DNV GL’s CEO Remi Erik­sen is glimps­ing a LowCar­bon, Dig­i­tal Fu­ture

Norway-Asia Business Review - - Contents -

“I firmly be­lieve we are on the cusp of a tech­nol­ogy-led rev­o­lu­tion, a new re­nais­sance of in­dus­trial progress,” said Mr Erik­sen.“In the com­ing years au­toma­tion and data-driven in­sights will ac­quire real mean­ing and scale.”

“Most of the tech­nolo­gies will be known to us, what’s new is the com­bi­na­tion of ad­vanced tech­nolo­gies from pre­vi­ously sep­a­rate do­mains like phys­i­cal, bi­o­log­i­cal and dig­i­tal. New com­bi­na­tions and the speed of im­ple­men­ta­tion are the building blocks of the fourth In­dus­trial Rev­o­lu­tion.”

Part of DNV-GL’s re­spon­si­bil­ity is to fore­cast and it be­lieves over the next 10 years, the fu­ture will be elec­tric, and de­car­bon­i­sa­tion and dig­i­tal­i­sa­tion will be the dom­i­nant driv­ers. By 2025, re­new­able en­ergy will have a ma­jor role as a source of elec­tric­ity gen­er­a­tion as a dis­rupter, po­ten­tially out­strip­ping coal as an en­ergy source. The com­pany thinks re­new­able en­ergy will be re­spon­si­ble for half of the ad­di­tional power-gen­er­at­ing ca­pac­ity added over the next decade.

“There will be a strong de­crease in coal and oil con­sump­tion by 2025,” he said. “Around two-thirds of the re­duc­tion in oil con­sump­tion will come from the trans­port sec­tor, which is what we mean by de­car­bon­i­sa­tion.”

“Dig­i­tal­i­sa­tion will in­volve re­al­time data gen­er­ated from mas­sive de­ploy­ment of sen­sors and will in­crease con­trol, en­hance re­silience, re­duce cost and open new op­por­tu­ni­ties for the im­ple­men­ta­tion of en­ergy ef­fi­ciency in a wide range of sec­tors.

“There are two trends that I strongly be­lieve will in­flu­ence our fu­ture en­ergy con­sump­tion. First is the use of al­ter­na­tive fuels in the trans­porta­tion sec­tor, specif­i­cally in ship­ping. Sec­ond is dig­i­tal­i­sa­tion in the power sec­tor.”

Ship­ping trans­ports 80% of the world’s goods by vol­ume and does so in a more en­ergy-ef­fi­cient way than any of the other options. Only 2.5% of global green­house emis­sions can be at­trib­uted to ship­ping. But shipown­ers and their clients will ex­pect the sec­tor to do its part, said Mr Erik­sen.

“The UN En­vi­ron­ment Pro­gramme be­lieves the ship­ping in­dus­try must de­crease its emis­sions by 30% from present lev­els in or­der to help stay be­low the two-de­gree warm­ing ceil­ing,” he said. “One so­lu­tion is the use of a different fuel type. His­tor­i­cally ship­ping has pre­ferred one fuel type, which is cur­rently oil­based. In the fu­ture there will be no sil­ver bul­let so­lu­tion, but in­stead a higher de­gree of diver­si­fi­ca­tion. We be­lieve each ship­ping sub-sec­tion will choose its fuel based on safety, af­ford­abil­ity, re­li­a­bil­ity and sus­tain­abil­ity.”

“To­day the lead­ing al­ter­na­tive fuel for ships is liq­ue­fied nat­u­ral gas (LNG). There are about 75 ships op­er­at­ing us­ing LNG now and another 85 un­der con­struc­tion. More con­tainer ves­sels and oil and chem­i­cal tankers are start­ing to use the fuel, show­ing LNG bunker­ing in­fra­struc­ture is ex­pand­ing be­yond short­sea ship­ping.

“One re­cent ex­am­ple of the promis­ing devel­op­ment of LNG as a marine fuel is an agree­ment be­tween Qatar­gas, Shell and Maersk Line, which are the largest LNG fa­cil­ity, the largest LNG pro­ducer and one of the largest ship­ping com­pa­nies. The trio signed a mem­o­ran­dum of un­der­stand­ing to ex­plore the use of LNG as a marine fuel in the Mid­dle East. This shows there is a mo­men­tum building for sig­nif­i­cant change.

“Sin­ga­pore is well po­si­tioned to ben­e­fit from this shift as a ma­jor trad­ing and ship­ping hub that re­cently in­vested in a LNG re­gasi­fi­ca­tion ter­mi­nal.”

Mr Erik­sen said LNG has the ob­vi­ous ad­van­tage of elim­i­nat­ing sul­fur ox­ides, re­duc­ing ni­tro­gen ox­ides and par­tic­u­late mat­ter and cut­ting green­house gases. But LNG does not suf­fi­ciently re­duce CO2 emis­sions to al­low the 60% re­duc­tion re­quired by the cli­mate agree­ment.

“Another tech­nol­ogy that holds sig­nif­i­cant prom­ise for en­ergy ef­fi­ciency and a smaller en­vi­ron­men­tal foot­print is ship elec­tri­fi­ca­tion,” he said. “To­day there are 34 ves­sels sail­ing with bat­ter­ies on board, of which three are fully elec­tric. We think fully elec­tric is the most re­al­is­tic so­lu­tion for short-sea ship­ping, with an elec­tric hybrid for used for deep-

sea ship­ping.”

“As with LNG, in­fra­struc­ture is key. Building in­fra­struc­ture for the charg­ing of ships can also catal­yse the use of cold iron­ing, mean­ing ships can utilise shore power while in port. This can lower emis­sions and im­prove hu­man health in urban ar­eas sur­round­ing ports.

“A few years from now, power grids will have om­nipresent sen­sors, pro­vid­ing real-time data that al­lows them to learn and adapt to the use of re­new­able en­ergy sources. These grids will have self-con­fig­u­ra­tion for re­silience, loss re­duc­tion and self-ad­just­ment for volt­age vari­a­tions. They will also dis­patch au­to­mated de­mand-re­sponse ac­tions to avoid ca­pac­ity lim­i­ta­tions in the grid.

“In ef­fect, power grids will be­come cy­ber-phys­i­cal sys­tems: phys­i­cal en­ti­ties man­aged by lo­cal, dig­i­tal con­trol sys­tems. Sin­ga­pore has started this jour­ney al­ready, host­ing a liv­ing lab to test new ideas for smart en­ergy in­fra­struc­ture us­ing sen­sor net­works and big data an­a­lyt­ics.”

In or­der to ac­com­mo­date an in­creas­ing share of re­new­able en­ergy, elec­tric­ity will need to be trans­mit­ted over in­creas­ingly longer dis­tances, said Mr Erik­sen. High-volt­age DC is the low­est-cost so­lu­tion for this task.

“In 10 to 20 years, we will see su­per­grids that com­bine ul­tra-high­volt­age DC and AC sys­tems,” he said. “This will al­low in­te­gra­tion of re­new­able en­ergy while en­sur­ing security and sus­tain­abil­ity of the grid op­er­a­tions.”

“In the mean­time, there will be hybrid grids that see an up­take in flex­i­ble AC and high-volt­age DC. We are see­ing the devel­op­ment of this al­ready in the US, Europe, India and China. But hybrid grids also in­volve in­creas­ing lev­els of com­plex­ity, such as com­bin­ing slower, me­chan­i­cally con­trolled AC sys­tems with faster, elec­tron­i­cally con­trolled high-volt­age DC sys­tems. To do this you also need high-volt­age DC cir­cuit break­ers, which DNV-GL is part­ner­ing with 33 en­ergy play­ers to test.

“His­tory tells us there is al­ways a time lag be­tween the break­through tech­nol­ogy dis­cov­ery and large-scale up­take. But we be­lieve the lag be­tween the cur­rent in­no­va­tions and up­take will be shorter than usual, so we must be ag­ile to act on these new tech­nolo­gies.

“I be­lieve the key ingredients of the fu­ture en­ergy tech­nol­ogy in­no­va­tion will be in­vented here in Asia. A McKin­sey re­port projects a USD 7 tril­lion short­fall in in­fra­struc­ture in Asia un­til 2030. The fact that the re­gion’s in­fra­struc­ture is not that ad­vanced here can pro­vide op­por­tu­ni­ties in the en­ergy sec­tor to leapfrog a cou­ple of tech­nol­ogy it­er­a­tions straight into the next gen­er­a­tion. Be­cause there is not a heavy in­vest­ment in the cur­rent in­fra­struc­ture, I think it’s a ben­e­fit to Asia go­ing for­ward.”

DNV-GL spends 5% of its bud­get on re­search and devel­op­ment, which is cur­rently EUR 120 mil­lion. In the next five years, Mr Erik­sen be­lieves it will have to spend half of that on the dig­i­tal­i­sa­tion trend.

“I would rec­om­mend ship­ping and oil and gas in­dus­try fol­low the same R&D bud­get al­lot­ment,” he said. “We don’t know where this R&D jour­ney will take us, but for sure it has to be baked into your or­gan­i­sa­tion’s cul­ture and DNA. It has to be a part of your value propo­si­tion.”

“Our com­pany in the fu­ture may not pro­vide the same ser­vices we do now be­cause the plat­forms and tech­nolo­gies are chang­ing. Though it may sound ex­treme that we can quickly change from ship­ping and oil and gas, which make up 70% of our rev­enue, to more en­ergy grids and dig­i­tal­i­sa­tion, but we have al­ready ac­quired many of these com­pe­ten­cies from pre­vi­ous ac­qui­si­tions. And we think these syn­er­gies can be eas­ily trans­ferred to other sec­tors.

“While we think the time lag will be shorter for new en­ergy tech­nolo­gies, most economies are go­ing to need to use oil and gas for many years to come. At some point the oil price will even­tu­ally rise be­cause it is all re­lated to sup­ply and de­mand. I think right now the low price is par­tially re­lated to low ac­tiv­ity, mean­ing there is less de­mand for oil.”

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