Energy is key to fight climate change
Companies with innovative energy solutions should be open to the increasing business opportunities in the China market.
TEXT: Magnus Carnwall, Embassy of Sweden
22 MARCH, 2019
Do we have great challenges with air pollution and climate change?
Of course we do. But those challenges are not overwhelming. I would even go so far as to say, those challenges create great opportunities to rethink the way we are used to perceive things. For those who have new and innovative solutions, this will generate great business opportunities and energy is a big key.
You should question what you did yesterday and learn from it!
I have always enjoyed questioning things. Like how we used to produce energy for our different needs. The only thing we can be certain of is constant change. And the speed of change is increasing.
We are standing in the middle of an energy transformation and we might as well call it an electricity transformation. You may also think that it will be the traditionally huge power production enterprises that will be running the show the same way as they did before. Think again. Although there are many differences between the Chinese and Swedish electricity market, you and I will be the driving forces as the future so called prosumers, together with renewables entering the playing field in a widely distributed manner. This means there will be less big centralised power plants and more distributed energy sources, which also will have other challenges on existing grids and resulting in more local energy systems or regional flexibility markets.
But electricity demand is bigger than ever and growing. If you look around, most of what you see is running on electricity in some way or another. Traditional stuff like lamps and heaters are joined by an intrusion of mobile equipment, electric vehicles and other things we “need”. In energy terms, we need both energy efficiency and more renewable energy to manage the transformation.
Sweden is a frontrunner of innovation and smart-energy solutions. Every year, Sweden hits the top of different innovation challenges and indexes, especially when it comes to energy. However, very few Swedish energy start-ups succeed in expanding rapidly on international markets. In order to leverage on its innovations, Sweden must industrialise these companies more where the solutions are needed. One key is to showcase them more and increase our trade and export of these solutions, to see the change we need for transformation and reaching climate goals. Increasing the export of Swedish sustainable energy innovations is therefore one of the main arguments for the Swedish Energy Agency in having a presence in China. To be successful, we have to be persistent, adaptive and agile, but most importantly we need to be present.
Successfully meeting the targets of the Paris Agreement depends on addressing the challenges in China’s power sector.”
Why China? Well, it might be obvious, but let´s add some facts. In late 2018, the International Energy Agency released a report that states that along with economic growth in China the demand for electricity has exploded, going from 1,387 TWh in 2000 to 6,418 TWh in 2017 (in comparison this is more than the entire European Union). To cope with that growth, a domestic source (coal) has been used to a large extent and the Chinese power market today accounts for almost half of global coal consumption. With that, significant global carbon dioxide emissions originate from China, as well as high emission levels of dioxide sulphur (SO2) and nitrogen oxides (NOx), with considerable local impact. The emission values indicate that “the path of the Chinese power sector shapes the landscape of power generation globally. Successfully meeting the targets of the Paris Agreement [on global greenhouse gas emissions] depends on addressing the challenges in China’s power sector.”
The on-going reforms of the power sector in China face several challenges. The already mentioned IEA report outlines them in terms such as system planning, flexible operation of coal power generation, introduction of market competition to reduce average power generation costs, introduction of market competition at the retail end to offer multiple choices to consumers, modernisation in the use of network infrastructure and last but not least renewable energy development and integration.
The challenge may seem immense, but at the same time there is a strong push from the government and the State Council for results and provincial governments have been given far-reaching implementation powers. A number of pilot projects are running in different provinces and the outcome will probably have impact on large-scale implementation in the near future. Meanwhile, we also see Chinese officials from different areas, including state-owned companies and power market experts visiting the Nordic countries to learn more about our Nord Pool spot market. I am really eager to see where this is going.
Furthermore, China has also in a very short time become a significant renewables player and had in 2017 (globally) the largest installed capacity of both land-based wind power and solar photovoltaic systems (PV). There are still some curtailment issues to handle but the trend is clear and coal share in the energy mix is declining, although still at around 65 per cent in 2017.
So why do I write all this? Well, because with change I see opportunities. But they will not be coming knocking on your door. If you are home fine-tuning your China strategy for the years to come you will likely miss the train. Don´t get me wrong here. Of course, you will have to do your homework and have a sound understanding of how the market functions, how to work with local partners, being able to change the business model that worked so well in x country, etc, in order to find the business channels that actually works y market. In this case, the strategy has to be adaptive and more a way to handle different situations.
There is a Chinese way of saying “seeing is believing”. The possibility to showcase your solution or product is crucial. There will be follow-up questions after a pitch. Here is also where I believe our different national demonstration platforms, such as Smart City Sweden, play an important role to show how products function in a system. Equally important is finding a local stakeholder or partner for your business to expand. You may find support at the chamber of commerce or other stakeholders like Business Sweden, but for areas relevant for the energy sector I would also like to raise awareness about the Swedish Energy Agency’s portfolio and support mechanisms.
Sweden has a long history of addressing environmental issues and today we live in harmony with nature. For instance, less than 0.7 per cent of our household waste goes to landfill. Combined with this, Sweden is a world leader when it comes to innovation and new solutions. This combination is a perfect match for Sweden and China. Moreover, the Swedish Energy Agency has a portfolio of more than 170 innovations, which offers the potential to cut the equivalent carbon dioxide (CO2) emissions by more than 14 times the annual emissions of Sweden.
There is also a great interest from all over the world for Swedish and Nordic innovations in the energy field. In May, Sweden will host a big conference for investors in clean technology, the Cleantech Forum Europe. Read more about this at www.cleantech.com/event/cleantech-forum-europe.
Magnus Carnwall was appointed counsellor for energy affairs at the Embassy of Sweden in Beijing in mid-2018. Prior to that, he was an international affairs manager at the Swedish Energy Agency, a national government agency supporting commercialisation and growth but also funding research for new and renewable energy technologies, smart grids, smart cities, vehicles and transport fuels of the future. Carnwall has also held the position as a national delegate to the High-Level Steering Group of the European Strategic Energy Technology Plan as well as to the Renewable Energy Working Party in the International Energy Agency (IEA).