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"WILL TECHNOLOGY CHANGE THE ELECTRICITY BUSINESS?" EXECUTIVE FORUM
To help redress the balance, the first three and a half hour session of the EURELECTRIC Annual Conference would be dedicated to the question: Will Technology Change the Electricity Business? Mr Haider reminded the audience that electricity itself provides a “unique, economically-competitive energy solution which can help to drastically reduce the use of hydrocarbons, cut down on CO2 emissions and boost energy efficiency”, adding that “progress on the technology front will help to ensure that we make the most of these advantages”.
Mr Maurel underlined that to meet these five requirements and “turn expectations into reality”, Europe would need to make continuing use of all kinds of energy resources and set the right goals for research and development.
A successful future for the electricity industry implies both avoiding any negative perceptions among the public and the policymakers and being aware of the long-term scenarios regarding sources, technology and investments, he suggested. Dr D’Haeseleer saw energy conservation and efficiency as the prime immediate goal. This should lead to a growth in “energy services” to customers on the one hand and a reduction in society’s overall energy intensity on the other. The four technological pillars of low-emission conversion are clean fossil fuels, renewable flows, nuclear power and the “hydrogen economy” and fuel cells, he argued. Looking at the need to achieve the key energy goals within the framework of the European liberalised market, he saw some “nervousness” arising from uncertainties over the unclear and varied regulatory regimes; the short-term view being taken by some companies; question-marks over future investments in power generation and transmission capacity and the lack of incentives to undertake research and development in the electricity and gas sectors. Dr D’Haeseleer argued that there is a real need for careful analysis of the various issues and an “in-depth interdisciplinary exchange of ideas" on a Europe-wide basis between academic experts, authorities and stakeholders. The EU-SUSTEL project – whose results are due out in early 2007 - and the newly-founded European Energy Institute are examples of this kind of approach, he told delegates.
Given that nuclear power and renewable sources including large hydropower plant already account for 46% of the 3,000 TWh of power generated in the 25 EU countries, efforts towards reducing CO2 emissions would have to be aimed at the remaining 54% of generation – ie coal, gas and oil, with the major effort focussing on “clean coal” technology, Dr Jäger pointed out. Should political decisions result in the closing down of nuclear, which today produces 1,000 TWh of carbon-free electricity, to be replaced by fossil fuel powered plant, this would add 500 million tonnes a year of CO2 emissions – more than the current target for CO2 reductions under the Kyoto commitments, he underlined. Dr Jäger forecast that as plants approach the end of their 40-year nominal life-time and demand for electricity increases, some 2000,000 MW capacity would have to be installed before 2030. This provides a clear opportunity to bring in new technology, increasing efficiency and cutting down on carbon-dioxide emissions. He set out various steps on the path forward, some feasible in the short term, others further off. State-of-the-art technology means that fossil plant efficiencies can already be improved by 10% (the best combined cycle gas turbine plant attaining energy efficiencies up to 58%), with a potential to reduce by 2bn tonnes on the current 5.5 bn tonnes of CO2 emitted by the EU today. Full carbon capture should be feasible by 2020, with sequestration a little further off. The “third generation” of nuclear plant – including advanced pressurised water reactors and boiling water reactors - is available now, smaller-sized modular reactors (such as the pebble bed modular) already under development and research ongoing into a fourth generation involving new materials, enhanced fuel cycle capabilities and a new level of both safety and economic performance. Among new renewables, windpower is already well established but “the challenge is to make it competitive”; biomass depends on a direct link to fuel sources and a proper heat contract; while photovoltaic power still needs a “technological revolution” to break through. All in all, we must not divide technologies into “good” and “bad”, or ignore feasible options, but we should try to “integrate them all”. Tariff frameworks set by the authorities must “contribute to market-development, stability and a climate propitious for investment”, underlined Dr Jäger.
Mr Filion pointed to the emerging solutions. Distributed generation helps to strengthen power delivery infrastructure and relieve congestion. Meanwhile tailoring the network to assure sufficient reactive power will also help to integrate the burgeoning windpower. Data collection and system operation could also be adapted to include wind variation and turbines further adapted, said Mr Filion congratulating the manufacturers of wind assets for the progress made and exhorting them to “keep up their efforts”. However, it is now time to replace the “jumble of legacy systems” with a “smarter system based on digital technology, whose components can “talk to each other”, providing automatic control and defence plans for network security, preserving the stability of the system and maintaining acceptable voltage levels. Mr Filion underlined the important role of CIGRE in providing a platform for cooperation so as to help the industry better meet the needs of customers.
Mr Nabuurs stressed that technology was not only an “internal resource” for improving the generation and delivery of electricity but could also “put the consumer in control”. Although electricity is a “boring commodity”, technology - home power plants, smart metering and premium power offers etc - will provide opportunities to differentiate the product, he stressed. Therefore, “technology should be leveraged to create competitive advantage and add value for customers”. Ideas, people and technology will drive your business and we need new ideas, and money to back them, he told the delegates. ********************************** PANEL DEBATE
For the panel debate, the speakers were joined by Michel Poireau, Head of Unit at Directorate General for Research at the European Commission, Jacqueline Stubbe, chair of EURELECTRIC’s Working Group on Research and Development, and Richard Warner, Senior Partner at business consultancy firm Accenture, and Marc Florette, Executive Vice-President and Director of R&D division at Gaz de France.
Mr Poireau pointed out the need for dialogue between industry and researchers, and the importance of reversing the downward trend in both public and private spending on research.
Mr Nabuurs told the audience that “at the moment, the public is not convinced that the industry wishes to promote all technologies”, asking: “if 20-25% of revenue can be spent on R&D in some sectors, then why not in our business?”. R&D spending levels should be totalling some 5-10% of turnover, he argued. Mr Filion agreed that the electricity industry has been very slow in terms of the development of technology, but he was confident that progress was being made. Looking at system reliability, he explained that “a good operating system should avoid any possibility of a blackout”, and that “while this is not the case today, the technology is there to make this possible”. However, he returned to the key question “who will pay for future research and development?” While acknowledging that “the R&D investment figures are low”, Prof. D’Haeseleer was “not all that pessimistic about investment in technology”. “The industry has gone through a revolution, and when the regulatory climate becomes clearer in Europe, the industry will increase spending on R&D”, he said. Taking up the theme of system reliability and blackouts, Prof. D’Haeseleer argued that an occasional blackout “serves to remind the public of the importance of electricity” but then the industry will come under heavy criticism when one occurs – “so it’s a lose-lose situation”. Mr Warner said that any future developments would be to a large extent driven by what the customer wants. However, the key question is “how to filter the mass of information coming from the customers and turn it into a sound basis for decisions on capital investments”, he argued. While basically believing in the ability of markets to drive investment and innovation, Prof. D’Haeseleer said that “in some cases where the market might not solve all problems you might need subsidies, but these subsidies must be transparent”. Dr Jäger explained that that the real challenge is to be able promote new ideas “without jeopardising the backbone of the electricity system”. For example, technologies “should be pushed” in a direction in which cogeneration could play its full part, he argued. Prof. D’Haeseleer felt strongly however that “cogeneration is not the Holy Grail”. He returned to his earlier assertion that energy efficiency, “both on the generation side and the end-use side” is the central point for technological development.
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“Amongst
all the meetings and discussions my colleagues and I at EURELECTRIC
have with the policymakers, legislators and other political groups
regarding market development, network access, competitive conditions,
rules for trading emissions allowances, and so on, it is sometimes
easy to lose sight of the sheer importance of technology in impacting
on the electricity business and driving change", Hans Haider
Chairman of the Managing Board and CEO of Österreichische
Elektrizitätswirtschafts-AG (Verbund) and EURELECTRIC President,
opening the Executive Forum, told delegates. 
Vincent Maurel,
President and CEO of Framatome ANP and Member of the AREVA Executive
Board, chairing the session and moderating the debates, listed three
main drivers for technological research work in the electricity sphere
in Europe: ongoing growth in demand for electricity; the need to renew
ageing plant; and the need to enhance the performance of the networks
to cope with developments and integration of the liberalised markets
of Europe. Future decisions and choices must take account of five key
requirements, Mr Maurel told delegates. These are: ensuring security
of supply; reducing output of CO2 in line with the current Kyoto
commitments and the post-2012 requirements - which would have to “go
far beyond” the present commitments, he stressed; offering power at
affordable prices to support the overall competitive performance of
European industry; delivering a high quality product to increasingly
sophisticated customers; helping to develop a Europe-wide integrated
market, which calls for “efforts and new tools to enhance the
performance of networks”.
The basic
challenge is to ensure a sustainable electricity provision chain in
the society of tomorrow. Professor William D’Haeseleer
of the University of Leuven, told the audience, listing three
“buzz-words” for sustainable provision of electricity: reliable, clean
and affordable supply. Reliable implies on the one hand instantaneous
and continuous power flow avoiding blackouts and on the other a secure
strategy for obtaining primary energy that implies source and
geographical diversification. Issues here include centralised versus
decentralised generation; ways to store electricity; and the storage
of primary sources like gas and coal. Clean requires solutions to
issues such as air-polluting emissions and radioactive risks, with the
greenhouse gas emissions linked to climate change currently posing the
biggest challenge. Affordable implies a cost-effective approach,
taking account of primary sources and the energy conversion
technologies used, in a full-cost view that also incorporates
“externalities” such as environmental costs, “shadow” costs including
the backup needed for technologies like windpower, plus risk premiums
associated with geopolitical issues. 
“The best
way to forecast the future is to arrange it!”, Dr. Gerd
Jäger, Chairman of the Board of
Directors at VGB Powertech, told the audience, adding that efforts to
bring about a “low-carbon future” must be embedded in a clear road-map
for further technological development. The challenges include
maintaining a stable contribution from nuclear power by ensuring
acceptable solutions for radioactive waste disposal; developing
nuclear fusion as a viable power source; working to maintain fossil
fuels as the “backbone” of power generation; and increasing the share
of renewable energies in the competitive electricity market by
reducing their costs.
“The renewal
and development of the networks is the keystone for providing an
efficient service to customers”, given the rising demand for
electricity due to worldwide economic growth, rapid expansion of
information technology services and the burgeoning demand in the
developing countries for a better quality of life based on
electrically-powered devices, Yves Filion,
President of Hydro Québec TransEnergie told the Forum. Looking at the
current situation in Europe, Mr Filion pointed out that increased
cross-border power trading was a positive development but it had
placed new demands on the networks, creating congestion and
bottlenecks and leading to less efficient electricity transmission as
losses increase and systems are in some cases having to work beyond
their design limits. Moreover, new types of power generation - smaller
and less stable units such as windpower - were increasingly seen on
the grids at a time when digital devices and IT appliances, which are
intolerant of transients, harmonics and voltage surges, require higher
quality power service. The old analogue infrastructure is not able to
cope with this requirement, Mr Filion warned, pointing out moreover
that threats to grids from human error, natural disaster or deliberate
attack require networks to be robust and quickly restorable. On top of
these challenges, environmental and social constraints such as the
difficulty and expense of obtaining real estate and right of way,
costly and time-consuming processes for obtaining permits, are
limiting network expansion.
“Technology
is never a status quo”, and “the future belongs to those who prepare
for it today”, Pier Nabuurs, CEO
of Dutch research, testing and certification consultancy KEMA, told
the audience, offering the example of the music business, where music
“has always been with us” but the carrier - from vinyl records to tape
to cassettes to CDs to i-Pod devices - has been constantly changing.
Similarly companies are constantly merging and moving into new fields
and “ if we do not take the key decisions on technology ourselves,
others will come in and make them for us”, he warned, pointing out
that electricity companies have been cautious in bringing in new
technology and the present stage of liberalisation and limited
competition has not yet pushed them to innovate. 
Mr Florette spoke about the prospects for carbon dioxide
capture and sequestration as part of climate change action. He said
the process would be in its initial phase by 2010, and would have
reached a mature level by around 2020. He underlined however three key
requirements: not only would the technology have to be effective, but
regulatory treatment would have to be favourable to the process, while
no real progress would be made without public acceptance.
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