SIEW 2018: 5Qs with Ditlev Engel, CEO, DNV GL – Energy

Ditlev Engel brings a wealth of knowledge of the global energy industry and international leadership competence. From 2005 to 2013, he had the position of Group President & CEO of global wind turbine manufacturer Vestas. Prior to Vestas, he has 20 years of experience at coatings manufacturer Hempel A/S, of which 10 years as executive leader moving from EVP Marketing and R&D to Group President & CEO. He has degrees in business administration, finance, accounting, and general management from Copenhagen Business School and INSEAD.

Ditlev Engel has been a driving force behind many global green investment initiatives, pushing the energy transition to the next level. He has been Member of the Energy Partner Network of the World Economic Forum, Advisor of the International Energy Agency, Chairman Green Growth Working Group at three consecutive G20 Summits, co-founder of the Green Growth Action Alliance and Member of UN’s Sustainable Energy for All.

1. What are the main drivers that will change Asia’s energy landscape?

Looking at Southeast Asia, meeting the growing energy demand from rising populations in expanding economies is the key priority for the region. A lot of this energy demand will be met by electricity as the region is well placed for sustainable means of electrification. In fact, electricity consumption will increase more than threefold between now and 2050.

For example, the residential sector will see a steady shift in cooking practices. Much of the expected growth will be offset by reduced energy demand related to a switch in cooking from biomass to more energy-efficient gas and electricity.

The majority of the growing electricity demand will come from renewables, which will provide 84 percent of total power generation by 2050. Solar PV and wind start from very low bases, but will make real contributions from 2030 onwards.

Beyond 2030, there will be rapid growth of renewables, with solar PV taking the lead. By 2040, solar PV will have surpassed coal as the largest source of power and will provide 49 percent of the region’s electricity needs by mid-century.


2. How will the cost structure of energy systems develop in the years to come?

The good news is that total energy costs as share of global Gross Domestic Product (GDP) will go down. Fuel costs, for example, will be much smaller in future. We see that investments in power lines and for non-fossil generation increase considerably by 2050; this is compensated by reductions in other areas

All in all, and as a result of GDP growth, the amount that the world will need to pay for energy-system expenditures will decrease from around 5.5 percent of global GDP today to around 3.1 percent in 2050. We also see a shift in investments. Right now, the bulk of energy investments come from oil and gas companies. In future, investments will have to come from electricity and infrastructure companies


3. How will electrification impact Asia’s grid infrastructure?

Southeast Asia will witness the modernisation of its building sector and increased energy use in both residential and commercial buildings.

As a result, the number of power station connections required signals the need for a massive increase in the capacity of electricity grids. The Indian Subcontinent and Greater China lead the way in power-grid development; their geographic scale also drives the need for more extreme and ultra-high voltage grid systems for long-distance transmission.

Stresses on grid infrastructure from the integration of variable renewables will also need tackling.

Grid initiatives will contribute to greater collective energy security and stability. One example is the Association of Southeast Asian Nations’ (ASEAN) drive to develop a regional super grid.


4. What will be the leading solutions to provide the required flexibility to manage intermittent energy sources like wind and solar?

Energy storage, and battery storage in particular, is sometimes suggested as the obvious solution to the challenge of variable renewables, and more generally for other issues of electricity system operation.

But there are several competing options, often described together as providers of ‘flexibility’, including greater interconnections, flexible generation, and flexible demand such as demand-side response.

For all flexibility issues, it is important to understand the issue of timescales. Demand-side response, interconnections, and storage, particularly batteries, are good for the very shortest timescales of sub-seconds and seconds. All options are useful on timescales up to minutes and hours. For example, we are now seeing significant growth in batteries being used in conjunction with solar PV to smooth the mid-day peak in solar production into the evenings


5. What are your thoughts on the SIEW 2018 theme “Transforming Energy: Invest, Innovate, Integrate”?

The theme “Transforming Energy: Invest, Innovate, Integrate” hits the nail on the head – as it is a prerequisite for the transformation of the energy sector towards meeting the 2015 United Nations Climate Change Conference (COP21) targets. With the growth of renewables, integration into the existing grid infrastructure becomes increasingly important. This is supported by innovation, such as storage, but also demand response and intelligent grid management enabled, for example, through the Internet of Things (IoT).

Last but not least, it is vital to work closely together with investors and lenders to create bankable projects that have an attractive size. What we see today, especially in this region, is that there is enough capital available, but investors struggle to find bankable and sizable projects.

And there are interesting alternatives. Instead of ‘just’ investing into a wind farm, one could package such a project with Liquefied Natural Gas (LNG) supply and fast response generation assets – that is, bringing the ‘frenemies’ wind and gas together to provide environmentally friendly and economical viable constant power supply to remote locations such as islands.