Non-OECD countries will have to double their investments in
electricity, due to the combined effects of growing demand and
rising capital intensity within the industry.
The Future of Electricity 2016 report, from the World Economic Forum, analyses
best practices in improving the investment attractiveness across
developing countries and outlines eight key recommendations for
policy makers, regulators, businesses and investors.
Scale of investments will force fast-growing markets to look for
private investors to fund new generation capacity.
Review the full report at www.gepower.com.
Industry estimates show that non-OECD countries will have to double
their investments in electricity by 2040 to keep pace with demand. A new
report from the World Economic Forum, released today, offers solutions
to improve investment attractiveness of the power sector that would help
to bridge this critical investment gap, as the countries face increased
competition for capital necessary to invest in power infrastructure.
According to International Energy Agency (IEA), meeting the electricity
demands of consumers and businesses in non-OECD countries will require
$13 trillion investments by 2040 – outspending OECD markets by a factor
of 2 to 1. The report outlines recommendations for fast-growing
economies to attract more private investments to the power sector in
order to achieve their social and economic objectives, including
universal access to reliable, affordable power and environment
“From 2000-2014, non-OECD countries invested on par with OECD countries
– about $240 billion annually. But given the amount of electricity
infrastructure that needs to be built in fast-growing countries to serve
growing demand, fast-growing countries will not only have to double
their investments, but also ensure that these funds are used to develop
all parts of the value chain so that none are left stranded or
underdeveloped,” said Roberto Bocca, Head of the Energy Industries of
the World Economic Forum.
The report analyses best practices in improving investment
attractiveness of the power sector and outlines eight recommendations
for fast-growing countries:
Pursue the most efficient pathways to policy objectives.
Develop long-term roadmaps to ensure the right balance between
renewable and conventional, centralized and distributed power
generation, while remaining as technology neutral as possible.
Develop integrated policies that ensure balanced development of the
power value chain. Policies need to be integrated across the power
value chain to ensure that the upstream fuel supply, generation
assets, and transmission and distribution (T&D) develop in parallel.
Ride the declining technology cost curve. Capitalize on the
declining technology cost curve, and avoid the urge to promote unique
technologies that will likely remain at high cost due to a lack of
Provide a level playing field for technologies, reflecting carbon
abatement and security of supply appropriately. Structure power
markets in ways that recognize the full value and costs of
technologies, including carbon pricing.
Ensure technically and financially viable operations across the
value chain by keeping it clear of financial obstacles. Regulators
need to work with suppliers to reduce losses from non-metered supply
and ensure that tariff subsidies are fully funded.
Business & Investors
Create effective public-private partnerships to attract private
sector capital. Regulations around public-private partners should
be transparent and independent to ease investors’ concerns about
committing long-term capital.
Nurture favourable investment environment. Put measures in
place to reduce risk and decrease the cost of capital, allocating
residual risks to the most appropriate market participants.
Actively invest in education and R&D to close knowledge and human
capital gaps. Foster the development of universities and research
institutes that produce the talent that will innovate, develop and
manage the power sector in the decades ahead.
“There is a massive need for power in the developing markets, and over
one billion people still lack access to electricity,” said Steve Bolze,
President and CEO of GE Power and current chairman of the WEF Energy
Technology community. “This need will require a portfolio of power
generation and digital solutions that will enable affordable, reliable
and sustainable electricity.”
“Fast-growing economies have a great opportunity to define the
sustainable energy mix and power market structure they need,” said
Ignacio S. Galán, Chairman and CEO of Iberdrola and current chairman of
the Forum’s Energy Utilities community. “This will play an essential
part in driving the required scale of investment to clean generation,
especially renewable, as well as efficient storage and networks, which
is essential in the global energy sector.”
“Within the next 25 years, we expect the world’s emerging markets to
deploy more renewable generating capacity than their developed
counterparts,” said Julian Critchlow, who leads the Utilities and
Alternative Energy Sector at Bain & Company, which collaborated with the
Forum on the report. “Historically, the public sector has supplied about
70 percent of electricity investment in non-OECD countries, but the game
has changed. These governments could fall well short of supplying the
necessary funds to meet growing energy demands.”
The Future of Electricity Report is a continuation of the World
Economic Forum’s Future of Electricity initiative, which launched at the
2014 Annual Meeting with the aim of providing governments, companies and
communities with a platform for dialogue and learning amid the
transition to a lower-carbon economy.
Over 2,500 leaders from business, government, international
organizations, civil society, academia, media and the arts will
participate in the 46th World Economic Forum Annual Meeting in
Davos-Klosters, Switzerland, on 20-23 January. Under the theme,
Mastering the Fourth Industrial Revolution, the programme comprises over
250 sessions, of which over 100 sessions will be webcast live.
Taking a formative role in shaping the discussion at the Annual Meeting
2016 as the Co-Chairs are: Mary Barra, Chairman and Chief
Executive Officer, General Motors, USA; Sharan Burrow, General
Secretary, International Trade Union Confederation (ITUC), Brussels; Satya
Nadella, Chief Executive Officer, Microsoft Corporation, USA; Hiroaki
Nakanishi, Chairman and Chief Executive Officer, Hitachi, Japan; Tidjane
Thiam, Chief Executive Officer, Credit Suisse, Switzerland; and Amira
Yahyaoui, Founder and Chair, Al Bawsala, Tunisia.
Notes to Editors:
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