Covid-19 is accelerating the transition to green energy

Chairing Ghorfa Energy and Water working group’s energy transition discussion

Today I had the pleasure of chairing the Ghorfa working group for Energy and Water, where we discussed decarbonization and the future of the energy transition, with Hydrogen emerging as a key theme.

We received insights into the NEOM futuristic smart city initiative in Saudi Arabia and its visionary target to be fully powered by renewable energy and the GMIS initiative for the decarbonization of Industry through Hydrogen.

In my takeaway from this session, and reflecting on the events around us, the impact of Covid-19 is changing the world, not just in terms of the way we live, work and travel, but in the way we consume energy, and this will be long-lasting. This is accelerating the energy transition in the power sector.

Personal and corporate habits are changing and many of these changes are sticking. From remote working or working from home and tele-conferencing, to remote-operations, digitalization and utilization of unmanned operations.

These practices are altering energy usage patterns across the world.

We are now at a crossroads. On one hand the world is awash with cheap hydrocarbons but on the other, the economic and societal conditions for improving the conditions for a greater uptake of renewables. It would appear we are heading down the right path.

The IEA estimated that this year energy demand will contract by 6% and that energy-related emissions will decrease by 8%. wiping off the last five years of demand growth. Such a decline has not been seen for the past 70 years. 

Oil demand is expected to drop 9% and coal 8% for this year, while crude oil is at record-low prices. Natural gas will continue to be the bridge to cleaner fuels in the coming years and add to energy mix.

Renewables are the only energy source likely to experience demand growth across the remainder of 2020, regardless of the length of lockdown or strength of recovery. This is true across many countries.

This is because renewable energy has become the cheapest source of energy. IRENA recently reported that the cost of solar had fallen by 82% over the last 10 years, 

Bloomberg NEF states that renewable energy is now the cheapest energy source in two-thirds of the world.

This is positive news to take comfort in during these bleak times, but we still have a long way to go and many challenges to overcome before renewable energy becomes a core part of the energy mix.

We need to bridge the gap between conventional electricity generation and renewable energy generation. One major area of focus will be energy storage, to help increase the mix of renewables. The production of Green Hydrogen – using renewable energy to power the manufacture of hydrogen – is one key area, which offers a variety of benefits beyond just energy storage.

We at Siemens Energy embrace the energy transition challenge. We are forging ahead with innovation and with our products, solutions and services, we are providing answers to global energy megatrends – digitalization, decentralization, decarbonization and the constant growth of demand.

We energize society. #WeEnergizeSociety