The shape of power to come

Dubai: We’re often told that in future our rooftop solar panels may go a long way to providing our domestic energy needs.

But that may not be the case, energy expert Kurt Oswald told delegates at a Wetex seminar on energy transition.

Oswald, a partner at global management consultant AT Kearney, and head of its Middle East utilities practice, painted several pictures of the energy industry in 2040 during his talk at Dubai World Trade Centre on Tuesday morning.

The first variable he listed was the global geopolitical landscape.

If the world continues to develop open economies, with strong international bodies and effective global regulation — a situation Oswald called Globalisation 3.0 — increased growth will mean significantly greater energy demand, but more of it would be clean energy from renewables.

If the world of 2040 is dominated by regional blocs, growth will be slower, with energy demand also rising more slowly.

But if the blocs break down, with every nation developing its own policies — what Oswald called Islandification — the rise in energy demand will be slower still, but more of it will derive from fossil fuels as there will be slower technological progress and no international commitments to renewables.

In the globalised world of 2040, renewables and gas take a larger share of the energy market, with oil losing out. Coal maintains its share due to demand in India and China.

In the islands world, coal expands its share, renewables expand minimally, and oil and gas maintain their position.

Within those broad scenarios, energy provision fell into four models.

Utilities could continue to be centralised power producers, a model Oswald predicted would continue to dominate the Middle East.

Alternatively, they could move be providing distribution platforms for energy produced by themselves and others.

They could move to provide integrated solutions, such as new technology, to consumers, at an international level, or they could become regional solution providers, interfacing between the larger models and the customers.

All of those models would increasingly rely on new technology, but Oswald warned, “You can apply as much technology as you want but only the customer relationship can maintain the customers — the customer relationship is one of the key levers for success.”

Examining the potential for the EU, Oswald predicted, “The big winner will be the solution provider, which hardly exists now. It’s an emerging business model.”