Energy Transition

Why accelerating the deployment of advanced energy solutions is not a technology readiness challenge

Huge investment is needed in advanced energy solutions such as clean hydrogen.

Huge investment is needed in advanced energy solutions such as clean hydrogen. Image: Getty Images/iStockphoto.

Maciej Kolaczkowski
Manager, Advanced Energy Solutions Industry, World Economic Forum
Debmalya Sen
Lead, Advanced Energy Solutions, World Economic Forum, C4IR India
Jeremy Williams
Project Fellow, Advanced Energy Solutions, World Economic Forum
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Energy Transition

  • Advanced energy solutions are critical in the global endeavour to reduce carbon emissions and achieve a net-zero future.
  • Yet progress is significantly lagging – more investment is needed and solutions need to be scaled up rapidly.
  • The primary challenge in scaling advanced solutions over the next decade does not lie in their technological feasibility - rather, it is a challenge of confidence.
  • We outline the key factors that will ensure success in achieving the required levels of deployment in coming years.

Energy storage, clean hydrogen, sustainable aviation fuels (SAF), carbon management and small modular reactors are central in the global endeavour to achieve a net-zero future.

The scale of capacity growth and investment needed across these solutions is unprecedented. Achieving a path to net-zero emissions by 2030 will need carbon capture and storage (CCS) to scale to 20 times the current capacity, energy storage to 35 times, clean hydrogen production 70 times and SAF 190 times. Additionally, mass deployment of new advanced modular nuclear reactors will be needed.

However, while progress is being made, it is significantly lagging. Publicly announced plans currently cover only a fraction of the estimated investment needs.

Image: Analyses based on IEA, BNEF, Global Data and Hydrogen Council.

Not a technology readiness challenge

While technology development must continue to drive down cost curves and bring new innovations to market, the primary challenge in scaling advanced solutions over the next decade does not lie in their technological feasibility. Rather, it lies in confidence in these solutions. Many stakeholders recognize the need for these solutions and the opportunities they offer but are not confident enough to move at the speed and scale required.

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The challenge can be broken down into technological confidence, demand confidence, business case confidence and public confidence. In essence, large energy companies, energy users, financial institutions, policy-makers and the general public need to be confident that technologies are proven, safe and able to deliver the most affordable path to net-zero emissions by 2030.

Technological confidence

Misconceptions over the technological readiness of many of advanced solutions continue to linger despite an increasing number of plants that exist and projects that are being commissioned in energy storage, clean hydrogen, SAF and CCS. Advanced nuclear solutions are often seen as less mature, even though technologies behind small modular reactors, for instance, have been around for decades.

Existing advanced energy plants in operation, clockwise from top left: DAC facility, Orca; Battery Storage, Moss Landing; Carbon Capture, Shutes Creek; Clean Hydrogen, Baofeng Project. Credits: Climeworks, ExxonMobil, Vistra Corp, and Baofeng Energy.
Existing advanced energy plants in operation, clockwise from top left: DAC facility, Orca; Battery Storage, Moss Landing; Carbon Capture, Shutes Creek; Clean Hydrogen, Baofeng Project. Credits: Climeworks, ExxonMobil, Vistra Corp, and Baofeng Energy.

For example an operating electrolyser plant in China, has the capability to produce 27,000 tonnes of green hydrogen per annum. A refinery in Singapore has capacity to produce 1 million tonnes of SAF. Lithium-ion battery storage continues are being added added in the GW’s all over the world, and carbon management technologies continue to capture and remove CO2, such as the 4,000 tonne per year direct air capture facility “Orca” in Iceland.

Business case confidence

At the same time, all advanced energy solutions are going through intense innovation. This, combined with the increasing scale and industrialization, is expected to substantially lower costs by 2030.

However, despite potential reductions, a “green premium” will persist over the next decade comparing various options solely on cost basis. For example, SAF is likely to remain 2-3 times more costly than kerosene by 2030. Absorbing this cost would increase the passenger ticket price by 18% to reduce approximately 50% of flight emissions.

Hence, it will be instrumental to better understand the value of emissions and pollution reduction, better public health, improved industrial competitiveness and energy security. For advanced energy solutions, any business case must include clear mechanisms to cover green premiums. It needs to be established how additional cost will be met and distributed through a range of options from government subsidies, consumers paying more to philanthropic capital.

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Demand confidence

Despite such a robust market outlook, confidence in actual demand from industries and individuals remains low. Purchase agreements and offtake contracts are often key levers for providing more demand confidence. Suppliers greatly need these demand signals to invest in production facilities, infrastructure, feedstock and materials.

Public confidence

Lastly, public confidence is essential to rapidly scale-up by minimising resistance and increasing willingness to pay. This confidence is underpinned by explaining the true value these solutions can bring, such as cleaner air, reduced healthcare costs, and job creation.

Collaboration and policy

Exponentially scaling the advanced energy solutions industries over the next decade will require unprecedented levels of collaboration to build and unlock confidence in technology, business case and demand, while taking a people-positive approach. It will be essential to driving scale, creating the demand signals, unlocking investment, spreading the risk and informing policy-making.

The role of policy remains central to unlocking various challenges to scale. For instance, permitting and supportive regulation such as financial subsidies and demand mandates can help create business cases and address green premium scenarios.

Community

While every region, country, industry and company will decide its own approach, all stakeholders need to work in concert with each other and the existing system.

The World Economic Forum’s Advanced Energy Solutions community aspires to accelerate, from decades to years, the deployment at industrial scale of advanced energy solutions. It helps stakeholders increase public confidence in technology, demand and business case by enabling collaborations and informing policies.

Advanced Energy Solutions is a community of the World Economic Forum. LEK Consulting is the knowledge partner of the community. Get in touch to learn more and engage at maciej.kolaczkowski@weforum.org.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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