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Risk Management News - Mix of energy sources needed to provide energy security

Source: Asia Insurance Review | Dec 2015

A panel discussion at the recent Singapore Energy Summit, which saw more than 28,000 energy leaders from 60 countries sharing insights on “Global Energy Transitions”, came to the conclusion that a mix of energy sources is necessary to provide for energy security. 
 
   The eminent panellists, from a range of energy organisations and countries, agreed that no country should rely on a single energy source today. 
 
Ruling out nuclear energy is not an option
Given the impact of fossil fuels on the hot topic of climate change, the risks and rewards of nuclear energy as a clean source was heavily discussed. 
 
   Lady Barbara Judge, Chairman Emeritus of the UK Atomic Energy Authority noted that nuclear energy is the only source which currently meets the challenges of energy security; independence being located in a country’s very own geographical boundaries and the environmental concerns surrounding climate change.
 
   Despite nuclear incidents like Fukushima, she noted that statistics showed the use of nuclear had in fact not decreased in recent times, except that the action had moved to Asia. She acknowledged that nuclear energy requires efforts to gain public acceptance – its safety statistics are in fact better than the oil and gas industry. “My opinion is, small modular reactors which are being developed now, may be appropriate to add to the energy mix of small countries like Singapore,” she said, noting that several Asian countries already had plans to go nuclear.
 
Renewables – Cost will decrease
On the role of renewables, Mr Eric Luo, CEO of leading solar energy firm Shunfeng International Clean Energy said that as technology advances and investment grows in the sector, renewables would become a ready energy source. 
 
   The cost of installing solar panels has been decreasing rapidly. Mr Gireesh B. Pradhan, Chairman and Chief Executive of the Central Electricity Regulatory Commission in India said that the use of off-grid renewables, such as rooftop solar in India has been significant. 
 
   However, much R&D is still needed for renewables. Dr Mohamed Mostafa El-Khayat, from the New and Renewable Energy Authority (NREA), Egypt said while the use of small-scale rooftop solar panels in his country is reliable, large-scale renewable systems are still not competitive. 
 
   “There is a need for greater efforts in R&D for storage of renewables, and for forecasting production,” he said. Echoing this point, Lady Judge remarked that renewables could be in the mix but it is not sufficiently reliable, and a country still needs a source of “baseload generation” such as nuclear. 
 
Role of fossil fuels and LNG
The panellists agreed that fossil fuels still play a critical and reliable role in less mature societies, where coal is important. Mr Pradhan noted that in the context of Indian households, where 30% do not have access to energy, “there is no source of energy which is taboo,” he said. India is still striving towards a fundamental goal of securing energy for the entire population. 
 
   Meanwhile, Mr Shigeru Muraki of Tokyo Gas said that liquefied natural gas (LNG) would, in the long term, continue to be important, being relatively lower in carbon. He noted that countries in Asia like Japan, Korea and Singapore would likely become key LNG trading hubs.
 
Market forces may not always work
One point discussed was that supply could not always be left to the market, which may give inadequate signals. 
 
   Mr Pradhan agreed that government support and some subsidies would be required especially from his observations of India, where it is very difficult to convince banks to provide loans for renewables. 
 
   Lady Judge noted that building nuclear plants currently could be expensive and may need some sort of government help, though the latter seemed to apply to all other kinds of energy as well. “The important thing is the government should not change its policy from year to year, so that investments can be made on the basis of a long term outlook. But we need to have a basket of energies, and if there are some subsidies, the government needs to be careful about the kind of behaviour it’s incentivising,” she said. 
 
   Mr Luo pointed out that with capital costs reducing by as much as 10 times, solar energy does not need government subsidies and can be self-sustainable and compete with fossil fuels.
 
The challenges ahead
The speakers agreed that with challenges emanating from many angles, a bouquet of different energy types is necessary to see countries into the future – and the developed world could do more to share expertise with the developing countries. On the flip side, managing demand is just as important. “My concluding remarks are that the best energy of all is the energy you don’t use,” Lady Judge said.
 
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