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Q&A with Christopher Guérin
Electrification holds the key to combating climate change, respecting the UN’s Sustainable Development Goals, complying with the Paris COP 21 agreement and achieving carbon neutrality by 2030. Christopher Guérin, Nexans’ CEO, explains where the challenges and opportunities lie.
Q: Why is electrification so important?
Global energy system. Renewable generation and grids will need to be expanded on an unprecedented scale over the next 20 years. This will require global investment of an estimated €23 trillion.
Stimulating electricity consumption is a vital part of the transition. Electricity demand will need to grow at 1.7% per year between now and 2040 if global warming is to be limited to an increase of two degrees Celsius. Consumers in emerging economies and usage substitution will play a key part in driving demand for low-carbon power.
Electrification needs to be inclusive. Today, 11% of the global population has no access to electricity. To avert catastrophic climate change and to meet the UN’s Sustainable Development Goals, 100% of the world’s population will need access to reliable electricity supplies within the next ten years. We need to connect nearly 1.8 billion people to reach the target of 100% coverage by 2030.
Electricity – when it is renewable and when connected systems are optimised – is the most sustainable form of energy and it will fulfil the needs of humanity in the coming years. The future of the world depends on sustainable electrification.
Q: How is electricity demand evolving?
Demand will rise dramatically, faster than ever before. Substitution will be the primary driver. Almost everything that now runs on oil, gas or coal will need to switch to electricity in the coming years. Buildings, industry and transport will see the highest levels of usage substitution.
In buildings, electricity demand will be driven by the electrification of space heating. “Smart buildings” will incorporate asset management technology to optimise consumption. There is scope for increased electricity use in industry: the iron and steel sector, for example, currently relies on coal for three-quarters of its energy. In transport, the shift from petrol and diesel to electric vehicles will drive electricity demand. Electric cars are expected to account for about 10% of European electricity consumption by 2050. Today, it is less than 1%.
In addition, we expect to see significant new demand for cooling – particularly from data centres. Forecasts suggest that data centre demand could exceed 1,900TWh annually by 2030, ten times the current level. To put this in context, 1,900TWh is equivalent to the entire electricity generation of France, Germany, Canada and the UK.
It is vital that we focus on the reliability of supplies. Sectoral coupling will reduce the impacts of intermittency. This means enabling power flows between previously isolated systems, eliminating energy silos. In parallel with this, there is a need to integrate storage – batteries, heat and hydrogen – to ensure that there is no waste.
We must never lose sight of the need for efficiency. The signals are positive. An example is the trend towards equipping industrial electric motors with Variable Speed Drives, reducing power consumption by 30-50%. Meanwhile, smart sensors and meters are making it easier to fine-tune electricity consumption everywhere.
Q: What impact will the energy transition have on business models?
I think there are three drivers here. The first is renewable generation. The second is digitalisation. The last one is the short transportation circuits in our industrial processes. Together, these forces are already enabling new types of business. Examples include generation aggregators, flexibility aggregators and peer-to-peer players. These businesses reflect structural changes in the electricity ecosystem, specifically, the need to match supply and demand in a world where generation is less predictable and less centralised.
This raises another key point about the energy system: it is going to become increasingly data driven. Digital technologies such as cloud and the Internet of Things will reshape the way electricity is generated, distributed and consumed.
Digital technology will also change the way energy is paid for. An example is the growth of Energy-as-a-Service. Rather than paying directly for energy, consumers instead pay for services derived from energy. We see this already with electric vehicles and commercial lighting.
Digitalisation is also enabling innovative services for electricity transmission and distribution system operators. Among these are software solutions that transform the way grids are designed, maintained and upgraded. “Digital twin” technology is an example: asset management solutions based on this technology make it possible to simulate any scenario and to strike the right balance between network performance, capital and operating expenditure.
Last but not least, our management model has changed to align with the 3P principle: People, Planet, Profit. I have decided to link the three items closely. This means monitoring and rewarding our organisation and its management team on their understanding and respect of the 3Ps. It profoundly changes our common vision, our decision-making process and it influences our strategic choices.
Q: What is Nexans’ role in the energy transition?
Nexans’ mission is to electrify the future. We have played a crucial role in the electrification of the world for more than a century. Now we’re amplifying that role. We are doing this by building leading positions in digital services and data management. These capabilities build on our long expertise in cabling and electrical systems.
Our teams are designing dedicated digital answers to our customers’ unique requirements. We are present in every part of the value chain – from energy production to transmission, and from distribution to usage. Our innovative electrification solutions generate sustainable profits for all of our stakeholders, whilst enabling progress for people and planet.
As a responsible global citizen, it is our duty – and our purpose – to do everything in our power to deliver an energy system that is safer, more sustainable, decarbonised and renewable.
The threats facing our world are enormous. But so are the opportunities. Our vision is a world in which electrification connects us – all of us – to a cleaner and more prosperous future. And that future is within our grasp.