicles, are also creating stresses and opportunities for power systems. Yet in addition to distributed renewables and electrification, one of the most significant, cross-cutting and user-centred trends transforming today’s global energy system is digitalisation.

By joining together all components of the energy system via high-speed digital communications networks, digitalisation provides new opportunities to accelerate the growth of low-carbon and energy efficient energy systems. For example, as the share of variable renewable generation increases, homes and businesses with electric cars and heating and cooling systems can offer flexibility services to ensure the security of our power supply. By facilitating higher levels of automation, digitalisation also promises efficiency gains across the energy system: from individual appliances to buildings and power plants.

For consumers, digitalisation is changing expectations of service and value. People no longer need only to be passive energy consumers; digital technologies are already supporting people to more actively participate in energy markets, and will soon allow users to produce, consume, store and trade an even wider range of energy services.

The IEA is at the forefront of research on each of these trends, tracking technology change and supporting its member governments understand how to leverage the digital revolution for greater energy efficiency, and how infrastructure, markets and institutions can adapt to the evolving challenges of electricity security in the 21st century, amongst other topics.

One of the key takeaways from this research is that energy users are now more central to the energy system than ever before, with consumer purchasing decisions and behaviour determining the pace of technological change, whether digitalisation becomes a force for greater efficiency or just more energy use, and how much distributed storage and flexible load resources become available to balance variable renewables.

Yet paradoxically, a major unknown factor in future energy transitions is the human element. For example, research has consistently revealed mismatches between how technology providers, techno-economic models, and policy makers expect technologies to be adopted and used, and reality. These discrepancies play out in contrasts between the expected and actual impacts of policy measures and observed uptake of technologies – through to the ‘performance gap’ between designed and in-use efficiency of vehicles and buildings.

A failure to properly understand the role of energy users in the energy transition is worrying in a world where governments have set ambitious climate goals that depend on a rapid increase in demand-side energy efficiency, alongside an acceleration in the growth of intermittent renewable generation. If the world is to succeed in this mission, it is imperative that policy makers and technology providers properly understand how and why people adopt and use new energy technologies.

With this in mind, 16 members of the IEA family and three sponsors launched a new collaboration under the IEA’s Technology Collaboration Programme (TCP) in October 2019: User-Centred Energy Systems, or UsersTCP. This initiative brings together the world’s leading socio-technical researchers and policy makers to provide the evidence base needed to make better energy policy decisions that place energy users at the heart of the policy process.

UsersTCP was created with the recognition that people use technologies to convert energy into the services they want. To do this, technologies must be useable, and their services must satisfy user needs. This ‘socio-technical’ approach is becoming more and more central to policy making and lies at the heart of the work of the collaboration.

Announced at the All-Energy Australia Conference in Melbourne, UsersTCP has adopted a systems perspective in which people, such as technology designers, policy makers, intermediaries and end users, are as integral as hardware and software to delivering an energy system that meets our wider social, environmental and economic goals. As such, the work programme focuses on business models, peer-to-peer energy trading, hard-to-reach energy users and the social licence to automate, with new work to begin shortly on the application of behavioural insights in energy policy making , in collaboration with the IEA’s Energy Efficiency Division.

To help disseminate the outputs of the UsersTCP and connected work, the User-Centred Energy Systems Academy has begun holding monthly webinars on key topics. Building on the success of the DSM University, the first webinar looked at on the grid integration of electric vehicles.

The IEA will be working closely with this new research collaboration, and looks forward to using the results of its research to inform its modelling capacity and policy guidance. 

* David Shipworth, Chair of UsersTCP.

IEA

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Energy

Gazprom and Europe

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Football in the 21st Century is not only a sport but a global brand in itself. Football allows others to feed and profit off of it as well. Global corporations have used this opportunity to leverage into newer markets and, or, improve their reputation in existing markets.

Gazprom; it is on players’ jerseys in Germany, in Russia, in Serbia, at games in England, and on side-lines in Italy. Gazprom is a Russian natural gas company. Teams make money offering jersey space to sponsors selling things like credit cards, cars, insurance companies and cell phones. But Gazprom is not like most sponsors: private companies with products football fans can buy. Instead, it is a company owned by the Russian government that makes money selling natural gas to foreign countries. It is everywhere in European football. So, if football fans cannot buy what they’re selling, why is Gazprom spending millions to sponsor games?

The answer is part of a larger story that’s changing the sport. Gazprom’s partnership with these clubs is mutually beneficial because they provide a crucial revenue stream to the football club while in turn gaining publicity and a foothold in key target markets in which they are hoping for an increasing profit margins they represent a successful confident company that yields significant power and influence.

It is a corporation that reflects the values and ambitions of the Russian state the company via a series of commercial partnerships and high-profile sponsorship deals is now firmly in the collective conscience of European football fans few are quite sure whatthe company stands for or what this foothold means and in any case they are largely apathetic which oddly mirrors the aims of Vladimir Putin and increased influence in Western culture becoming a major player in events without the stigma of political connections or ulterior motives. Foreign countries use companies they own to burnish their reputations abroad, and to understand why Russia is involved, one needs to closely observe a  map. Russia has the world’s largest natural gas reserves and most of the mare located in Arctic gas fields controlled by Gazprom. The company is led by Alexey Miller, a close ally of Vladimir Putin. Since 2005, the Russian government has owned a majority stake in Gazprom. Meaning company profits are under Putin’s control and gas sales, along with oil,account for around 40% of Russia’s annual budget.

Various maps showcase how European countries are on Russian gas and Eastern European countries are more dependent than countries further west. At the end of the 20th century, Germany represented the biggest opportunity for Gazprom. German Chancellor Gerhard Schroeder had announced plans to phase out coal and nuclear power, which meant Germany would need more natural gas to maintain their energy supply. Gazprom wanted to get it to them, but there was a problem. To get to Germany, Russia’s gas needed pass to through pipelines crossing countries charging Gazprom transport fees. And most of them went through Ukraine, a country that has a complicated relationship with Russia. Today, Ukraine still charges Russia $2-3 billion dollars every year to pump gas through to Europe. So, starting back in 2005, Russia began working on a strategy to bypass Ukraineand ship their gas directly to Western Europe.

This led to the birth of the Nord Stream pipeline,  a route through The Baltic Sea straight to Northern Germany.In late 2005, Gazprom was in the final stages of financing the project and Germany’s chancellor was preparing for an election. During his time in office, Gerhard Schroeder had become friendly with Putin and critics in Germany were increasingly concerned about the Russian leader’s growing influence.

Just a few weeks before the election, Schroeder met with Putinto sign an agreement officially approving the pipeline. Two months later, Schroeder lost his re-election but by March he had found a new job: overseeing Gazprom’s pipeline to Germany. It also came out that, before leaving office, Schroeder had approved a secret Gazprom loan that provided over a billion euros to finance the project. Soon, the story of Gazprom’s big project in Germany was becoming a story of scandal, corruption, and the creeping influence of Russia. But then the story changed.

In 2006, Gazprom signed a deal to sponsor the German team FC Schalke 04.At the time, Schalke’s finances were worrying team officials and Gazprom’s sponsorship provided money the team desperately needed. At a press conference announcing the deal, a Gazprom chairman said Schalke’s connections with the German energy sector were why they decided to become their sponsor. Schalke plays in Gelsenkirchen – a town in Germany’s Ruhr Valley, where much of the country’s energy industry is based. It’s also close to the town of Rehden, a hub for pipelines to the rest of Europe and home to Western Europe’s largest natural gas storage facilities.

Interestingly, Schalke was not Gazprom’s first deal. The year before, they had bought a controlling stake in a team on the other end of the Nord Stream route: the Russian team Zenit St. Petersburg. Gazprom’s investment made Zenit a major force in soccer. Two years after taking control, Zenit won their first-ever league championship. They’ve been able to sign expensive foreign stars, like Belgian midfielder Axel Witseland the Brazilian forward Hulk, and Gazrpom uses Zenit for marketing stunts: like having players scrimmage on the side of their offshore gas platform.

In 2006, as Gazprom logos were revealed around Schalke’s stadium, German headlines were hailing the Russian gas giant for pumping millions into the German team. To celebrate the deal, Schalke’s new jersey was unveiled in a ceremony before Schalke and Zenit played a friendly match in Russia. And, over the next few years, the Gazprom logo would become a team symbol displayed at Schalke games and printed on official merchandise. Schalke also won a championship in 2011 and by then, Nord Stream had been completed, and that year, Gerhard Schroeder, Angela Merkel and other European officials gathered to celebrate as it began pumping gas to Germany. There was also another struggling team whose jerseys started featuring Gazprom’s logo: The Serbian team Red Star Belgrade. Red Star was about 25 million dollars in debt when Gazprom signed to become their jersey sponsor.

And, again, there was also another pipeline: The South Stream would have bypassed Ukraine by going directly through Serbia to Southern Europe. That project closed in 2014, but Gazprom has continued increasing their access to Europe by building Nord Stream 2, a second pipeline doubling the amount of gas flowing from Russia to Germany. Gazprom has also expanded their empire to include energy partnerships with Chelsea Football Club[1], Champions League and the sport’s most famous tournament: the FIFA World Cup.

These sponsorships have made Gazprom’s logo familiar not just to fans in Europe, but across the world.“We light up the football. Gazprom. Official partner.”It’s in commercials before games, and on jerseys and sidelines once it starts. FC Schalke fans have also started to see Nord Stream 2 ads at home games. And, while climate activists like Greenpeace have staged protests to point out Gazprom’s threat to Arctic resources, Gazprom had no trouble renewing their sponsorships.

Now, Russia controls nearly half the gas consumed by Europe and other countries are learning from their example. Etihad, Emirates, and Qatar Airways all are owned by sovereign states in the Middle Eastwith interests that go beyond selling airline tickets. As the example of Gazprom shows, having a prominent footballing sponsorship offers a way around bad publicity by winning approval on the field. If you’re a fan, that can feel like a big opportunity: their money helps teams win major tournaments, but it’s starting to change the sport itself. Gazprom like so many others, is an opportunist who strives to be linked to sporting successes. Gazprom’s reasons for investing so heavily in sport could be compared to any global organization. It is a fascinating  means of advertising. It has become common to see a Serbian team sponsored by Russia’s gas company facing off against a French team sponsored by Dubai’s state-owned airline, it’s starting to seem like the field is hosting two competitions at once: A match between two teams, and a larger play for foreign influence that continues long after the final whistle.


[1] Owned byRoman Abramovich since 2012 seven years prior to this deal Abramovich sold his shares in Sibneft his oil-producing company to Gazprom for an estimated 10.4 Billion Euros.

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New oil pipeline in northern Thailand may worsen flooding

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A pipeline stretching from central to north-east Thailand promises to “promote Thailand as an energy hub in the region” and “increase energy security”, according to the Ministry of Energy. Construction began in mid-2019, despite local communities objecting that the largely Chinese-financed project could worsen flooding and contaminate water.

The 342km pipeline will run two metres underground and link Thailand’s north-eastern province of Khon Kaen to an existing pipeline in the central province of Saraburi. Energy Minister Sonthirat Sonthijirawong attended a ceremony on 5 February to lay the foundation of a 140 million litre oil tank in Khon Kaen’s Ban Phai district at the end of the pipeline.

Altogether, it will pass through 70 towns in five provinces including Lopburi, Nakhon Ratchasima and Chaiyaphum.

The route was agreed in August 2016, when the energy ministry signed a deal with the project investor, Thai Pipeline Network (TPN).

The ministry has promoted the pipeline as a more efficient means of transporting oil to the north-east, claiming it will lower oil prices and cut down on accidents involving road tankers.

TPN director Panu Seetisarn said the pipeline will avoid 88,000 road tanker journeys each year.

The THB9.2 billion (US$300 million) project is largely funded by a loan from the Chinese government, which stipulates that at least 35% of the equipment used must come from China. The precise details of the deal have not been made public. However, Panu revealed that TPN and undisclosed investors are investing about THB1 billion each.

The project has been progressing quickly since January last year when the government approved the environmental impact assessment (EIA) report.

In February, TPN – a subsidiary of Power Solution Technologies (PSTC) – signed a contract with China Petroleum Pipeline Engineering (CPP) to construct the pipeline within a 30-month period. And then works commenced in mid-2019.

Panu also revealed that the company wants to link the pipeline to the capital of Laos, Vientiane, and to southern China.

As well as the controversial north-eastern route, the first phase of another route, from central to north, is also under construction. The northern route is being developed with the ultimate aim of linking Tak province into Myanmar’s Kayin state at Myawaddy.

Flood risk

“This will lead to a big flood, bigger than the recent one,” said Ow, a local resident of Khon Kaen’s Ban Phai district, recalling flash flooding following tropical storm Podul that put homes under more than 1.5 metres of water for over a month last summer.

She fears the construction of an oil tank a few kilometres away will worsen flooding in future.

“Looking at its huge area and how high they have raised the land to level it for construction, [it] will definitely block all waterways,” she said, adding: “What will happen to us if there’s a big storm again?”

“After discussion with my neighbours, we [all] share the same concern and decided to file a complaint to the local authority but nothing happened,” said Ow.

The villagers’ concerns are justified, according to Jaroonpit Moonsarn, an environmental official at the Department of Environmental Quality Promotion (DEQP).

“There are two creeks, the Huay Bandoo and the Huay Khamrian, in the area that are natural waterways helping to drain waters in the district. The construction has blocked these significant waterways,” said Jaroonpit.

She believes another tropical storm in the area would create a bigger flood than the one last August.

Dust, pollution and public safety

Flooding is tomorrow’s fear, but dust is today’s suffering, said Ow, referring to air pollution caused by the construction of the oil tank that is affecting surrounding communities.

“We filed a complaint to the construction company, but they told us to complain and seek compensation from their subcontractors. It’s still unresolved. We don’t know who to talk to,” she said.

Jaroonpit also noted local concerns about the project once it’s finished, such as explosions, chemical contamination of local groundwater and heavy traffic. Road tankers will still be needed to distribute oil from the pipeline to nearby provinces, and additional tankers are expected to operate if the road to Laos is improved.

“Public safety should be seriously studied and discussed, including how to manage such risks and how to compensate,” she said.

“This involves the daily life of local people and they should have been informed clearly before the project’s construction approval, otherwise it leaves all the burden on them,” said Thawisan Lonanurak, former secretary general of the North-eastern Chamber of Commerce.

Apart from the risks to public safety, there are several basic questions about the project that need answering, according to Thawisan.

“Will oil prices in this area really be cheaper? How cheap? And most important, how transparent is the deal between the state and private investor?” Thawisan said.

“These questions should be answered at least during the EIA and hearing process, but it hasn’t happened,” he added.​

Witoon Kamonnarumet, senior advisor to the Khon Kaen Federation of Industry, said hearings for the EIA were conducted twice among a small group of people selected by the project owner and the company contracted to produce the EIA. They were not open to the general public.

“Even local businessmen in my network said they know very little about this project and are not clear on what it will really look like. We heard it would come two years ago and then there was a long silence and then construction started recently,” Witoon said.

“At the EIA hearing, most of the time was used for a company presentation focusing on what they had done in other areas,” said Paitoon Mahachuenjai, Nakhon Ratchasima’s Dan Khun Thod District head. They said that if there was “any problem during construction they would be ready to help,” he added.

Local activist Suwit Kularbwong, chairman of the Human Rights and Environment Association, said communities affected by the project have limited access to information about it.

“Where will the pipeline pass through exactly? How much area will be expropriated or compensated, and at what rate? They still don’t know. This goes against the [country’s] 2017 Constitution on public information and public participation for such a project,” Suwit said.

“This project has been initiated by the state and developed with a top-down approach, without sufficient consideration of its impacts, and with poor public participation. What will happen if more and more people along the pipeline know about the real impacts after construction and learn that they were not informed beforehand? Local opposition is foreseen. And government should be aware of this as it could affect the ongoing construction of the project,” he said.

Chinese investment and public discussion

Suwit said there is inadequate public awareness and discussion about projects and Chinese investment.

“The influence of Chinese investment in this region as well as the Mekong has been growing rapidly in recent years, without taking human rights violations and environmental impacts into account. And [it’s been] actively supported and facilitated by our Thai government.

“The key question is how ready are we for such massive investment from China? How ready is our government to protect its people’s interests from developments like this one where they are losing their land?” asked Suwit.

To address public concerns, Suwit suggested open public forums so that discussion could take place on the controversial oil pipeline and broader development plans for the north-eastern region.

“That which is missing from the past EIA process should be fixed there. At the forum, all basic project information should be available beforehand. It should be open to participation and discussion from all groups,” Suwit said.

Thawisan shared the same suggestion. “Local universities and academics should also play an important role to help digest technical and academic information for local people to understand the project properly,” he said.

From our partner chinadialogue.net

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How Turk Stream is forcing Europe on its heels

Sisir Devkota

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Russia laid down two gas pipelines from its territory, one from the topmost northern hemisphere, famously named as “Nord Stream” and the most advanced, latest with all rights “Turk Stream”; that passes through Turkey, a nation that now finds pride in being able to connect Russia with the rest of Europe. In recent years, European nations have heavily relied on American natural gas supplies and new set of renewables; while sanctions over Russia in the past decade primarily stalled business on both sides, Europe has now changed its language on Russia’s desire to sell oil to the continent. On paper, Europe is openly welcoming a new source of energy supplies in the name of profitable competition, yet changesare only the tip of deep lying geopolitical stakes. Turkstream was launched in the beginning of January; and so, did a brand-new Russian policy take effect that could change foreign relations in the years to come. But, why is Europe changing course suddenly?

Geographically, between the two pipelines on the north and south is Ukraine sitting ignored by Russia’s willingness, more so; it is also a statement of available options at Putin’s hand. It is well noted that Russian aspirations are serious; investing on two different routes has been costly, but the oil rich nation has caught all eyes. While Turkey is flaunting a newfound friendship on the East, other nations in the region, including Ukraine, are assessing exact Russian interests; a major miss out on economic benefits would not be rational for a set of other rather neutral nations than Ukraine. Consider the politics of language, while Nord Stream is still very vague and could include Baltic and western Scandinavia, “Turk Stream” is a prize won in the eyes of a shared Mediterranean neighborhood. It is like saying that Turkey won the rights to sell Russian reserves to European clients, that also have inhibitions against historical Turkish aspirations in the EU. Still, other reasons are held higher.

Uncharacteristically, China is behind all the insecurities in Europe. There is no secret on whether Sino-Russian ties could yield a similar energy route between two nations, both infrastructural might and President Xi’s willingness to expand the Belt & Road projects could easily accommodate energy linkups. For European leaders have realized that such possibilities could most possibly deteriorate Europe’s energy as well as economic balance. By 2030, Chinese energy needs are going to double from what it is now; Europe does not desire a vociferous Chinese demand taking away Russian reserves to the East. Alarmingly, European nations also realize that soon, a proposition as such is highly likely, given how current competition has taken down prices. After a decade of disturbing sanctions testing Russian sanctions, it will be waiting patiently for an overhaul in the form of ceiling new rate of prices. For Europe, America still might not have been redundant, but the US-Ukraine soft spot, certainly has.

The European dilemma does not end yet, for Russia has played the cards on both sides; it will have to forge a face-saving approach with Turkey, given how it has treated Ankara over issues relating to EU membership. Like an astute capitalist, Moscow is promising to feed Europe, whilst also biting into its wounds, forcing to deal with problems that may allow Russia an affirmation to jump over Chinese demands. On the backdrop of a successful Brexit, Turkey will be teasing at the European sanctity, a group that has continuously reminded it of being unsuitable. For Europe’s dislike, Russian reserves now flow through Turkish territories and might successfully ruin newly established competitors in the energy market. Underestimation has cost Europe again while Russia has lastly taken afoot. It is only the beginning of a grand Russian policy.

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