15 for 15: Frost & Sullivan presents energy & environment outlook

2015 will be the year that LED lighting will become truly mainstream, desalination will undergo a revival and cities will get smart about saving water, according to consultancy firm Frost & Sullivan.

The group’s energy and environment teams analysed all sectors and compiled a list of 15 key trends and innovations that will shape the energy and environment world over the next 12 months.

And it’s not necessarily all good news for those calling for a transition to a low-carbon global economy. Low gas prices will lead to a resurgence of gas-fired generation in Europe and also an uptick in production for energy-intensive industries, Frost & Sullican says.

The 15 for 2015

1) Oil Prices will stay below US$60 

– A combination of geopolitics, weaker economic growth, increased production (both OPEC and non-OPEC) and negative market sentiment will keep oil prices at or below the US$60 per barrel mark in 2015. The result will be lower investment in new unconventional/offshore oil production and lower revenues for oil services companies, as oil companies cut expenditure.

2) Renewable energy stays resilient

– Despite the fall in the oil price, renewable energy investment will remain strong. Oil now accounts for just 5% of global electricity generated, and in many countries it is 1% or below, showing it is no longer a viable option for electricity generation. Renewable investment costs are also projected to continue falling, particularly for solar PV. Finally government mandated targets and preferential grid access mean that renewables remain an attractive investment option in a large number of countries.

3) Gas will expand

– With low oil prices come low gas prices. This will be particularly marked in Europe and Asia, where gas supply contracts are linked to the price of oil. This will herald a resurgence of gas-fired generation in Europe, where many plants have been mothballed or running at low hours. It will also spur greater investments in gas assets as private equity firms begin to take an interest. 

4) Re-Shoring will continue

– The transfer of industry from emerging markets back to North America and Europe is expected to pick up speed as gas prices stay low. Massive new supplies of liquid natural gas from Australiasia and Africa will limit US exports, supressing North American gas prices and providing a boost to energy intensive industries relying on the fuel. 

5) Nuclear will rise in the East 

– Nuclear power will continue to be a key energy source but with important regional variations. Nuclear will suffer in North America, where plant closures are ongoing due to shale gas competition. The year will also see the start of Germany’s scheduled nuclear phase-out as the first of the remaining plants is taken off the grid. Asia, on the other hand, will see strong growth led by China, as well as Japan, where nuclear capacity will be restarted.

6) Distributed will become the new centralised 

– The distributed energy sector is booming and this will continue in 2015. Solar PV is reaching grid parity, with module costs continuing to decline. Research into energy storage technologies – particularly Lithium-ion – is driving the cost down, with many demonstration projects ongoing globally. ‘Vehicle-to-grid’ technologies (whereby plugged in electric cars return power to the grid), are also expanding.

7) Batteries will get smaller, more portable and more powerful 

– The past year has seen a boom in wearables and battery manufacturers are investing heavily in producing batteries that are flexible, thin and stretchy. In 2014, the consumer Li-ion battery market was worth $11.4bn, accounting for over half of the total Li-ion battery market. Samsung introduced curved batteries in 2014, while Panasonic showcased its pin-sized batteries for wearables. Look for this innovation to continue.

8) LED lighting will go mainstream 

By late 2014, LED lighting had passed 40% penetration of the global lighting market. Driven by enhanced controllability and energy efficiency, the revolution will continue and momentum will build throughout 2015. This transformational change brings massive opportunities across value chains, but also presents huge strategic challenges to incumbent players in terms of pace of technology change and business model.

9) Clean-tech will continue to boom 

– With cutting pollution in China a key political priority and the US prepared to take steps to reduce its emissions, 2015 has the potential to see a deal struck at the UN Climate Conference in Paris. A combination of legislative pressure and declining technology costs will see clean-tech enjoy continued strong growth

10) Desalination will rebound

– The global desalination market peaked in 2007-08. However, some of the large desalination projects were stalled due to the financial crisis. The economic recovery over the last couple of years and a steady flow of projects means growth has returned to the global desalination plant market in 2015. Exciting technology trends, such as forward osmosis and solar power desalination will provide a further boost to market growth.

 11) Cities get smart by plugging leaks

– Non-revenue water (NRW) losses in cities can be as high as 50% to 60% of total water abstracted and treated, which reflects a highly inefficient water supply delivery mechanism.  NRW will become a top priority as cities become smart. Frost & Sullivan estimates the global smart water grid market to be around $9bn in 2015 with double digit growth forecast to 2020.

12) Services will be increasingly supplied over the internet 

– Energy performance contracting, demand response and virtual power plants are transformational changes requiring new business models. Businesses that can make these changes are increasingly providing their services online rather than on-site.

13) The internet of things will enables smart buildings

– Software and hardware improvements are bringing the internet of things (IoT) to reality. We are already seeing many IoT solutions for the smart home and smart building and 2015 will be the year of acceleration. Under the umbrella of big data analytics, companies will be able to improve heating, electrical and water efficiency.

14) Devices that improve solar energy yield will continue to grow

– 2015 will bring new opportunities for micro inverters and DC optimizers in terms of expansion into new applications and geographies. The European market (worth €4.2bn in 2014) is relatively under-penetrated, and is expected to grow by around 5-7% until 2020. Established US players are expanding their business into the European and Asian markets.

15) More people will benefit from innovations

– The United Nations estimates close to 2.7 billion people are not connected to centralised sewer systems and therefore need decentralised solutions. This bottom of the pyramid segment is being addressed with innovative technologies that not only address wastewater treatment, water reuse and recycling but also generate renewable energy.

Brad Allen

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