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Deloitte: Energy Management – Paused by Pandemic, but Poised to Prevail

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Since Deloitte began conducting its annual survey tracking clean energy attitudes and actions a decade ago, the percentage of residential consumers concerned about climate change and personal carbon footprints has risen steadily from about half to a consistent 68%, putting increasing pressure on businesses to do more. The year 2020 appeared to be the tipping point, but when COVID-19 hit, many questioned whether the momentum had been derailed as companies focused on survival.

Deloitte’s 2020 Resources Study, “Energy Management: Paused by Pandemic, but Poised to Prevail,” found that despite the pandemic — and maybe in part because of it — progress in efforts to manage energy use, reduce carbon emissions and address climate change will likely continue and even potentially accelerate in the longer term. The study is based on survey data collected from 1,531 residential consumers and 602 business decision-makers.

Consumer concern about climate change is rising, but looking to others to solve
Consumer sentiment about climate change has steadily increased over the past decade. Sixty-eight percent of residential consumers surveyed said they were “extremely or very concerned” about climate change and their personal carbon footprint and 65% said they saw greater renewable energy development as boosting the national economy, the highest level since 2014. While the benefits of clean energy are clear, most consumers (80%) surveyed expect others, such as the government and corporations, to address climate change issues. And about a third of respondents expect action from their employers.

Millennials are a driving force for corporate sustainability
Further emphasizing the corporate role, more than a third of respondents who identified as full- or part-time employees, students and/or job seekers said it’s extremely or very important to work for a company with sustainability and/or climate-risk goals, and this sentiment rose to nearly 50% among millennials. “Employee motivations” has consistently been one of the top three drivers of corporate energy management programs, selected by at least a quarter of business respondents each year. But in 2020, that rose to a third, the highest level ever in our surveys. Employees are becoming more vocal about climate change, and this may be due to the growing influence of millennials in the workplace.

Businesses are feeling increasing stakeholder pressure to address climate risk
In line with rising consumer sentiment, nearly 60% of businesses surveyed feel increased pressure from stakeholders to develop and disclose plans to demonstrate how they’re addressing climate risk. The stakeholders seen as most active are employees (49%), followed by board members (42%), customers (41%) and shareholders (37%). Of those businesses feeling increased pressure, nearly 90% have reviewed or changed their climate-risk disclosure procedures and developed plans to address climate-related risks.

Importantly, although businesses are feeling pressure, they also increasingly see procuring clean energy as doing the “right thing.” In fact, 75% of those surveyed said recent global climate change reports have caused them to focus more on energy management. And almost 90% of respondents now see energy procurement as “not simply a cost to the company, but an opportunity to reduce risk, improve resilience, and create new value.”

Convergence of cost and clean means more green
Over the past 10 years, the “cost” versus “clean” motivations for utilizing cleaner energy resources have been steadily converging as renewable energy costs have declined. This greater affordability is allowing businesses and residential consumers to prioritize clean energy without making bottom-line sacrifices.

Businesses are procuring more renewables through more channels:

  • Sixty-three percent of businesses surveyed have increased emission reduction goals.
  • Three-quarters of business respondents said customers are asking them to procure renewable energy.
  • More than half (51%) of businesses said they’re working to procure more electricity from renewables.
  • Of the 60% of businesses citing having onsite generation, the highest share of electricity supply was generated with cogeneration (15%) and renewables (13%).
  • Microgrids also appear to be growing in popularity with 44% of business respondents saying they’ve considered a microgrid, a spike of 9 points over 2019.

Residential consumers still cost-conscious but putting environment first:

  • For the first time in five years, “utilizing clean energy sources to be better stewards of the environment” was cited ahead of “keeping my total energy bills affordable” as one of the top three most important energy issues to residential consumers.
  • More than half (53%) of respondents said it’s “extremely” or “very” important that part of their electricity supply comes from renewable energy.
  • Thirty-two percent of respondents said they were “very” or “extremely” interested in installing solar panels and 51% of those who don’t already have them on their primary residence, expressed interest if combined with battery storage.
  • Among respondents who had already installed rooftop solar, “clean” beat out saving money for the first time as the primary motivator.
  • Renewables are gaining ground as a reason for respondents to switch providers versus lower electricity costs as renewables rose 3 points in 2020 to take second place from “better service,” while “lower electricity costs” stayed steady in first place.

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Surging electricity demand is putting power systems under strain around the world

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Global electricity demand surged in 2021, creating strains in major markets, pushing prices to unprecedented levels and driving the power sector’s emissions to a record high. Electricity is central to modern life and clean electricity is pivotal to energy transitions, but in the absence of faster structural change in the sector, rising demand over the next three years could result in additional market volatility and continued high emissions, according an IEA report released today.

Driven by the rapid economic rebound, and more extreme weather conditions than in 2020, including a colder than average winter, last year’s 6% rise in global electricity demand was the largest in percentage terms since 2010 when the world was recovering from the global financial crisis. In absolute terms, last year’s increase of over 1 500 terawatt-hours was the largest ever, according to the January 2022 edition of the IEA’s semi-annual Electricity Market Report.

The steep increase in demand outstripped the ability of sources of electricity supply to keep pace in some major markets, with shortages of natural gas and coal leading to volatile prices, demand destruction and negative effects on power generators, retailers and end users, notably in China, Europe and India. Around half of last year’s global growth in electricity demand took place in China, where demand grew by an estimated 10%. China and India suffered from power cuts at certain points in the second half of the year because of coal shortages.

“Sharp spikes in electricity prices in recent times have been causing hardship for many households and businesses around the world and risk becoming a driver of social and political tensions,” said IEA Executive Director Fatih Birol. “Policy makers should be taking action now to soften the impacts on the most vulnerable and to address the underlying causes. Higher investment in low-carbon energy technologies including renewables, energy efficiency and nuclear power – alongside an expansion of robust and smart electricity grids – can help us get out of today’s difficulties.”

The IEA’s price index for major wholesale electricity markets almost doubled compared with 2020 and was up 64% from the 2016-2020 average. In Europe, average wholesale electricity prices in the fourth quarter of 2021 were more than four times their 2015-2020 average.  Besides Europe, there were also sharp price increases in Japan and India, while they were more moderate in the United States where gas supplies were less perturbed.

Electricity produced from renewable sources grew by 6% in 2021, but it was not enough to keep up with galloping demand. Coal-fired generation grew by 9%, serving more than half of the increase in demand and reaching a new all-time peak as high natural gas prices led to gas-to-coal switching. Gas-fired generation grew by 2%, while nuclear increased by 3.5%, almost reaching its 2019 levels. In total, carbon dioxide (CO2) emissions from power generation rose by 7%, also reaching a record high, after having declined the two previous years.

“Emissions from electricity need to decline by 55% by 2030 to meet our Net Zero Emissions by 2050 Scenario, but in the absence of major policy action from governments, those emissions are set to remain around the same level for the next three years,” said Dr Birol. “Not only does this highlight how far off track we currently are from a pathway to net zero emissions by 2050, but it also underscores the massive changes needed for the electricity sector to fulfil its critical role in decarbonising the broader energy system.”

For 2022-2024, the report anticipates electricity demand growing 2.7% a year on average, although the Covid-19 pandemic and high energy prices bring some uncertainty to this outlook. Renewables are set to grow by 8% per year on average, serving more than 90% of net demand growth during this period. We expect nuclear-based generation to grow by 1% annually during the same period.

As a consequence of slowing electricity demand growth and significant renewables additions, fossil fuel-based generation is expected to stagnate in the coming years, with coal-fired generation falling slightly as phase-outs and declining competitiveness in the United States and Europe are balanced by growth in markets like China and India. Gas-fired generation is seen growing by around 1% a year.

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Canada’s bold policies can underpin a successful energy transition

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Canada has embarked on an ambitious transformation of its energy system, and clear policy signals will be important to expand energy sector investments in clean and sustainable energy sources, according to a policy review by the International Energy Agency.

Since the IEA’s last in-depth review in 2015, Canada has made a series of international and domestic climate change commitments, notably setting a target to cut greenhouse gas emissions by 40-45% from 2005 levels by 2030 and a commitment to reach net zero emissions by 2050.

To support those climate and energy targets, governments in Canada have in recent years worked on a number of policy measures, including an ambitious carbon-pricing system, a clean fuels standard, a commitment to phase out unabated coal-fired electricity by 2030, nuclear plant extensions, methane regulations in the oil and gas sector, energy efficiency programmes and measures to decarbonise the transport sector.

“Canada has shown impressive leadership, both at home and abroad, on clean and equitable energy transitions,” said IEA Executive Director Fatih Birol, who is launching the report today with Jonathan Wilkinson, Canada’s Minister of Natural Resources. “Canada’s wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realise its ambitious goals. Equally important, Canada’s efforts to reduce emissions – of both carbon dioxide and methane – from its oil and gas production can help ensure its continued place as a reliable supplier of energy to the world.”

Canada’s profile as a major producer, consumer and exporter of energy presents both challenges and opportunities for reaching the country’s enhanced targets. Energy makes up 10% of gross domestic product and is a major source of capital investment, export revenue and jobs. Moreover, Canada’s highly decentralised system of government means that close coordination between federal, provincial and territorial governments is essential for a successful energy transition.

“This report acknowledges Canada’s ambitious efforts and historic investments to develop pathways to achieve net-zero emissions by 2050 and ensure a transition that aligns with our shared objective of limiting global warming to 1.5 degrees Celsius, “ said Minister Wilkinson. “These are pathways that make the most sense for our people, our economy and our country and will also yield technology, products and know-how that can be exported and applied around the world.”                              

The IEA finds that emissions intensity from Canada’s oil and gas production has declined in recent years, but the sector remains a major source of greenhouse gases, accounting for about a quarter of the country’s GHG emissions. Along with strong action to curb methane emissions, improving the rate of energy technology innovation will be essential for the deep decarbonisation that is needed in oil and gas production, as well as in the transport and industry sectors. Canada is actively advancing innovation in a number of key fields, including carbon capture, utilisation and storage; clean hydrogen; and small modular nuclear reactors, with a view to serving as a supplier of energy and climate solutions to the world. The IEA notes that further federal support for research, development and demonstration would help accelerate progress towards these goals.

The IEA is also recommending that Canada’s federal government promote a comprehensive energy efficiency strategy in consultation with provinces and territories that sets clear targets for energy efficiency in the buildings, industry and transport sectors

The IEA report highlights that Canada’s electricity supply is among the cleanest in the world, with over 80% of supply coming from non-emitting sources, thanks to the dominance of hydro and the important role of nuclear. To further support the expansion of clean power and electrification, the report encourages increased interconnections among provinces and territories to ensure balanced decarbonisation progress across the country.

The IEA commends Canada on its efforts to advance a people-centred approach to its clean energy transition, including initiatives to promote diversity and inclusion in clean energy sectors; programmes to increase access to clean energy in northern, remote and Indigenous communities; and actions to enable just transitions for coal workers and their communities.

“Canada has laid out a comprehensive set of policy measures and investments across sectors to meet its climate targets, including a strong clean energy component to its Covid-19 economic recovery efforts,” said Dr Birol. “I hope this report will help Canada navigate its path toward economy-wide emissions reductions and a net zero future.” 

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Iran to add 10GW to renewable energy capacity

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Iranian Energy Ministry and some of the country’s private contractors signed memorandums of understanding (MOU) on Sunday for cooperation in the construction of renewable power plants to generate 10,000 megawatts (10 gigawatts) of electricity across the country.

The signing ceremony was attended by senior energy officials including Energy Minister Ali-Akbar Mehrabian and Head of Renewable Energy and Energy Efficiency Organization (SATBA) Mahmoud Kamani, IRIB reported.

The MOUs were signed following the Energy Ministry’s public call for the contribution of private companies in a project for developing renewable power plants in the country.

According to SATBA, after the ministry’s public call, so far 153 requests for the generation of 90,000 megawatts (MW) have been submitted to the ministry by private companies.

Speaking in the signing ceremony, Energy Minister Ali-Akbar Mehrabian said: “When the private sector invests in this industry [the renewables], the government is obliged to return the equivalent of the investment plus its interests to the investor.”

Mehrabian noted that the government has allocated over 30 trillion rials (about $101 million) for the development of renewables in the budget bill for the next Iranian calendar year (begins on March 21), saying that it is an unprecedented budget in this area.

Further in the ceremony, SATBA Head Kamani mentioned some of the Energy Ministry’s plans for the development of the country’s renewable energy industry, saying: “Export of renewable energy is a goal that has been targeted by the government.”

“Constructing renewable power plants for the cryptocurrency miners is also being seriously considered,” he added.

Back in December 2021, Kamani had announced plans to create 10,000 MW capacity of new renewable power plants across the country within the next four years.

He had put the current capacity of the country’s renewable power plants at 905 MW, saying that such power plants account only for one percent of the country’s total power generation capacity.

“Currently, 30 percent of the world’s electricity needs are provided by renewable energy sources, and some countries have even declared 2030 as the final year of using fossil fuels,” he said.

“We are far behind the global standards in the development of renewable energy,” he regretted.

Referring to another program for the development of renewable energies in the domestic sector, Kamani noted that to encourage households for constructing such power plants the Energy Ministry has announced that it will buy their surplus generated electricity at a guaranteed price.

He further pointed to the indigenization of the knowledge for the construction of the equipment used in renewable power plants as another priority of the Energy Ministry and SATBA, saying: “Currently, the construction of solar panels and wind power plants is completely indigenized, and we must strengthen our producers to finally become able to build all the required equipment from start to finish, in this regard, of course, some enterprises have announced their readiness.”

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