Held in fully digital format for the first time, the seventh edition of Open Days – a Galp event designed to bring together representatives from the key players in the energy sector, experts from government agencies, market analysts and universities – was attended by over 1100 participants this year, including 85 Portuguese and international speakers in four virtual rooms on a simultaneous basis over a four-day period. “Integrating Energy Transition” was the slogan chosen as the springboard for dozens of debates focused on the sharing of experiences, the vision of speakers and participants in relation to dealing with current dilemmas and the opportunities this presents.
Parallel to the event, Energiser spoke to Tom Heggarty, an analyst at Wood McKenzie, a consultancy company specialising in energy, about the major challenges in a market striving to meet the ambitious goal of decarbonisation by 2050, the barriers Covid-19 has brought to the sector and the role of the ever-increasing use of renewable energies. "Renewable energy will be the main challenge in the next few years”, guarantees the specialist.
Due to the fact production prices have been falling for around a decade, renewable energies such as wind and solar power are now a good investment option, both for the more traditional players in the oil & gas sector and for the new players pouring into the market. “We have moved from a scenario in which wind and solar power needed to be heavily subsidised, to one in which they are now the cheapest forms of energy in many countries”, explains Tom Heggarty. In his opinion, at this rate of development, the next step, which is another major challenge, will be the creation of large-storage capacity batteries and the production of hydrogen. “The growing need for energy can now be met using low-carbon energy, but the challenge for when we begin to have large amounts of renewable energies is batteries”, he emphasises.
Supplying the energy required by a world with a high growth rate, at low prices, and with the least possible impact on the environment are the corners of a triangle Tom Heggarty calls 'the energy trilemma'. Both in more developed countries and areas of the globe with emerging markets - Asia, sub-Saharan Africa and Latin America - the needs and demand for energy are growing at an alarming rate, placing enormous pressure on producers. Nevertheless, the Wood McKenzie analyst sees a series of opportunities for several players in this scenario. On the one hand, the drop in the price of renewable energies and, on the other, the challenge of decarbonisation, are causing the entire sector to take urgent measures with regard to production, thereby making it easier to develop sustainable projects all over the world on a large scale. “The amount of investment required in low-carbon, electricity and hydrogen is enormous, which opens up opportunities for companies not normally active in this sector", he says. In the case of wind and solar power, there are few barriers involved in joining these markets today, and this makes them highly desirable. “It's less complex in technological terms and highly competitive compared to the oil & gas market”, he adds.
In Europe, the major challenge is decarbonisation, particularly in markets that are still highly dependent on fossil fuels, such as Poland. Here, Tom Heggarty argues, technologies – at increasingly reduced prices – will be one of the essential tools in achieving this goal. And, therefore, he stresses: “Oil & gas players are entering the renewable energies market, in addition to utility companies, small renewable energy companies, technology companies and investment funds... it's an extremely interesting and dynamic market”.
The investment capacity of traditional players in the oil & gas industry will, in Tom Heggarty's opinion, ensure the success of the energy transition underway. These companies, he says, “have a enormous role to play, particularly in relation to more complex technologies such as hydrogen and storage, where there will be a connection with renewables, but also the need to develop pipeline networks, supply infrastructure, etc.”.
Many oil & gas companies are investing in solar power - as is the case of Galp, which this year became the biggest solar energy player in the Iberian Peninsula -, and even Covid-19 failed to slow down its investments. Tom Heggarty believes that the pandemic has had the greatest impact on the oil & gas sector, with major changes and slumps in consumption, especially during the confinement period between March and May.
Nevertheless, he acknowledges that most of these traditional players have taken the opportunity to have a closer 'look' at other sectors such as renewable energy market. As far as the Wood McKenzie analyst is concerned, investment in wind and solar power - which are already mature markets - guarantees healthy and transparent returns. The hydrogen market is more immature and the returns are somewhat less clear. Moreover, he sends a message to Governments, which, in his opinion, will make it possible to leverage new business: “they need to focus on increasing the price of coal in order to make investment in less mature technologies more attractive”.
