Finance Monthly August 2019 Edition

9 www.finance-monthly.com NEWS - MONTHLY ROUND-UP News you Can’t Afford to Miss DECARBONISATION, DIGITISATION AND DECENTRALISATION ARE ACCELERATING THE COUNTDOWN TO A NEW ENERGY WORLD FASTER THAN EXPECTED Renewable energy technol- ogy advances, innovation in storage and digitisation and increased distributed energy generation are ac- celerating the pace of the global energy transition, according to the latest EY research in collaboration with IDC, a leading global analyst house. A year ago, EY teams and IDC mapped the major driv- ers to determine when three tipping points would forever change the way utilities do business and set the indus- try on a countdown to rein- vention. The latest analysis, covering Europe, the US, Oceania, the Gulf Coopera- tion Council (GCC) coun- tries, China, India and Latin America, indicates that these drivers are progress- ing faster than even the most ambitious estimates, bringing forward the tipping points by as much as two years. Benoit Laclau, EY Global Energy Leader, says: “A revolution in the power sec- tor is driving rapid change in renewable energy support- ed by digital technologies, the falling cost of battery storage, and empowered consumers. These are quickly ushering in a new energy system, transform- ing our world into one where cleanly generated electricity will power almost every as- pect of our lives”. The research identifies four key forces creating a com- bination of factors that com- press the timeline to a new energy world. Force 1: Better, cheaper technology As a result of the accelerat- ing shift toward utility-scale renewables, complemented by declines in the cost of decentralised generation- plus-storage solutions, 2018 is the seventh year in a row where new renewable energy capacity outstripped new conventional energy installations. Energy and digital technologies that accelerate renewable de- ployment, such as battery storage, electric vehicles, artificial intelligence and machine learning, have moved quickly from being emerging trends to integral parts of the energy system. The research indicates that battery innovation - in par- ticular, the adoption of util- ity-scale storage - marks a major turning point that will drive momentum in other regions. Force 2: Policy revisions and more ambitious clean energy targets Around the world, govern- ments are positively re- vising renewable energy targets, with many mandat- ing big increases that are quickly shifting their coun- try’s energy mix. As technol- ogies and markets mature, countries are increasingly moving away from some of the policy mechanisms that drove early uptake in renewables. While feed-in policies remain the back- bone of national support schemes, renewable ten- ders are becoming promi- nent. Force 3: Distributed gen- eration gaining momen- tum, especially among corporates The analysis indicates that a powerful mix of consum- er demand, sustainability targets and a desire to cut costs and secure energy supply is pushing compa- nies to forge their own pow- er purchase agreements (PPAs) or self-generate electricity. For many busi- nesses, the main driver is economics, because sig- nificant reductions in renew- able energy costs, as well as maturing market and policy environments, have made renewables an attrac- tive source of energy in their own right. Meanwhile, the uptake of solar photovoltaic at a residential level contin- ues to accelerate beyond expectations and commu- nity energy schemes are on the rise, impacting energy companies’ market share. Force 4: Stakeholder ac- tion is reshaping energy investment In the past few years, the funding landscape of the energy sector has changed significantly, with renewa- bles and energy technolo- gies attracting new types of funders. This includes pri- vate equity firms and ven- ture capitalists who seek investments with smaller time frames and bigger po- tential for innovation. One of the major impacts seen is from activist investors as well as regulators, custom- ers and the public, all of whom demand companies to focus on cleaner sources of electricity. In addition to the above forces, “the electrification of everything” is a major factor that is underpinning this change in the energy mix. By 2050, nearly, 70% of the world’s population is expected to live in urban areas and 50% of total final energy consumption will be electricity. This indicates an electrification of buildings, heating, industry, data cen- tres and transport being the critical lever in the building of sustainable climate-safe cities. In major energy mar- kets, the phasing out of in- ternal combustion engines in favour of electric vehi- cles (EVs), is a very visible and high impact part of this trend and is bolstered by ini- tiatives to reduce emissions and create urban mobility networks. VIRGIN ATLANTIC TO GO PUBLIC Sir Richard Branson has announced his intentions to take Virgin Atlantic pub- lic on the New York Stock Exchange. Branson is among others—Jeff Be- zos and Elon Musk includ- ed—in the race to be the first to bring commercial passenger flights in space to the world. Branson said: “We can open space to more in- vestors and in doing so, open space to thousands of new astronauts. We are at the dawn of a new space age, with huge potential to improve and sustain life on Earth. He also announced an al- liance with Billionaire and former Facebook execu- tive Chamath Palihapitiya, who will assist with fund- ing and who has pledged an additional $100 million investment when the deal is completed. Palihapitiya commented: “We are con- fident that Virgin Galactic is light years ahead of the competition. It is backed by an exciting business model and an uncompro- mising commitment to safety and customer sat- isfaction. I cannot wait to take my first trip to space and become an astro- naut.”