Energy IQ : Five insights into the future of energy for facility professionals – Part I
Energy is an important cost element for many businesses, but limiting the role of energy in a business to financials would minimize the importance of energy to a business. Energy related decisions impact businesses' environmental footprint and the continuity of their operations; and facility professionals are the heart of all these, as they curate energy management strategies for their businesses.
The International Energy Agency annually releases its World Energy Outlook with an objective of deepening our understanding of the future of energy. This report is over 800 pages, and has great insights around the future of energy. In this two-part blog post, we have summarized five insights every facility professional needs to know when it comes to the future of energy.
No. #1: Electricity use grows faster than energy demand
Demand for energy is forecasted to grow 1% a year until 2040, while the electricity use is forecasted to grow
twice as fast. While the use of electric vehicles is one of the most highlighted reasons for this increased demand, there are three other more impactful drivers of this increase: industrial motors, household appliances and cooling needs.
This increased demand for electricity will strengthen its position as the second most popular choice of energy in final consumption, challenging oil's positions at the top. A mix of technologies will fuel this transition, where solar photovoltaic (PV) and wind will take the lead. By 2040, more of our electricity will be through renewable sources than fossil fuels.
No. #2: Rise of electricity as a form of energy brings new challenges
The rapidly increasing need for power system flexibility is the first challenge the rise of electricity introduces. The interruptible nature of renewables is the key driver behind this increasing need for flexibility. A wide-array of technologies (including batteries) will be utilized to address this challenge, which will be covered in part two of the post.
Regulations and policies are very prominent in utility markets, and the increasing pace of advancements in connectivity and digitalization brings up a key challenge: can the regulations within utility markets allow businesses to maximize opportunities generated by these new technologies? Regulations on energy storage, flexible generation, demand response and electric vehicle-to-grid interfaces will be the ones to watch in the upcoming years.
Facility professionals shape the future of energy for their businesses. Their energy related decisions yield outcomes in many areas including the environment, economics and reliability. Insights shared in this article are aimed to keep the facility professionals' perspective of the future of energy fresh and current.
Part II of this article will highlight the remaining three insights focused on increasing the need for flexibility and the technologies that are forecasted to make the biggest gains in levelized cost of electricity. Sign up below for Energy IQ to receive Part II and other relevant insights about energy management. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage.
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Aytek Yuksel
Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.