WEF report paints bleak picture in the energy space - CNBC Africa

WEF report paints bleak picture in the energy space

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by Trust Matsilele 0

WEF report paints bleak picture in the energy space. PHOTOS: Electrification Online

According to the World Economic Forum report, The Future of Electricity, diminishing financial returns for utilities has put at risk the ability of the electricity sector in OECD markets to raise the estimated 7.6 trillion US dollars in investments needed by 2040 to meet energy policy objectives.

(READ MOREEskom withdraws from WEF to deal with current situation)

This investment is needed to simultaneously decarbonise the sector while maintaining energy security.

The Future of Electricity report offers guidance on transforming the electricity sector to a more sustainable, affordable and reliable system, and outlines recommendations for policy-makers, regulators and businesses in developed markets to attract needed investment.

“It is part of a broader Future of Electricity initiative, which was launched at the WEF Annual Meeting 2014, and aims to provide countries, companies and societies with a platform for dialogue and learning amid the transition to a lower-carbon electricity system," said Roberto Bocca, Head of the Energy Industries at the World Economic Forum.

“Since 2000, OECD countries have invested more than three trillion US dollars in new renewables, conventional power plants and distribution structure, but about 20 per cent more investment a year is still required over the next 15 years." 

(WATCH VIDEO: Why Eskom pulled out of WEF)

“Collaboration across stakeholders will be critical to achieving this goal and providing the holistic perspective needed to successfully make the low-carbon transition.”

Julian Critchlow, a partner at Bain & Company, which collaborated with the Forum on the report said the electricity sector is at a crossroads.

“We are entering a period of unprecedented investment to meet our energy policy goals, but decreasing returns and increasing risk are raising questions over future investment,” he said.

“OECD countries will need to take immediate action to ensure continued investment across the energy value chain.”

According to the report, root causes of the sector's investment challenges include suboptimal geographic deployment, inadequate carbon price signalling and declining returns of conventional generation. 

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