Parameters For Future Energy Price Scenarios

The ground rules of forecasting methods which rely on broadening of trends”, says godet “is unrealistic when the nature is an ever-changing and the phenomena which need to accounted are complex and related.” [1]

Taking the year 2025 as a near end to analyze alternative future developments and also to assure and reproducible framework using formal models and data to and harmonize regional aspirations with global possibilities, I take the following qualitative parameters into account.

1) Population: –

To relate population growth and energy demand, the link amid population and energy involves two mediatory connecting elements to be recognized.

They relate to the changes in financial development. Typically, the greater a regions’ per capita revenue, the greater it’s per capita consumption of energy. [2]

2) Environmental taxes: –

Taxes on energy consumption and carbon taxes reflect instruments which reduce the polluting releases, by economists. Practicing environmental policies, the increasing number of Western European countries has applied taxes based on the emissions or energy content of the energy products. These definitely influence the energy price scenarios in the near future. [3]

3) Investments in energy supply sector

Over the period of years 2001-2030 the total investment essential for energy supply infrastructure worldwide is estimated around $16 trillion.”[4].This investment must be used to enlarge supply capacity and to replace present and future supply amenities that will be drained or become out-of-date during the projection period. The energy market of the world is expected to rise by 2/3rds over the next 30years. Energy infrastructure investment is a cardinal driver for the growth of the economy. Energy-investment requirements will account for an important fact of total domestic investment in Russia and other transition economies, Africa and the hydrocarbon-rich Middle East. Between primary fossil fuels, the capital intensity of investment varies considerably. Natural gas is about six times more capital-intensive than coal for equivalent energy supplied. [5] This is a powerful consideration for capital-constrained countries. Future investment needs are subject to many uncertainties, including macroeconomic conditions, energy prices, environmental policies, geopolitical factors, technological developments. [6]

4) Energy technology cost: –

Advanced energy technologies can influence long-term energy investment outlook. Due to high deliverance costs in an imminent market, the fuel costs of travel in hydrogen fuel equipped vehicles would greater than those of the alternative conventional fuels, but they could ultimately become equal to gasoline vehicles.

Fuel cell vehicles are prone to technology development hurdles; however, there should be large decrease in price of owning an automobiles before fuel celled vehicles become attractive to the general public. Fuel storage is also a problem. The extensive use of H2 has to be intervened by the government to improve its usage, refueling facilities and vehicles. Nuclear advances can lead to designs with less capital costs, shorter construction time and flexible operation, so improving the economics of nuclear electricity. There is widespread interest worldwide in a 4th generation of nuclear power reactors, though public opposition can continue. [7]

5) Energy technology diffusion rates: –

Energy Technology diffusion is a sophisticated process presenting diverse dimensions for analysis. In dividing the major aspects of technology diffusion, it is in the scope of this paper to analyze the process in different dimensions. It can have a huge influence on the pricing scenario.

6) Climatic Policies: –

The energy policies are constantly changing, especially in relation to climate change and the energy transition. The energy markets are lacking regulations, there is an increase in the demand energy from renewable resources and there are price hikes. And further changes are yet to come into picture. Many of these improvements are interrelated and it is difficult to foresee their impact on strategies. However, with an affirmative approach to new improvements and accessing the right skill we can minimize risks and avail opportunities.

7) Terrorism: –

Through 2025, internal skirmishes threat the stability around the globe. Terrorist attacks are now posing serious threats to the world’s economy and energy efficiency.

Between now and 2025 terrorism will grow sophistically to a new height which breaches the world peace and harmony, indirectly effecting the energy efficiency and price scenarios. Due to these internal threats the local governments are tending to invest more on internal security sophistications and hence diverting the energy investments. We can expect more lethal terrorist attacks to occur in the future. Hence, terrorism can be considered as a threat to the energy efficiency. [8]

8) Natural Calamities: –

No nation, expert or forecasting technique can foresee a natural disaster and prevent its damage. Natural calamities can always affect a nation’s economy and energy stability. Energy price scenarios are highly influenced by these disasters. The effects include the diversion of investments to alternate housing provisions for disaster struck colonies. Relief measures have to be initiated and continued which includes huge energy consumption affecting the energy price scenario.

9) National and Local Politics: –

Government support is essential for energy policies. Creative technologies are to be experimented and implemented under the funding of the government; hence the frontrunners are planning to invest parts of their economy for these implementations. Since the global warming and other issues became serious issues of political interests, the government will be a substantial issue in energy pricing.

10) Cumulative primary energy consumption and renewable energy production:

Cumulative energy demand and efficiency can be seen as an indicator of environmental influences to estimate the exhaustion of energy resources and usage of common energy sources considering a whole lifecycle. Prospective approach always emphasizes on consumptions in the future leading to formulating theories which in return help quantification this parameter. [9]

11) Cultural effects: –

Generally living cultures and groups grow continuously and affect one or the other forms of environmental activities at the lowest levels. For an example, if a person has a big car and a small car he would generally prefer to use a bigger car.

Let it be for prestige or whatever, our culture is that way. So, cultural effects also worry the energy price scenario of the world. Consumer culture plays a weighty role in the energy needs and production.

Ans. 1b) Identification of Quantifiable Parameters:

All the qualitative parameters discussed in the previous section are not quantifiable but some are definitely quantifiable.

Population.

Environmental taxes.

Investments in energy deliver sector

Energy technology cost.

Cultural effects.

Ans. 1c) Godet’s Proposition

I moderately agree with this specific aspect of Godet’s proposition.

Qualitative forecasting techniques generally depend on expert opinions. These can be applied where historical data is available. But the historical data cannot directly interpret the future. Quantitative forecasting methods are used when past data is available. In the quantitative forecasting techniques the causation relationship is also taken into account.

Qualitative forecasting emphasizes much on prediction of future through the present scenario. It can sometimes be too erroneous to depend upon.

The cause is that predicting the future has always been an opportunity for us to let our minds run free. Eventually we will be happy or sad to see technological development which will produce unforeseen changes. As market by Godet, “imagination can deceive but sometimes it can follow a trend”. Extrapolation of the prevailing trend sometimes leads to futuristic thoughts.

These, sometimes, can be accurate too. But I consider that extrapolation of the variable a good method rather than a complete extension of a trend. But, we cannot alone depend on our predictions always. Future had never been predicted exactly and never will be.

We cannot leave our posterity with predictions only but we must prepare them for any situation. Prospective approach can be a solution to broaden our perspective towards the future but everything cannot be predicted. [10]

Ans. 1d) Commercialization of energy efficiency in Japan

1. Although many firms may be developing energy technologies and might have super features with great scientific advances but the commercialization is a bug in the ear of such firms. Market-adaptation skills and institutions to take benefits are still scarce.

In table 4 of paper by Osamu Kimura on “Commercialization of energy-efficient technologies in Japan”, some technologies which failed to get commercialized due to lack of marketing skeletal models. Michel Godet’s ideas on commercialization and qualitative approach could have definitely improved the commercialization potential of the technologies which failed to get commercialized due to marketing deficiencies.

The main difficulty is a deficiency of commercial awareness where the advanced, inspirational and market related abilities to turn an idea or design into a dependable commercial able product. Specifically quality is the lacking factor. These market-related deficiencies are persistent in any economy. [11]

Godet believed in an eight stage strategic approach, which he called a “prospective approach”, can be useful in commercializing technologies to the core.

The first stage hawked with the socio-organizational context which sets the tenor for the entire process. Technologies which have failed at this level cannot move any further because it justifies technology and tell us why it is introduced.

The second stage hawked a 360 degree ‘x-ray’ oft the enterprise, its knowledge/experience, and its productive capacities. Such a verdict will be effective in commercialization since the trademark of the developer can also affect the extent of commercialization.

The third stage emphasizes on the structural diagnosis of the enterprise, whereas, the fourth analyses the dynamics of an enterprise, its strengths and weaknesses etc. Technologies like ‘Heat Transport System using vacuum insulation’ which were introduced and failed to get commercialized due to organizational instabilities can be improved of their potential if they are introduced by a more stable organization, according to the second, third and fourth stages in the prospective approach.[12]

The fifth stage attempts to increase certainty in key questions about the future with experts’ advice and expand the risks, trends etc. Technologies like “High Efficiency Heat Pump Using Multi Fuel Engine” and “High Efficiency Heat Pump Using Hydrogen Absorbing Alloy”, which were dependent on fuels not available in the foreseen future, can be effectively commercialized using efficient fuel substitution on expert advice.

The sixth seventh and eighth stages dealt in compatibility and implementation. Additional significant features of commercialization are constant product maturity development and cost decline. Technologies like “Compression/Absorption hybrid heat pump”, “Heat recovery from slag process in steel plants”, “Heat transport system using surfactants” and “Absorption pump using natural refrigerants” can be commercialized if they successfully pass through the sixth, seventh and eighth stages of the prospective approach. [12]

2) I completely accept the conclusions of the study. There were mainly four conclusions of the study. First, “the government funding for private R&D needs to be in long tem”.

The creation of new technology frequently plays a significant role as a source of economic evolution. Furthermore, social return is always greater than the private return and hence all countries want to introduce their technologies through government funding so that the technology can reach the public far well. Hence such technology introductions receive more loans and subsidies. Two of the bases which lead to such a technology are market fluctuations and underinvestment in such technologies. Whenever a technology is under R&D, such a technology cannot be placed under secrecy and hence it will gain public interest and in turn the government funding can initialize its commercialization to a better level than a private company.

Public R&D funding surges the total R&D expenditure only if the contributions spur firms to research and deploy projects that would otherwise recognized on a smaller scale. So, the government funding to the private R&D has to be formulated to belong term so as to assist effective commercialization.

Second, “responding to and influencing market demand is a key to commercialization”. Commercialization is the process by which people, responding to markets, transform new knowledge and technology into economically successful products, processes, or services. Knowledge, sessions and topical studies suggest that a national method to commercialization should highlight the demand for R&D and technology and organize plans close to their marketplaces.

Third, “the deployment policy should complement the public R&D in the commercialization phase”. Implementation at the pre commercial stage is the beginning of the commercial distribution. This has to be done analogous to the R&D so as to find out the pros and cons of the technology in the commercial sector.

Finally, “assessment of cost and market demand”. The profitability of innovation depends on the costs of commercialization. In some industries or technologies, the sheer size of the investment re­quired is the largest single hurdle to commercial­ization. ­

Only in niche markets, with less competition and consideration of costs, can small plants compete successfully in these industries.

In other industries, however, cap­ital costs do not present as great a barrier to com­mercialization. . Especially in new industries that are expected to demonstrate strong learning- curve effects, decision makers often cannot deter­mine how quickly production costs will drop to a desired level. Uncertainties regarding cost also enter the decision-making process. [13]

Hence arrangements have to be made in order to develop commercial storage. This helps the economy and also the interests of the geographical analysts. The ongoing investments in energy storage show an urgent need of energy storage.

There have to be a regulation or a regulatory committee keeping an eye on the investments in infrastructure which proves a potential alternative for the energy supply in the energy crisis.

Greater efficiency of energy throughout its usage has to improve a lot in order to lessen the energy usage and use the available energy effectively and efficiently.

Answer to question 2:

” Internal energy market legislation according to the demand price scenario. The OPEC oil price rise in 1973:”

2a) Gazprom’s supremacy over the European natural gas market is a growing concern among Europe’s policy makers. In restricting European investors from the Russian market, challenging access to regulatory distributions on the European market, while concurrently exercising its influence upon the CIS states, Russia has showed it undependability as a long-term supplier.

Emergency planning faced a hindrance by lack of consistent comparison between the known definitions and the operative measures which were taken. In this context I assume myself as a large manufacturer (large energy consumer) and describe my response.

“Early in the crisis, Europe’s gas industry showed its capability to manage with several features of the problem being faced by Europe. The presence of transaction covenants and supply contracts permitted establishments to work together to preserve sources to internal customers, schools and hospitals, during the unkindest days of emergency.” [14*].

Manufacturers are withstanding high energy prices and supply cuts (as in this case where Gazprom cuts its energy supplies or increase price by 200%), where energy is only a smaller component in the cost of production. Usually the problems that persist for a large manufacturer when there is an energy supply cut or a price hike are:

Generally the lack of fuel-switching capability in the cardinal equipment (which requires a lot of capital investment).

Unattractive attributes of some energy-saving equipment, such as differences in quality or comfort and high cost. Energy-savings may be less important than other factor-savings.

Energy storage before the energy crisis occurs (before the supplies are cut).

Investments to buy more energy from the supplier before the energy supplies are cut.

Transportation of fuel and transportation of raw materials/products.

Searching for alternating sources, and pipelining

Demand at alternative sources.

Being a large manufacturer I am putting forward the following solutions,

The Internal Market Principle, “which one part of the market should help in supplying another part at a period when there is scarcity of energy” must prove valuable.

There is a lack of interdependence in the EU. This has to develop to a significant scale where the EU relies much on itself rather than the Middle East countries for energy supplies.

Fuel transition from have to be diversified in order to make EU a comfortable, sustainable and competitive in the energy market.

A more interconnected market is always required where the flexibility and security becomes a major aspect. More fuel switching options have to be introduced in order to reduce the risks that the “reliability on a single supplier” introduces.

Gas storage is a useful task when there is an energy scarcity has to be implemented which plays an important role in proper market functioning under energy hindrances and supply cuts.

The EU has to stop relying on a single supplier and diversify its importing strategy for securing its energy needs.

Increasing dependence on gaseous fuels for electricity and domestic heating, with no or limited availabilities of fuel switching technologies is a greater risk.

Developments have to be made in implementing renewable energy and enact fuel switching.

Transportation has to be made more energy efficient for greater energy efficiency.

Developing technological innovations such as self-powering open electrical power systems which extract the required electrical supply from active vacuum and readily scalable in size and yield.

Measures have to be taken by the respective governments or the organizations to resolve the conflicts that rose between the producer and the consumer. Geo-political issues come into discussion here, which is out of our interest.

Limiting the production and energy usage until the conflict is resolved is another option.[15]

Ans.2b) In the above response, I believed in going with both ‘out of the box’ solutions and a partially conservative, incremental approaches together.

As manufacturer, one of my key duties to foresee a situation and change accordingly for the sustainable development of my organization until it achieves success. If an organization is performing well, it is evident for us that there is nothing wrong with the situation and it is perfectly under control. But still we need to extrapolate continuously and new ideas to secure the perfect condition of the organization. Innovation requires us to think out of bounds and it requires unlocking creativity.

In the above context I searched for other possibilities of energy crisis and so I came up with effective solutions which may prove useful in the future also. For example, fuel switching is an ‘out of the box’ solution. Adapting to the energy changes with new technology and energy efficient systems is an out of the box solution.

Coming to the advantages of thinking out of the box in order to achieve service excellence; every business operation expresses strategies and measures which have been or are being accomplished in their particular industry by their counter parts; or all these systems have remained standing since time because there is a mindset that the customers are most contented and pleased with the way that they are being aided. In certain occasions; schemes and measures are a result of involvement of an individual or a team who seemingly are the achievers of the trade and are considered to be born geniuses who are totally in agreement with the pulse of their customers. This sometimes can be a conservative approach. It will work well when the situations are a repeat of the past. In the above solutions, storing energy, limiting the production and internal market principles are some examples of conservative approaches. Incremental approaches are primarily conflict resolving solutions between the consumer and the supplier.

All such circumstances are very risky and waiting to bounce back at a slimmest blunder.

Interactions with customers, policy makers can be made interesting by thinking out of the box and adopting systems which are efficient when compared to those in the conservative approach.

Ans.2c) I believe that an incremental approach is the best solution to reduce the ill effect created by inflexible market issues. This approach takes the initiative in solving the conflict by offering help to the conflicting parties. It can also prove useful to threaten both the parties and force them to take timely decisions in resolving the conflict. It also provides the conflicting parties with optional solutions along with their advantages and disadvantages. It, however cannot resolve all conflicts but it will definitely provide some assistance in at least reducing the magnitude ill effects. This kind of approach recognizes that gradual long term approach offers the best solutions to such conflicts. It also recognizes that dividing the conflict into parts and solving each part incrementally is a sound approach.

The incremental approach recommends the parties to examine the full context of the conflict and recognize the unpleasant effects of the conflict. Sometimes this incremental approach involves functions like making negotiation between the conflicting parties, in smaller issues and then move on to the more adverse issues. Fractionalization is employed in breaking the issues into smaller parts and dealing with them one by one. This incremental approach has its own advantages and disadvantages. Braking up the inflexible issues and using negotiations to solve the conflicts are some of the advantages. But the conflict resolving techniques of this approach can bring up many other problems and can sometimes utterly fail in conflict resolving.

Conservative approach is a one in which the parties will insist more on conservation compared to conflict resolving. This approach can work well only for a small, certain period of time. In this kind of approach there are no attempts made to resolve the conflict. So there can arise a situation where the conflict grow up to peaks and irresolvable. Conservative approach can go along with the incremental approach for the best performance.

While negotiating with the parties, following an incremental approach, an inner conservative approach have to be followed. This can continue until the problem is solved. It also has its own set of advantages and disadvantages.

Service brilliance can also be achieved by doing accurate things in a diverse manner or simply by improving the quality of your procedures by thinking “out of the box”. An approach is said to be ‘out of the box’ when that is new, creative and cannot be related to normal or conventional approach. Similarly a technology which is invented through unlocking creativity is known as an ‘out of the box’ technology. Approaches leading to such out of the box technologies are known as an ‘out of the box’ technological approach. An ‘out of the box’ technological approach is different from straight approaches in various ways. Technologies which evolve from conventional approaches are necessarily improvements of past technologies. They depend a lot on the past variables and past attributes. Such approaches generally attract people/customers who are interested in improvements to the previous technology.

Markets to such conventional technologies follow trends almost similar to those followed by their parent technologies. These trends can sometimes be variable attributing those to uneven results to the customer satisfaction, extent of improvement etc. Whereas, technologies which are ‘out of the box’ are new and creative. There can be some implications to such creative inventions. Technologies that are ‘out of the box’ need not be entirely new. When they follow a familiar theory, their implementation may be different; when they follow a familiar implementation, their background and theory may be different; when they follow a familiar theory and a familiar implementation, their field of application may be different or new. They can sometimes be entirely new too. Markets trends to such ‘out of the box’ technologies are very unpredictable. The procedures that are made or are being followed cannot be inflexible and they cannot deal with out of the book solutions for every problem. All the initial steps of careful screening would mean that the lineup dealing with the clients is armed with the right kind of boldness that is required in service industry. There is a very thin line between being elastic while providing furnishing the customers’ necessities and desires and breaking the rules and procedures in the apparel of serving people. [16]

Ans.2d) I feel that foreseeing a situation which is already being seen is not an intellectual way of answering this question. Nowadays we are already in a situation where we need to do with less, in terms of capital goods, travel, and levels of comfort for the benefit of all. Presently we are personally reducing the usage of plastic, this is because plastic cannot be decomposed and when we try to decompose or burn it, it will produce harmful fumes. So this can be one of the cases where we are reducing our comfort levels for the sake of others. Instead, we are using alternative methods like replacing plastic with paper. We are even keen on implementing the three r’s (reduce, reuse and recycle).

Similarly, lighting is essential to a modern society. Lights have transformed the way we live, our efforts and our entertainment. Today, about five percent of the energy used in the world is for lighting our homes, buildings, and streets.

Nowadays we reduced the amount of energy we consume for lighting, intentionally or unintentionally, we have begun using energy efficient systems. Reducing energy usage or switching to energy efficient methods can be efficient.

In the last 100 years, appliances have revolutionized the way we spend energy and our time at home. Tasks that used to take ages are now achieved in few minutes, using electricity most of the time. Until the embargos of the 1970s, people drove without thought of fuel economy or ecological impacts. Aerodynamic designs were combined and engine size condensed. More vital was that engines were enhanced to upsurge fuel efficacy with fuel injectors and electronic communications. CO2 emissions are threatening to the world. Hence we are adapting to substituting fuels.

We reduce our luxury for the sake of others and energy efficiency. We are using public transport to reduce the energy usage.

Thinking collectively about the present and future is an important step, but reflecting upon changes in the environment should not become an end in itself. Similarly, we do not want to shine a spotlight on the surface while leaving the center in the dark. The future is genuinely the result of human will and initiative. Local ecological influences are likely to remain to take superiority over worldwide change in the accomplishment of sustainable energy developments. [17]

Answer to question 3

3a) Major changes in the UK affecting the energy during the past 50 years also brought up with them “a major technological change”. Some may be positive and beneficial but some may be negative and ineffective. Let’s talk about them one by one.

Restriction on manufacturing new types of nuclear power plants (Sizewell B reactors).

These have been the most important challenges for the technologists. They have to find new technologies for producing nuclear energy based on gas-cooled reactors because there is a restriction on building water cooled reactors. They have to build new reactors, storage units etc.; this demands a lot of finance to be invested initially. New technologies have to be developed to ensure the safety of the labor in this industry, for example, radiation resistant safety suits, etc., Gas cooled reactors a second generation British technology reactors which uses graphite as moderator. The advantage of this design is that the coolant can go to higher temperature than water. Resulting higher plant efficiency (above 40%) compared to the water cooled design (around 30%). This is recognized as the most important improvement in nuclear technology. [18]

The Natural gas from the North Sea is being replaced by the gas derived from the Coal.

This reduced the pressure on the coal industry. But this demanded new technologies for efficient offshore fuel extraction stations and for transport. Leak proof, underwater pipelines were a huge burden initially. Refining the fuel gas also introduced new innovations. Progress in offshore technologies is exemplified by advances in production platforms and production systems which highly rely on seismic technology. Drilling technologies have also improved a lot, leading to multilateral and multi branch wells.

Floating storage vessels, shuttle tanks and condensation technologies are the most recognized improvements in the transportation technologies. [19]

Privatization of the coal /electricity industries and British Gas

As the technologies of the government are patented, privatization generally introduces new technologies into the respective industries thus causing technological expansion.

Promoting renewable energy investment by consumers.

Renewable energy investments promoted the developments of technologies in a lower, domestic level. The diffusion of new and renewable technologies is determined by a logistic curve function of two key factors: the size of the economic potential and the length of the diffusion process, which are different according to the technology. New and emerging renewable energy technologies include cellulosic ethanol, hot-dry-rock geothermal power, and ocean energy.

Solar power panels that use nanotechnology, which is used in creating circuits out of individual silicon molecules, will probably cost half as much as traditional photovoltaic cells.

The future prospects of electricity needs an innovation of nuclear and wind energies.

Since earliest times, man has utilized the power of the wind. The technology has diversified over ages to include pumping water, grinding grain