.
Volatile oil prices, shifts in global energy power, the rise of technology-driven architecture: these are the trends that have characterized global energy over the past decade, and they are likely to continue into 2016. Though no major changes have affected the energy market in the past year, the ways in which these trends are playing out is proving to be fascinatingly unpredictable.
The World Economic Forum recently released their Global Energy Architecture Performance Index Report for 2016. Aimed at evaluating each country’s energy performance, as well as analyzing global energy trends, this year’s report focused heavily on energy access and security. With technology affecting every area of energy – from importers and exporters to architectures, grid systems, and everything in between – the access and security of energy is seeing both an increase in opportunities as well as risks. Technology has consistently been a major player in global energy and will continue to affect energy systems for years; countries must accurately prepare.
Energy security and access rests on four platforms: availability, accessibility, affordability, and acceptability. In recent years, access to energy has increased significantly due to advances in technology. The benefits of technology are numerous – the creation of intelligent grid systems, decentralization and management of energy architectures, the ability to pinpoint areas of risk and vulnerability – but with such a large shift toward technology-based platforms comes higher levels of risk.
First, increasing interconnectivity between systems creates a platform on which small conflicts may have bigger ripple effects that could upset the system as a whole. Second, a large majority of energy companies are inexperienced when it comes to large-scale cyber attacks, leading to big vulnerabilities throughout the system. And third, the increasing technological capabilities of non-state actors in the energy system could lead to the creation of rogue actors unencumbered by state relations. This enormous, quickly advancing, and heavily specialized technological system that integrates global energy is creating vast opportunities for growth, but opportunities for destruction as well. Businesses and governments need to be aware of these risks and begin preparing defense systems for potential cyber attacks.
Although technology has helped shape global energy into what it is today, more traditional factors such as oil and renewable energy are also affecting the system in interesting ways. 2015 saw a shift in wealth from oil exporting countries to oil importing countries as oil prices dropped significantly due to a collapse in demand and supply-driven reasons. Though prices are projected to continue in this fashion, the oil market is volatile. Oil prices could rise unexpectedly, leading to an off-balance system and financial woes for oil-importing countries. This is why it is vital for countries to diversify their energy supply.
One way to diversity is through renewable energy. The past decade has seen a steady increase in renewable energy systems, such as wind turbines and a wider use of electricity. The last couple of years have seen promising plans put forward that would provide electricity to previously deprived areas, as well as increase distributed generation. The use of renewable energy also brings about low and stable energy costs, providing a steady base upon which energy infrastructure can rest. With the aforementioned volatility of oil and similar markets, countries must diversify renewable energy as well.
Diversification appears to be key to high energy performance in a country. One of the staples of the World Economic Forum’s report is the EAPI index, which examines the performance of energy systems around the world. This index is based on three factors: economic growth and development, environmental sustainability, and energy access and security. Though all of the countries have room for improvement, it appears that those who are relatively balanced across these three factors tend to outperform other countries.
Surprisingly, none of the top twelve GDP countries – except for France, who ranks 4th – appears in the top ten of the EAPI index. Many are mid-rank or lower, with the United States in 48th place. Nordic countries such as Norway, Sweden, and Denmark are all in the top five, with Switzerland taking first place. Despite the wide range of ranks, no one country performed perfectly in all sub-areas of the index, or even a majority of them. We are slowly improving, but there is still a lot that needs to be addressed.
Overall, the general state of the global energy market has kept steady. Companies and governments are beginning to use technology to transform global energy into an efficient, low-cost, and widely accessible venue for both consumers and producers. Renewable energy is not only bringing stability to the market, but is also helping heal the environment. These two factors are helping to steady the instability of the oil market, and global energy as a whole is proving highly resilient against these fluctuations. As long as we continue to invest in technology and renewable energy whilst preparing smartly for the future, the state of the global energy market should remain healthy for years to come.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
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Report Review: World Economic Forum’s Global Energy Architecture Performance Index
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March 29, 2016
Volatile oil prices, shifts in global energy power, the rise of technology-driven architecture: these are the trends that have characterized global energy over the past decade, and they are likely to continue into 2016. Though no major changes have affected the energy market in the past year, the ways in which these trends are playing out is proving to be fascinatingly unpredictable.
The World Economic Forum recently released their Global Energy Architecture Performance Index Report for 2016. Aimed at evaluating each country’s energy performance, as well as analyzing global energy trends, this year’s report focused heavily on energy access and security. With technology affecting every area of energy – from importers and exporters to architectures, grid systems, and everything in between – the access and security of energy is seeing both an increase in opportunities as well as risks. Technology has consistently been a major player in global energy and will continue to affect energy systems for years; countries must accurately prepare.
Energy security and access rests on four platforms: availability, accessibility, affordability, and acceptability. In recent years, access to energy has increased significantly due to advances in technology. The benefits of technology are numerous – the creation of intelligent grid systems, decentralization and management of energy architectures, the ability to pinpoint areas of risk and vulnerability – but with such a large shift toward technology-based platforms comes higher levels of risk.
First, increasing interconnectivity between systems creates a platform on which small conflicts may have bigger ripple effects that could upset the system as a whole. Second, a large majority of energy companies are inexperienced when it comes to large-scale cyber attacks, leading to big vulnerabilities throughout the system. And third, the increasing technological capabilities of non-state actors in the energy system could lead to the creation of rogue actors unencumbered by state relations. This enormous, quickly advancing, and heavily specialized technological system that integrates global energy is creating vast opportunities for growth, but opportunities for destruction as well. Businesses and governments need to be aware of these risks and begin preparing defense systems for potential cyber attacks.
Although technology has helped shape global energy into what it is today, more traditional factors such as oil and renewable energy are also affecting the system in interesting ways. 2015 saw a shift in wealth from oil exporting countries to oil importing countries as oil prices dropped significantly due to a collapse in demand and supply-driven reasons. Though prices are projected to continue in this fashion, the oil market is volatile. Oil prices could rise unexpectedly, leading to an off-balance system and financial woes for oil-importing countries. This is why it is vital for countries to diversify their energy supply.
One way to diversity is through renewable energy. The past decade has seen a steady increase in renewable energy systems, such as wind turbines and a wider use of electricity. The last couple of years have seen promising plans put forward that would provide electricity to previously deprived areas, as well as increase distributed generation. The use of renewable energy also brings about low and stable energy costs, providing a steady base upon which energy infrastructure can rest. With the aforementioned volatility of oil and similar markets, countries must diversify renewable energy as well.
Diversification appears to be key to high energy performance in a country. One of the staples of the World Economic Forum’s report is the EAPI index, which examines the performance of energy systems around the world. This index is based on three factors: economic growth and development, environmental sustainability, and energy access and security. Though all of the countries have room for improvement, it appears that those who are relatively balanced across these three factors tend to outperform other countries.
Surprisingly, none of the top twelve GDP countries – except for France, who ranks 4th – appears in the top ten of the EAPI index. Many are mid-rank or lower, with the United States in 48th place. Nordic countries such as Norway, Sweden, and Denmark are all in the top five, with Switzerland taking first place. Despite the wide range of ranks, no one country performed perfectly in all sub-areas of the index, or even a majority of them. We are slowly improving, but there is still a lot that needs to be addressed.
Overall, the general state of the global energy market has kept steady. Companies and governments are beginning to use technology to transform global energy into an efficient, low-cost, and widely accessible venue for both consumers and producers. Renewable energy is not only bringing stability to the market, but is also helping heal the environment. These two factors are helping to steady the instability of the oil market, and global energy as a whole is proving highly resilient against these fluctuations. As long as we continue to invest in technology and renewable energy whilst preparing smartly for the future, the state of the global energy market should remain healthy for years to come.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
