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CONSEIL FRANÇAIS DE L'ÉNERGIE COMITÉ FRANÇAIS DU CONSEIL MONDIAL DE L’ÉNERGIE

5th European Energy Forum R&D and innovation, drivers of the energy transition

Paris, 9th – 10th May 2016

Conseil Français de l'Énergie 2016 5th European Energy Forum 2

Administrateurs du Conseil Français de l'Énergie (au 1er mai 2016) Bruno Léchevin

ADEME

Philippe Knoche

Areva

Daniel Verwaerde

CEA

Jean-Bernard Lévy

EDF

Gérard Mestrallet

ENGIE

Didier Houssin

IFP Energies nouvelles

Patrick Pouyanné

Total

Francis Duseux

UFIP

Olivier Appert, Président

François Ailleret

Pierre Gadonneix

Jacques Maire

Bruno Weymuller

5th European Energy Forum

R&D and innovation, drivers of the energy

transition

Copyright © 2016 Conseil Français de l'Énergie

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Directeur de la publication :

Jean Eudes Moncomble, Secrétaire général

Crédit photos © Conseil Français de l’Énergie

Publié en juillet 2016 par :

Conseil Français de l'Énergie

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Conseil Français de l'Énergie 2016 5th European Energy Forum

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Contents

Opening session ........................................................................................... 6

Session 1: Contribution of R&D and innovation (RDI) to economic growth

and employment ........................................................................................... 8 “New” view on growth theory and consequences for RI policies .................. 8 Multilateral collaborative innovation: Enabling a sustainable energy

transition ............................................................................................................. 10 Energy in buildings: EDF’s R&D contribution to climate change mitigation,

economic growth and job creation .................................................................. 12 Panel Discussion ............................................................................................... 13

Technological focus 1 ................................................................................ 17 Nuclear energy innovation: A necessity, a challenge, and an asset for the

growth of the low-carbon economy ................................................................. 17 E-Storage: Shifting from cost to value ............................................................ 19

Presentation of the 23rd World Energy Congress in Istanbul ................... 21

Session 2: RDI choices and consequences on the organisation ............ 22 Designing new energy systems: Beyond decision and optimisation, design

theory and methods to manage R&D and innovation .................................... 22 IFPEN: Innovation and transfer to industry .................................................... 24 Model of R&D and innovation in the holding company ................................. 25 Panel Discussion ............................................................................................... 27

Roundtable 1: The emergence of new technologies, particularly those

serving the Energy Transition .................................................................... 28 World exergy flows: Energy end user efficiency ............................................ 29 The voice of German industry .......................................................................... 30 The utilities perspective .................................................................................... 32

Session 3: Deployment and dissemination of innovations, the key role of

demonstration and learnings ..................................................................... 37 Creating the culture of innovation ................................................................... 37 The challenges of low carbon technology demonstration and deployment:

The case of carbon capture and storage ......................................................... 39 Housing energy consumption in France: Synergies between energy

efficiency strategies and action on fuel poverty in France ........................... 41 Panel Discussion ............................................................................................... 42

Technological focus 2 ................................................................................ 46 Progress on hydraulic fracturing for unconventional hydrocarbons .......... 46 Digital-based energy systems .......................................................................... 47 Panel Discussion ............................................................................................... 49

Session 4: Research and Innovation policies ........................................... 50 Designing energy technology innovation policies ......................................... 50 Research, Innovation & Competitiveness in the EU: The 5th pillar of the

Energy Union ...................................................................................................... 53 Promotion of technology innovation in the Italian energy sector ................ 54 Panel Discussion ............................................................................................... 56


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Keynote speech .......................................................................................... 58

Roundtable 2: Connections between research & innovation policies,

corporate strategies and industrial policies ............................................. 60

Closing speech ........................................................................................... 65

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contained in this document.


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Opening session

Session 1: Contribution of R&D and innovation (RDI) to

economic growth and employment

Technological focus 1

Presentation of the 23rd World Energy Congress in

Istanbul, 9-13 October 2016

Session 2: RDI choices and consequences on the

organisation

Roundtable 1: The emergence of new technologies,

particularly those serving the energy transition


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Opening session

Olivier Appert, Chair, Conseil Français de l’Énergie

As Chair of the French Energy Council it is my pleasure to

welcome you to Paris for this 5th European Energy Forum. This is

a timely day for our meeting: 9 May being Europe Day.

The previous European Energy Forums have been a great

success, and I am sure that that will be the case again this year,

thanks to your active participation.

The theme of this Forum is very topical, with R&D and innovation being high on the

agendas of all stakeholders. Technical innovation has always played a key role in the

energy sector, and that is likely to continue in the future. We will not be discussing R&D

in scientific terms but will deal with R&D and innovation – so-called RDI. An innovation is

an invention that has found its own market. We will therefore not deal with the lower levels

of technology readiness (TRL). We will consider energy technologies that are able to

solve the challenges of climate change. However only a few references were in fact made

to R&D and technological innovation in the COP21 Paris Agreement. Clearly, the

environmental dimension has to be taken into account in the energy transition.

However, during this Forum, we also need to take into account the other dimensions of

sustainable development – the economic and social pillars of the Trilemma. We need to

ensure that new technologies will contribute to the world’s economic and social

development. In that sense, R&D policies should have a clear link to the corporate

strategies and industrial policies.

Technological landscapes are changing rapidly. In particular, big data and bio-technology

are two real game changers in the energy sector and beyond. These technologies are

already creating huge opportunities for the energy sector, and they are also already

changing the business models of many stakeholders.

I will now leave the floor to Jean Eudes Moncomble who will present the agenda for our

meeting. He has played a key role in setting up this Forum, and I would like to thank him

on your behalf.

Jean Eudes Moncomble, Secretary General, Conseil

Français de l’Énergie

The Forum will be composed as follows:

► 4 sessions that will cover all aspects of RDI from the

laboratory to the market, leading to an understanding of how

best to transform research into value added products and

services. Three speakers will participate in each session, the

first providing a general overview, followed by two presentations of more concrete

processes.

► 2 Technological Focus sessions, with specialists presenting the state of the art of

specific technologies.

► 2 Roundtables will close each day’s meeting.


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► 2 keynote speakers: Hasan Murat Mercan, who will present the 23rd World Energy

Congress in Istanbul, and Louis Schweitzer, France’s General Commissioner for

Investment.

I wish you all 2 very pleasant and interesting days in Paris and in this room.


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Session 1: Contribution of R&D and innovation (RDI) to economic growth and employment

► Paul Zagamé, Emeritus Professor, University Paris 1

► Jean-François Gagné, Head of Energy Technology Policy Division, IEA

► Thierry le Boucher, Deputy Director of Research & Development, EDF

“New” view on growth theory and

consequences for RI policies

Paul Zagamé, Emeritus Professor, University Paris 1

1) “New” views on growth theory

This is not strictly speaking a “new” view of growth theory. It is

a view first proposed 25 years ago by Paul Romer. It has, however, radically changed the

way we perceive research and innovation in terms of growth and employment. The new

view allowed us to pass from an exogenous growth theory to one of endogenous growth.

In the past, according to the theory of exogenous growth, it was not possible to modify

the long-term rate of growth. Growth was blocked by decreasing returns and depended

only on the (exogenous) increase in the labour force. However, if we consider non-

decreasing returns, then it is possible to endogenise the long-term rate of growth through

appropriate policies.

Paul Romer took this hypothesis as the basis for an endogenous growth theory.

His brilliant idea was to postulate knowledge externalities, knowledge spillovers or

knowledge transfer. That is, an R&D effort of innovation emerging in one firm provides

information to other firms, sectors and countries, increasing their productivity. As such, a

non-decreasing return hypothesis can be found for macroeconomic growth.

There are now three families of new growth theory:

► The fully endogenous growth theory: where rate of growth increases with the level

of R&D.

► The semi endogenous growth theory: where rate of growth decreases with the

stock of knowledge.


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► The fully endogenous growth: where rate of growth increases with the intensity

of R&D.

In the three families, R&D is the sole factor of growth, but can also be extended to human

capital, to other innovation assets such as ICT or other intangibles. Nevertheless, it is the

concept of knowledge spillovers that lies at the core of the new theories.

2) Knowledge spillovers

Whenever research and innovation emerges in a firm, knowledge transfer occurs to other

firms in the sector, to other sectors, and to other countries. These transfers are conveyed

by patents, conferences, publications, networks, and individual mobility. The main

methodology used to measure knowledge spillover is the volume of patent citations under

EPO (European Patent Office) and the USPTO (US Patent and Trademark Office).

The cited patent sends a piece of knowledge to a citing patent, and each patent can be

assigned to a sector and a country. For example, a patent relating to an improvement in

a steam turbine used to generate electricity represents a knowledge transfer from the

power equipment sector to the electricity generation sector.

Based on a number of different surveys using microeconometric works, we know that the

rate of return on private R&D (10-30%) is higher than the return on physical capital. If we

also include knowledge spillovers, we can see that the social rate of return of R&D is

twice that of the private rate (approximately 50%). Therefore, the cost-benefit analysis of

R&D expenditures must include all of these externalities.

3) Consequences for research policies

As a result of these new theories, economists now believe that the level of R&D efforts

are too low. The existence of these significant positive knowledge externalities means

that it is necessary to implement “redressing” policies. That is, aids and subsidies, tax

cuts, national and European grants, structural funds for research, and so on. It should

also be noted that there is a very high risk associated with R&D investments. That risk

makes it difficult to access financial markets, and highlight the need for new financial

instruments to reduce that risk.

When introducing research policies it is also necessary to assess those policies, not only

on their direct and indirect impact on productivity but also on their socioeconomic impacts.

After 20 years, the Barcelona objective, which aims to grow the intensity of research from

2% today to 3%, if it was reached, would allow a 11% increase in GDP and create

10 million additional jobs.

Generally speaking, the simulations show good economic results for R&D policies.

However, in some cases, the conditions prevailing at the time the policies are

implemented can have a negative effect. In particular, will public aid be a substitute – or

a complement – to private finance for a project that would have been carried out in any

case? Are there a sufficient number of scientists and engineers to undertake the

additional R&D effort? Are the market structures adapted to absorbing the new products

generated by innovation? Are financial instruments sufficiently efficient to avert risk?

Are public subsidies allocated in an efficient manner?

4) Conclusion

The theoretical virtues of R&D investment have led to a renewal in growth theories.

We know that R&D policies lead to good macroeconomic results, if they are carried out

under relatively stringent conditions. However, while significant structural reforms are

necessary, it is important that these reforms are not carried out to the detriment of R&D


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policies. In particular, deleveraging should not lead to a reduction in the funds available

for these policies.

In 1998, John and Williams estimated that the optimal level of research in the US was

12% of GDP, which is more than 4 times the current level.

Finally, with respect to research on energy, negative externalities (such as pollution)

should be taxed, and positive externalities should be subsidised. Research in energy will

increase positive externalities and will decrease negative externalities in the environment.

As such, it is clear that research on energy should be subsidised for these two main

resources.

Multilateral collaborative innovation:

Enabling a sustainable energy

transition

Jean-François Gagné, Head of Energy Technology Policy

Division, IEA

Thanks to the previous intervention, we all understand that R&D has multiple benefits and

needs to be supported. I will focus on why international cooperation is so useful in

maximising knowledge spillovers and the benefits of research. In that context, we first

need to understand the impacts on the environment, on economics and on social

development – the famous Energy Trilemma. Second, we know that innovation is much

more than invention. In order to move from invention to innovation, it is necessary to have

the right markets, regulatory frameworks and capacity with which to deploy the new

technologies.

The IEA has been active in highlighting the importance of the energy sector in meeting

the challenge of climate change. It has demonstrated that the trends have changed in

recent decades and how the INDCs are helping to change the link between the energy

sector and increases in CO2 emissions. We are starting to see real pledges from

governments, although we are still far from what needs to be done. To increase that

ambition, last year, the IEA’s bridge scenario set out 5 easy to implement actions that

could help peak CO2 emissions.

The IEA’s Energy Technology Policy Division tries to provide further details of the policies

that are necessary to encourage Research, Development, Demonstration and

Deployment. We firmly believe that the energy sector has always been and will continue

to be a technology sector, and we have to ensure that that technology is driven towards

meeting our multiple energy policy objectives. There are multiple technologies already

today that can allow us to do that, such as renewables and energy efficiency. We have

solutions that would help us bridge the gap, for example, fuel switching, which would allow

us to keep the emissions pathway open while we bring new technologies to market to

meet our future objectives. There is more than one way to meet our climate objectives,

but we are trying to link all of these technologies and options together in the most cost-

effective manner. In this, it is important to keep in mind affordability, energy security and

sustainability.

But when we track the rate of change, we see a disturbing trend. For the first time last

year, none of the technologies we track was on time in reaching its full potential. That is,

progress was occurring, but not at the necessary pace. We are fortunate in that a COP21

pledge was made to increase R&D spending. However, the percentage of R&D dedicated


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to the energy sector is in fact declining. We therefore need to review our priorities in order

to ensure that our R&D priorities are properly aligned with our overall sustainability goals.

1) The right policy at the right time

The right policies to support energy technology innovation depends on the maturity of the

technology and the degree of market uptake. I will focus on one important aspect of that

process: international collaboration. In this, it is necessary to note that approximately 70%

of decarbonisation actions need to take place in non-OECD countries. However, one

solution does not fit all, and national circumstances and resources will drive different

technology portfolios and pathways – in this, local users are best placed to understand

their own requirements. Emerging countries have a different starting point, different

pathways and different end solutions to meet climate goals. That variety of solutions is

good news for emerging countries as it means they can develop decarbonisation

strategies that also give them a competitive advantage.

Local innovation capacity is a key concept here, as the sustainability of any technology

solution depends on the capacity of the local population to install, maintain and use that

technology. Cooperation between industrial and emerging economies could therefore

create a win-win situation, and we see this is already happening: emerging economies

are starting to focus on those technologies that are important to their specific

circumstances and resources.

2) Focus on China

Last year, the IEA worked specifically with China to understand how it saw innovation as

a key driver in its economic growth. China is drastically increasing its R&D spend as a

percentage of GDP. In 2012, China’s R&D intensity – its R&D funding as a proportion of

GDP – matched that of the European Union (EU) for the first time. If this continues, China

is poised to become global leader in R&D spending by 2020. In addition, China is

succeeding in transforming and taking a leadership role in the deployment of

technologies. It is doing that by building on both its local and external markets.

For example, the National Fund for Technology Transfer and Commercialisation is an

innovative initiative targeted at stimulating the public and private financing of innovation

and commercialisation by SMEs.

One of the strengths of China's innovation system is its central and focused government

strategy. Clean energy technologies are highly capital intensive but have low operational

and maintenance costs. It is therefore necessary to address the issue of the cost of capital

– financing is the main impediment to the roll out of these technologies. That financing is

affected by the political risk relating to the returns on that investment. In China, that

political risk is very low. On the negative side, China's inadequate protection of intellectual

property is a weakness, as is its high level of regional protectionism.

Overall, China's innovation landscape is focused on transforming the Chinese economy

from “Made in China” to “Produced in China” to “Designed and Invented in China”.

3) Technology roadmaps

It is important for developed countries to understand the opportunities and threats to

existing business models. We need to understand the feedback loops between different

innovation stages, and between innovations in different sectors. Most importantly, we

need to understand the feedbacks between innovations in different parts of the world.

Technology roadmaps allow us to map the interfaces between policy innovation,

regulatory innovation and technology innovation. We bring together different stakeholders

from different parts of the world from industry, academia and government to explore the


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goals to be achieved, the milestones to be met, and the gaps to be filled. In this, we are

moving from a global roadmap programme to one that is regionally focused.

The IEA’s technology collaboration programmes bring together over 6,000 experts, and

310 public and private organisations from 51 countries to push the agenda forward.

Our next edition of the Energy Technology Perspectives 2016 will focus on urban energy

systems, and will include a country analysis of Mexico.

Energy in buildings:

EDF’s R&D contribution to climate

change mitigation, economic growth

and job creation

Thierry le Boucher, Deputy Director of Research &

Development, EDF

We believe that energy in buildings is a key factor both in the fight against climate change

and in stimulating economic growth. EDF is fully committed to meeting European targets

for a 4-fold reduction in CO2 emissions by 2050. The main sources of CO2 emissions are

industry, transport and buildings (both residential and tertiary). EDF already has one of

the lowest rates of carbon content in electricity generation in Europe, with 15 g/kWh in

2015. Whenever possible, EDF promotes the efficient use of energy in buildings, which

is the topic of my presentation today.

1) The house of tomorrow

We believe that electricity will be the key component in the House of Tomorrow – a house

that is energy efficient, environmentally friendly, affordable, comfortable and desirable.

In terms of energy efficiency, heating accounts for two-thirds of annual electricity

consumption of an average French household today, and this should be reduced to below

one-third by 2050. This will be achieved through the use of new and effective construction

materials. In order to reduce CO2 emissions, it is necessary to improve the building

envelope, improve the heating system, and use low carbon energy sources.

With respect to the building envelope, it is important to note the role of insulation in

existing buildings. This is not only a question of the thickness of walls but also the use of

super insulating materials, which can be 8 times thinner than traditional insulating

materials. EDF's R&D programme includes work on “super insulating” materials that

reach maximum thermal performance in the first few centimetres.

2) Impact on job creation and economic growth

When it comes to heating systems, heat pumps enable renewable energy to be obtained

directly from the buildings’ environment without any CO2 emissions. A French consulting

firm, Carbone4, has estimated the impact of replacing 3 million fuel boilers in France by

3 million air/water heat pumps. This would lead to the creation of 10,000-15,000 direct

jobs in installation, and would also have a positive impact on the economy, with a

€1.8 billion improvement in the balance of trade due to the reduction in fuel imports.

It would also lead to a reduction of CO2 emissions of 50 kg per m² of home, a very

significant figure overall. At the same time, the end user (householder) will pay

approximately the same price.


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3) Conclusion

The energy efficiency of buildings is key in meeting the objectives for CO2 reduction.

Heat pumps enable households to use carbon free energy from the buildings’

environment. R&D efforts are needed on new types of insulation materials, as well as on

higher efficiency heat pumps. Electricity generated in France has a low CO2 content,

which makes heat pumps an even lower carbon option. The jobs created through building

insulation and heat pump conversions would be European jobs, as these are not jobs that

can be moved to other parts of the world.

All of this will reduce fossil fuel imports, reduce CO2 emissions, reduce trade balance

deficits, and increase energy savings, energy independence and job creation in Europe.

Panel Discussion

Jean Eudes Moncomble

I would like to thank our speakers for presenting these three very different ways of

addressing the same issue.

Guillaume Bousson, VISTA, France

We have seen a number of different actions that could be taken: roadmaps, R&D,

technologies, macroeconomics, and the specific example of heat pumps. If we were to

set priorities in R&D and technology issues, which subjects do you believe should be

tackled first?

Jean-François Gagné

The IEA is not able to set priorities for governments. In order to determine a country’s

R&D priorities, it is first necessary to set that country’s energy policy objectives.

Only then, can it identify the technologies to be developed in order to meet those

objectives. We cannot disassociate energy technology policies from industrial policies.

Similarly, R&D can be linked not only to carbon reduction but also to job creation, energy

security, and energy affordability.

Paul Zagamé

Europe faces several major societal challenges that include energy, the environment,

ageing, wealth distribution, and so on. A country’s R&D priorities will depend on the

weight that is given to those societal challenges. From a more theoretical point of view,

researchers believe that research should be focused on those areas where knowledge

spillover is the most significant.

Thierry le Boucher

There are three different possibilities here – transport, industry and buildings – and my

choice would be energy in buildings. If we were to return to Paris in 20 years’ time, it could

be that the roads are filled with electric cars. This would be relatively easy to achieve as

a country’s car fleet is renewed every 10-15 years. With respect to industry, given the

right incentives, companies can move quite rapidly from one process to another.

However, when it comes to buildings, the Paris landscape would be quite unchanged.

It is therefore necessary to act quickly on buildings today, from both an energy and CO2

perspective.


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You stated that research should focus on those areas where knowledge spillovers are

the greatest. Within the energy field, where would these spillovers be highest?

Paul Zagamé

The nuclear sector and the energy efficiency sector are the two areas where knowledge

spillovers are the greatest. In certain energy domains, it is necessary to employ global

thinking due to the high level of international spillovers in that field.

I was very interested in Jean-François Gagné’s comments on China's R&D efforts.

Europe adopted the Barcelona objective of growing R&D spending from 2% to 3%.

Europe’s performance so far has been rather discouraging, especially when we compare

it to that of China.

Thierry le Boucher referred to the 10,000-15,000 jobs to be created from the replacement

of 3 million boilers. Was the macroeconomic impact of this measure also calculated?

Thierry le Boucher

The survey was carried out by the consulting firm, Carbone4, taking into account both

macro and microeconomic impacts.

Paul Zagamé

I believe that, if you add the macroeconomic impact, perhaps 40,000 jobs would be

created.

Miroslav Poljak, Končar, Croatia

What would be the global consequence on R&D policy of the fact that oil prices could

continue to decline for a long period of time?

Paul Zagamé

From a theoretical standpoint, I believe that low oil prices will lead to a reduction in the

volume of research in this field. However, it could also lead to greater use of fossil fuels

and an increase in emissions, which could stimulate research in the environmental impact

of energy.


There could be two side effects here. First, R&D that deals with longer-term returns would

probably be put on hold. Second, R&D focused on ensuring that existing assets are still

performing would probably continue.

Frank Carré, CEA, France

What are your views on the role of hydrogen or synthetic hydrocarbon fuels in displacing

fossil fuels in areas such as heating or transportation?


There were two interesting findings from last year’s IEA Technology Roadmap on

Hydrogen. First, to make hydrogen a viable option, investments must be high enough to

rapidly increase utilisation rates of the high level of new infrastructure required, to improve

production costs. Second, many people see hydrogen as the renewable energy saviour.

However, due to the need to go to scale very quickly, it is not necessarily in competition

with fossil fuels. To get this industry going quickly, the most cost effective alternative is in


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many cases to use fossil fuels with CCS. The main issue is that there is not such a great

resource of free renewable energy to be transformed into hydrogen making the usage

rate of production equipment very low, and therefore not warranting the significant capital

investments needed.

Thierry le Boucher

It should be noted that 95% of hydrogen in Europe is made out of fossil fuels. That means

that high levels of investment are needed to develop efficient electrolysis systems.

Didier Sire, World Energy Council, UK

You noted that CCS could represent 13% of the reduction of CO2 emissions. To date,

CCS has not been a great success for financial reasons and for reasons of public

acceptability.


As I stated earlier, one solution does not fit all. In the European context, CCS does not

appear to be a very viable solution in many countries. However, in terms of the developing

economies, where infrastructure is being built today, investing in very efficient fossil fuel

power generation that can later be retrofitted with CCS makes significant sense.

China, for example, has a strong focus on CCS as part of its low-carbon technology

solution framework. We therefore have to think of each technology in terms of the role it

can play in each region of the world.


In a World Energy Council meeting one month ago in China, we saw that our Chinese

colleagues were more interested in increasing the efficiency of coal power plants than in

CCS. In tomorrow’s session, Jim Watson will present the UK experience of CCS.


It should also be remembered that CCS is not an energy producing technology. It is a

CO2 emissions mitigating technology. Therefore, CCS will only become of interest

solution if it receives the backing of the political sphere.

Jean-Marie Dauger, World Energy Council

We heard that Europe needs to increase its R&D budgets, and that it is also necessary

to increase public support for R&D. How can we convince European policy makers to

contribute public money to programmes that will benefit other countries due to knowledge

spillovers? Second, how much of the job creation will come from the manufacture of new

devices? How much will be located in the countries where the initial research was carried

out? There have been many occasions in the past jobs were created in China and not in

Europe.

Paul Zagamé

For the international spillovers, policymakers must take into account that if on one side

national R&D expenditures give knowledge spillovers to foreign countries, and then some

advantages to them, on the other side, the increase in national R&D allows a country to

increase its ability to capture spillovers from outside.

This is a very important question. It is indeed very difficult to convince policy makers –

who are focused on the short-term – of the long-term benefits of R&D investment.


16


This again relates to the underlying policy objectives that have been set. The spillovers

can in fact be affecting the technologies themselves. It is therefore necessary to identify

the potential markets and the local needs to be addressed. Finally, it is necessary to

ensure that the products developed will actually be sold and used. This is truly an

exchange of information and not only a one way ticket. There is much more to be gained

by working with local stakeholders to ensure that the technology developed meets real

demands on the ground.

Thierry le Boucher

The situation of heat pumps is quite different from that of solar panels, where China has

a quasi-monopoly. The heat pump compressors do indeed come from China, but the rest

of the heat pump is manufactured in Europe.

Guy de Monchy, AFSE, France

How did you reach the figure of 3 million heat pumps, and how long would it take to

replace all of those heat pumps?

Thierry le Boucher

We calculated that there were 4 million boilers in France today, and targeted a 75%

replacement rate (3 billion boilers). The average life span of a fuel boiler is a maximum of

15 years, and their replacement should therefore be achievable in 8-10 years.


The cost-benefit of these options must be considered in a systemic manner. We should

not look at insulation on the one hand and heat pumps on the other. If a building is well-

insulated, a smaller heat pump would be sufficient, making the whole system more cost-

effective. A key challenge is to obtain the right data on existing buildings. That is key to

developing the right energy R&D policy.


17


► Frank Carré, Scientific Director, CEA

► Zulandi Van der Westhuizen, Director Resources, World Energy Council

Nuclear energy innovation:

A necessity, a challenge, and an

asset for the growth of the low-

carbon economy

Frank Carré, Scientific Director, CEA

I will be exploring three main issues today. First, the necessity of carrying out R&D to

ensure that lessons learnt from severe accidents are taken on board.

Second, innovation is difficult in the nuclear sector compared to other industries due to

long lead times (+15 years) and significant costs.

Third, many European countries are silent on the subject but nuclear is a vital component

in low-carbon economies.

1) Steady technological progress

The first generation of nuclear reactors in the 1950s used natural uranium and heavy

water as a coolant. The end of the 1990s saw the mastery of uranium enrichment, which

made it possible to use light water as both a coolant and a moderator. This technology

was developed initially for military use and then extended to civil use. 85% of all reactors

in operation today derive from that technology. The 3rd generation of reactors emerged in

the 1990s, and are aimed at simplifying systems with a view to keeping investment costs

down. The fourth generation of reactors is planned for the second half of the 21st century.

In improving safety, different countries have focused on different factors. For example, in

the US, as a result of the Three Mile Island cooling accident, the emphasis has been on

passive systems. In Western Europe, as a result of Chernobyl, the emphasis has been

on reinforcing containment. Currently the EPR is being revisited by the new AREVA team

and EDF to simplify the system and optimise the technology so as to make it more

competitive on the international market.

The Fukushima incident was the result of two natural events occurring at the same time.

The learnings from this event included a re-evaluation of natural events, and the need for

off-site power supply and cooling capabilities. This accident spurred international

cooperation on R&D on safety with a view to greater harmonisation of safety and

regulatory requirements.

There is also the question of economic competitiveness to consider, and the need to

contain the steady rise of investment costs. Nuclear power is challenged by fossil fuels,

wind power and solar photovoltaic. As well as technological issues, innovation also has

to address financing issues. 60% of the generating costs of nuclear result from the cost

of the investment in the reactor. Therefore, innovative financing schemes are also crucial.


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The growth of nuclear power also calls for solutions for the disposal of high level waste.

This is a particularly important issue for Europe. In contrast, in the US, repository issues

are not linked with the construction of plants.

2) Other challenges

Today, there are 440 nuclear power plants around the world, with 68 new plants under

construction and 220 planned. Of the 68 plants under construction, more than half are

located in China, India and Russia. Together with the development of renewables, nuclear

is a key factor in driving the economies of emerging countries, primarily for reasons of

energy security.

The importance of nuclear in developing a low-carbon economy has been acknowledged.

Professor James Hansen, from the US Academy of Science, has been advocating

nuclear energy as part of the global climate change solution for some time. He is confident

in the progress of technology that will make nuclear safer, more efficient and more

proliferation resistant.

The original rationale for launching France's nuclear fleet in the 1960s was energy

security. France is currently second after Sweden in terms of its per capita CO2 emissions.

The French fleet of 58 reactors provides 125,000 direct jobs (and 410,000 jobs overall)

and accounts for approximately 2% of national GDP. Going forward, the aim is to integrate

the use of nuclear and renewables in the move to a low-carbon economy.

Other possible uses of nuclear power include using nuclear power to co-generate

electricity and heat. Other ideas include using that power in electrolysis for the production

of hydrogen to be used in synthetic hydrocarbon fuels.

3) Future developments

Light water reactors make poor use of natural uranium resources. The next generation of

power plants could be based on a fast reactor technology that uses depleted uranium.

Europe had 7 experimental prototype reactors underway but these have all been closed

down for political reasons. The champions of this technology today are therefore Russia

and India. France aims to get back into this area through the Astrid project, which is

expected to be commissioned before 2030.

International R&D is also addressing other types of reactors including sodium fast

reactors, lead fast reactors, gas fast reactors, very high temperature reactors, super

critical water reactors, and molten salt reactors. The Generation IV Forum has been set

up by the US Department of Energy to explore international R&D cooperation in these 6

systems. There is also a revived interest in small and medium sized reactors which are

transportable.

4) Conclusion

Nuclear energy is still considered worldwide as a vital component of a low-carbon

economy. Innovation is required not only in the technology but also in financing and

regulatory frameworks, and there is also a need to integrate nuclear with renewable

energies as part of the transition to a low-carbon economy. In all of this, international

collaboration will play an important role. It will allow the costs of R&D and large

demonstrations to be shared, and will allow a move to more internationally harmonised

safety regulations.


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E-Storage: Shifting from cost to value

Zulandi Van der Westhuizen, Director Resources,

World Energy Council

I will focus on the question of whether storage is indeed moving

from cost to value, beginning with a quotation from Henry Ford in

1914 that shows that the electric automobile was already an idea

over one century ago.

The World Energy Council’s Resources report covers 12 different resources and cost-

cutting technologies, including energy storage (e-storage), which is the subject of a

specific chapter in the report. This work was prompted by a combination of the declining

costs of renewables (especially PV), the declining costs of storage (especially batteries),

and the increasing penetration of volatile renewable energy sources, in particular wind

and solar. E-storage can play an important role in stabilising and balancing that system.

1) E-storage

Pumped hydropower storage plants represents over 90% of all installed storage capacity.

Lithium-ion batteries constitute one-third of all installations in the world, and will continue

to grow. Storage is characterised by category: mechanical, thermal, chemical, electro-

chemical, and electrical.

E-storage covers a wide range of technologies and applications, and these can be

mapped in terms of their discharge times versus their energy capacity. For example,

super-capacitors have a fast discharge rate but a low energy capacity. Power to gas from

hydrogen has both a high capacity and a high discharge time at rated power. The type of

storage used will therefore depend on the needs to be addressed. The different

technologies have also reached different levels of maturity.

A Bloomberg New Energy Finance study shows that, as production increases, costs will

decrease. That same trend can be expected to apply to the emerging technologies as

well. When it comes to batteries, it is important to consider the bigger picture of the entire

value chain. That is, the challenge of dealing with waste also has to be kept in mind.

2) Cost modelling

PwC carried out a cost modelling exercise on Wind and Solar PV, estimating the costs

for 2015 and 2030 conditions. Two key metrics were used:

► SIC: specific investment cost.

► LCOS: levelised cost of storage. This is used in preference to LCEO, which is used

to calculate the cost of electricity from different types of power plants.

With respect to Solar PV, in 2015, the PSP, compressed air energy storage, and

thermochemical technologies are the lowest in cost, at about $100-200 per MWh.

Batteries are significantly more expensive. However, the lower cost technologies are less

suitable for integration with PV. In 2030, the cost reduction of batteries is particularly

striking. With respect to Wind, few technologies appear attractive. Battery technologies

are shown to be significantly more costly than for Solar PV, even in 2030.

The study therefore concluded that the costs of storage will decline by as much as 70%

by 2030. LCOS is useful as a metric but its limitations must be clearly understood: costs

will depend on the technology, on its location, and on its application. Finally, LCOS is not

the only issue here. Storage creates additional value in that it can also improve power


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quality, reliability and security of supply. That is a major game changer in particular for

emerging countries. Storage also provides a reserve capacity or ability to restart after a

blackout. It can help level load and create the potential for price arbitrage. LCOS allows

countries to defer grid investment. This latter point, however, could be a negative

consideration for the longer-term.

3) Conclusion

The key findings of the report are the wide variation in energy storage costs.

The important metric is value, which is a function of both cost and revenue. As such,

LCOS is only part of the story and understanding the application in question is critical

here. Understanding the revenue side of storage is also key as this is a complex issue.

From a country and societal perspective, the value of storage is the ability to provide

power quality, reliability, and security of supply. Storage also creates additional value

through its ability to level load. In order to be resilient, there is a tendency in developing

countries to have smaller, more localised capacity.

There is also a question of public acceptability to be addressed. Not everyone is in favour

of sharing information or of putting their own security of supply at risk for the greater good.

The report therefore leads us to recommend going beyond a narrow levelised cost

approach to storage technology assessment. Storage technologies should be assessed

on the basis of holistic case studies in context, focusing on the specific technology, the

specific application, and the specific geographical area in question. It is not possible to

make broad generalisations about any of these technologies.

It is also necessary to accelerate the development of flexible markets, working with

transmission and distribution system operators and regulators. This is a particularly

pressing issue in Europe.

Finally, storage provides value in its ability to provide power quality, reliability, security of

supply, and flexibility. It is a key factor to be taken into account when planning for grid

expansion or extension.


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Presentation of the 23rd World Energy Congress in Istanbul

Hasan Murat Mercan, Chair, World Energy Council Turkish

National Committee

The World Energy Congress is held every 3 years, with the next

Congress to be held in Istanbul on 9-13 October 2016.

The theme of the Congress is “Embracing New Frontiers”.

It addresses the fact that the energy sector is going through

major changes in terms of technology, innovation, strategy, and

geo-politics.

The 4-day Congress will cover:

► Day 1 - Vision and Scenarios for the Future.

► Day 2 - Identifying Business Opportunities: Resources and Technologies.

► Day 3 - Policy Solutions to Secure Prosperity: Embracing the Trilemma.

► Day 4 - Africa: Securing a Sustainable Energy Future.

Each day will include scene setting sessions, keynote speeches, special addresses,

roundtables and so on. Side events will also be organised and there will be 15,000 m2 of

exhibition space.

This will be a paperless Congress with the ambition of having +100 ministers, +10,000

delegates, and +250 CEOs and high level speakers. To date, 196 speakers have

confirmed from 69 countries, including 28 ministers. Academic papers must be submitted

by 31 May 2016, with monetary prizes awarded to the Top 20 papers. The Congress will

allow young professionals and academics to meet with their peers.

The Congress will be held at the Istanbul Convention Centre, a 5-minute walk from the

city centre. A security zone will be established around the Congress venue and hotels.

Full details are available on the Congress website: www.wec2016istanbul.org.tr

http://www.wec2016istanbul.org.tr/


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Session 2: RDI choices and consequences on the organisation

Pascal le Masson, Professor, Mines Paris Technology-PSL Research University

Didier Houssin, Chair, IFP Energies Nouvelles

Miroslav Poljak, Member of the Management Board, Končar

Designing new energy systems:

Beyond decision and optimisation,

design theory and methods to

manage R&D and innovation

Pascal le Masson, Professor, Mines Paris Technology-PSL Research University

I will be discussing the forms of organisation that are emerging in R&D organisations in

order to address innovation. This analysis relies on a framework that enables to

characterize the performance of R&D and innovation department, based on the

progresses made in Design Theory. In recent years, the Special Interest Group (SIG) of

the Design Society has grown into a community of over 300 researchers from

35 institutions from around the world working on design theory. This is a transdisciplinary

research program that deals with tools, methods, organisation, cognitive approaches, and

the economics and history of design.

1) Contemporary innovation: Shaping the unknown

Do we need new forms of R&D to address innovation? R&D organisations have existed

in companies for more than 100 years, and they have worked quite well to date. However,

they now face new questions. Rather than just optimising existing systems – which was

the role of R&D organisations in the past – the real issue today is to create brand new

systems. That is, we are moving from a role of planning and optimising to a role that

involves shaping the unknown. One of the issues faced today is the changing identity of

objects. For example, the energy system is an ecosystem where users are becoming

suppliers. Similarly, the functions of the mobile telephone have constantly changed in the

past 10 years. That is also the case for many other mass consumer products including

even vacuum cleaners or irons.

This logic of functional creation is at the heart of all contemporary economics.

At the same time, we face innovation bubbles, unsuccessful and costly innovations, and

orphan innovations (Agogué et al. 2012). There are many fields where society is ready

for and expecting innovation. Research is carried out but nothing happens. There are


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therefore many expectations and many ideas on the table, but the way to achieve them

is still being explored.

2) From decision making to innovative design

We have all heard about open innovation, co-design, design thinking, brainstorming, fab

labs and so on, but how efficient are these methods? We know that, with respect to

brainstorming for example, there is a sort of productivity gap, due to both individual and

collective cognitive causes such as cognitive fixation. This has been identified as a critical

issue in the creative process. The challenge for the organisation of innovation is to enable

teams to “unfix” themselves. In the 1950s, the focus of managers was on decision making

and decision theory. Today, the focus is on design theory and creating alternatives.

This involves identifying and measuring bias, determining its causes, and creating

organisations that overcome that bias.

There are at least 5 proposals of design theory, modeling new models of thought for

expansive reasoning. They all address the issue of being rigorously creative – being able

to generate a complete list of ideas for a given concept. One such theory is the C-K theory

proposed by Hatchuel and Weil in 2002 (Hatchuel and Weil 2009; Hatchuel and Weil

2003). It explains how, given certain building blocks, it is possible to (a) create a

combination of those building blocks, and (b) to think about things that are made of those

building blocks but that are not possible with those building blocks.

By way of illustration, in an experiment, a group of designers is asked to design a solution

that will ensure that an egg dropped from a height of 10 metres will not break (Agogué et

al. 2014). Using C-K theory, we can identify all the alternatives that could be imagined.

80% of the ideas relate to parachutes or mattresses that slow down the drop or dampen

the shock. Very few people would think of training an eagle to catch the falling egg.

There is therefore a very strong fixation or bias regarding the initial question, and that

bias can be explained. Can we, however, overcome that bias? Yes. By showing people

the idea of the trained eagle, they will understand the kind of resolving that is expected:

this is not problem resolving but a new kind of resolving and a new way of thinking.

The same kind of exercise can be carried out on a real issue: improving the valorisation

of biomass energy. If we consider all the EU funded programmes in this area, we can see

that they are all based on one particular type of solution. That is, they are all based on

restrictive reasoning rather than expansive reasoning.

3) Cooperative architectures

What are the consequences of these new theories on the organisation of R&D

departments? In the last 10 to 20 years, we no longer speak only of R&D but of RID –

with Innovation (I) interacting in a new way with Research (R) and with Development (D).

Innovative design methods and processes include evaluation criteria, tuning

breakthrough, creative leadership, and collaborative innovative design. However, when it

comes to energy questions, the firm alone cannot overcome all innovative design issues.

We therefore need this type of movement at the ecosystem level. If there is no

organisation at the ecosystem level, nothing will happen. For example, we have not seen

any real reduction in road deaths and injuries for decades. However, if a new actor were

to emerge and try to cover the whole range of possible ideas, we could “de-fix” the entire

ecosystem. That type of cooperation can be seen in the semiconductor industry (Le

Masson et al. 2012). All actors in this industry come together every 4 months to share not

what they know but what they do not know. They share matters that are critical for the

future of the industry but that are still unknown. Anyone can go on their website and see

the unknowns of the semiconductor industry. Collectively, they are able to overcome

fixation.


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We can therefore see new organisations emerging and can expect that this will lead to

more innovative ecosystems.

References

Agogué M, Kazakçi A, Hatchuel A, Le Masson P, Weil B, Poirel N, Cassotti M (2014) The

impact of type of examples on originality: Explaining fixation and stimulation

effects. Journal of Creative Behavior 48 (1):1-12.

Agogué M, Le Masson P, Robinson DKR (2012) Orphan Innovation, or when path-

creation goes stale: missing entrepreneurs or missing innovation? Technology

Analysis & Strategic Management 24 (6):603-616.

Hatchuel A, Weil B (2003) A new approach to innovative design: an introduction to C-K

theory. In: ICED'03, August 2003, Stockholm, Sweden, 2003. p 14

Hatchuel A, Weil B (2009) C-K design theory: an advanced formulation. Research in

Engineering Design 19 (4):181-192.

Le Masson P, Weil B, Hatchuel A, Cogez P (2012) Why aren’t they locked in waiting

games? Unlocking rules and the ecology of concepts in the semiconductor

industry. Technology Analysis & Strategic Management 24 (6):617-630.

IFPEN: Innovation and transfer to

industry

Didier Houssin, Chair, IFP Energies nouvelles

I will be sharing the experience of an R&D centre, which

combines innovation and transfer to industry.

At the same time, it is changing the scope of its activities to a

more diversified portfolio.

1) IFPEN overview

IFP Energies nouvelles (IFPEN) is a public sector R&I body that is also a training centre

and an industrial group. It has an international scope in the fields of energy, transport and

environment. The Research Centre has 1,660 employees including 1,130 researchers

spread over two sites in France. It covers 125 doctoral and post-doctoral researchers and

over 50 professions from geological engineers to powertrain engineers. IFPEN holds a

portfolio of 11,000 active patents, and is the 13th most important patent producer in

France. More than 50% of the new patents it obtained last year relate to new energy

technologies. It publishes over 200 articles each year in international scientific journals.

IFPEN works in three main areas: mobility, new energies, and the oil & gas sector. It is

one of the few public research bodies to fund 55% of its budget through its own resources.

The organisation has a strong policy of partnership with industry, and has research and

innovation contracts with over 100 industrial partners around the world. It also provides

technological support for approximately 20 SMEs per year.

2) A broad portfolio

IFP Energies nouvelles has a broad portfolio of industrial holdings including Axens,

Beicip-Franlab, IFP Training and Eurecat. The partnerships developed with industry take

very different forms.


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► Bilateral partnerships: Deeplines Wind is a bilateral partnership in offshore wind for

the development of software to simulate the behaviour of fixed and floating wind

turbines.

► Multilateral partnerships: Dionisosflow is a multilateral partnership using a

consortium approach for the development of 3-D stratigraphic modelling software.

The intellectual property and commercial operating rights belong to IFPEN but the

sponsors have access to the use of results at the end of the project. The advantage

of having industrial partners around the table is the ability to regularly test the

product during this development. This leads to the development of software that is

able to meet market requirements.

► Integrated alliances: The EOR Alliance is based on a collaborative or alliance

approach for integrated enhanced recovery services, from formulation to roll out

and field monitoring. Over 100 researchers are mobilised in the Alliance.

► Pre-industrial demonstration projects: The Futurol project involves the setting up of

pre-industrial demonstration operations, an important step in the validation of new

processes. It is aimed at the development of ethanol fuels from lignocellulosic

resources, and brings together industrial players, public and private research

centres, and financial institutions. The project was launched in 2008 and should

lead to a complete chain of processes to be marketed in 2017.

More recently, IFPEN has been creating links between partner SMEs to help them work

together, be more innovative and create value. This model is particularly adapted to new

areas such as offshore wind or new transport models that could not be developed by

traditional industrial partners.

3) Dare to be different

In conclusion, it is necessary to expand the scope of investigation beyond our traditional

areas. In this, it is important to dare to take a different view in entering new energy

technologies (wind power, biofuels, transport electrification, etc.) and new markets

(circular economy, energy storage, big data). As well as seeking new areas of

investigation, it is important to regularly think outside the box, cultivate new mind sets,

and renew the methodologies used. In this way, we can promote the emergence of new

ideas and new concepts.

Model of R&D and innovation in the

holding company

Miroslav Poljak, Member of the Management Board, Končar

I will present the model of R&D and innovation in the Končar

Holding Company, in particular with respect to the Končar Electrical Engineering Institute,

which plays an important role in our in-house R&D efforts.

Končar was founded in Zagreb (Croatia) in 1921. Today it is a holding of 18 companies

and one affiliated company involved in the energy, transport and industry sectors. It has

a headcount of approximately 4,000 employees. 95% of our products emerge from our

own R&D efforts, which are based on a very customer-centric approach. We produce

single products such as generators, HV switchgear, transformers, small electrical

machines, and power transformers. We also offer complex products, plants and services

including switchgear, electric vehicles, and engineering in energy and transport sector.


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1) The RDI process

Our RDI process for single products is relatively simple, starting in the design office. It is

either carried out entirely in-house or in collaboration with universities, R&D institutes and

other stakeholders. The Končar Electrical Engineering Institute, our in-house R&D

institute, was established in 1961. It is involved in three main activities.

► R&D: this primarily involves applied research on transformers, rotating machines,

switchgear, power converters, wind turbines, rail vehicle components, ICT...

► Laboratory testing and product certification: this includes both commercial testing

and experimental research and is carried out in 7 laboratories that have EN 17025

accreditation.

► Specific products: this refers to products that are not in production in any of the

Končar companies. It also includes components for low-volume but highly complex

products such as wind turbines, hydro power plants, PV plants, etc. Examples of

our specific products include the hardware and software components of an

embedded control system for safety control platforms in railway crossroads.

They also include off-grid power supplies that can be integrated into any energy

production (solar, wind, fuel cell, etc.). Finally, they include monitoring systems for

transformers, rotating machines and bay/switch yards.

The RDI process for complex products is focused on 6 strategic areas that have been

identified by the Management Board: transformer stations, power generation,

renewables, smart grids and communication technologies, traction vehicles, and

information technologies.

2) RDI strategic objectives

The company’s strategy objectives for RDI are, first, to harmonise strategic RDI projects

with the objectives of the Holding company. Second, to accelerate strategic RDI activities

through the rational use of resources. Third, to stimulate RDI for long-term projects and

new research areas.

The research is carried out by the Group’s different companies on the basis of various

rulebooks, bylaws, contracts and agreements for mutual cooperation. The process begins

with a proposal for an RDI project from the Management Board, an interested company

or an area coordinator. The Strategic Development Council provides its opinion, and the

Management Board can provide its preliminary consent. The final decision is taken by all

participants. The participants’ Project Leader submits an RDI plan and programme, and

the final decision is taken by the Management Board.

Funding sources include the subsidiary’s own resources (statutory and other reserves,

free depreciation funds, from current operations). It also includes the subsidiary’s

resources allocated to the funding of agreed activities with other subsidiaries.

Research can also be funded through recapitalisation (by cash or by tangible or intangible

assets). Finally, funding can come from specific purpose funds, including national and EU

funds.

During execution, the project leader submits technical, commercial and financial reports

to the project supervisory body consisting of participants and an area coordinator.

The model has allowed the production of many complex products including digital

transformer station, a commuter train, and a 145 kV metal clad gas insulated switchgear.

The model has also allowed us to establish a Centre of Excellence for Transformers.


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Panel Discussion


How would you define or characterise the concept of creative leadership?

Pascal le Masson

Our work in this area is still ongoing, with a doctoral thesis based on a cognitive approach

of creative leadership, based on design theory. We tend to consider that leadership has

almost no impact (or only a negative one) on creativity; that creativity is a type of natural

process. The real question is how leaders can, in operational terms, enable their teams

to go beyond fixation, in a sustainable manner. Our research shows that, ordinary leaders

can do much for the creativity of their teams. In particular their impact can already be

great only if he or she can only orient their teams not to work in a certain direction – and

the generativity effect of a leader is also related to his/her capacity to push their teams in

other directions.

Another stream of research concerns that fact that traditional leaders, particularly in

France, had the ambition of going beyond the known. For this, it is very important to

organise their Etat Major – or personal network – in order to explore the unknown. This is

key to overcoming the problem of fixation – and this was historically done by one of the

most famous French leaders, Henry Fayol.

Miroslav Poljak

Good leadership helps to improve knowledge, build competence, and provide a vision.

It must also result in success at the level of the market.

Didier Houssin

The question here is how to encourage creativity and innovation beyond traditional

models in an institution that is, by its very definition, conservative. One way of doing that

is by breaking down silos and borders within an organisation, moving beyond one’s

security zone. It is also important to encourage multi-skilled teams that draw on

competencies from different fields and sectors.


Would you say that there is a common type of organisation for company R&D centres?

Pascal le Masson

My knowledge of the energy sector is rather limited. However, I was impressed by the

two presentations. First, IFPEN has developed a model of transfer that is much more

sophisticated and richer than what is usually seen when one speaks of “technology

transfer”. Second, I was also very impressed by the involvement of Končar’s Management

Board in the management of innovative projects and in the management of innovation –

this again remind of Henry Fayol model of organizing his Etat Major.


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Roundtable 1: The emergence of new technologies, particularly those serving the Energy Transition

Arnulf Grubler, Acting Program Director, International Institute for Applied Systems

Analysis

Carsten Rolle, Head of Department, Federation of German Industries

Raphaël Schoentgen, Research & Technologies Director, ENGIE

Moderator: Christoph Frei, Secretary General, World Energy Council

Christoph Frei, Secretary General, World Energy Council

The first question we can ask is: What is driving new technologies

in energy? The consensus today is that this is not simply

opportunity. Rather, there are a number of major factors driving

massive change in the energy sector.

The World Energy Council’s Issues Monitor identifies high-level

issues that affect energy. We asked 1,200 energy leaders in 90

countries to rate those issues in terms of their level of importance,

their level of uncertainty, and their relevant time frames.

► Price volatility, economic uncertainty, market design and electricity storage

emerged as the top issues that keep energy leaders awake at night.

► Regional interconnection, renewables, energy efficiency and the transitioning of

subsidy regimes are the issues that keep energy leaders the busiest.

► Renewables and energy efficiency are seen as the top action for the coming 6

years, having replaced CCS or nuclear in this respect.


29

► In global terms, resilience issues are ranked relatively low on average, although

this varies greatly by region. Cyber threats rank among the top 1-year movers.

When it comes to resilience issues, Chinese energy leaders are most focused on the

energy-water nexus. In Germany, cyber threats are rapidly becoming the top resilient

issue. In France, however, resilience issues are relatively low on the agenda of energy

leaders.

In conclusion, when talking about the energy transition, we can say that it is clearly being

driven by three fundamental factors: decarbonisation, new market design and resilience

pressures.

I would now like to hand over the floor to our respected panel members.

World exergy flows:

Energy end user efficiency

Arnulf Grubler, Acting Program Director, International

Institute for Applied Systems Analysis

I am a student of technology history, with a specific focus on the

drivers of past energy transitions. Historically, these transitions have never been policy-

driven, as it is the case today. These transitions take also a very long time to unfold.

They are not driven by one single technology but by interrelated sets of technologies that

combine new technologies, new services, and new infrastructures.

The Global Energy Assessment found that technologies and institutions are not created

by individual efforts but in a very specific systemic context. To have new and better

technologies it is necessary to have new knowledge, and well-coordinated actors and

institutions that are the holders of that knowledge. Those actors and institutions are also

key in mobilising the necessary resources for technology investments.

In this, it is important to note that R&D is cheap! Globally we invest approximately

$50 billion in energy R&D per year. In contrast, we spend $200 million in subsidising

renewable energies, and the energy system itself mobilises up to $5 trillion in investments

each year. Mobilising resources for innovation is therefore not only about mobilising

resources for R&D; it is also about mobilising resources for market creation and to provide

incentives for investments into existing technologies and markets.

My main argument today is a very simple one. There is a group of technologies that is

marginalised in our innovation system – energy end-use efficiency. Over 80% of our R&D

spend is devoted to the energy supply side, and the innovation system is very biased

towards supply side technologies in all other aspects as well. We therefore need a

renewed emphasis on energy end-use efficiency, and the advantages of such a focus are

multiple.

► First, efficiency: By focusing on end-use, we can leverage enormous efficiency

gains. From an exergetic perspective, the two greatest losses occur at the level

of end-use and service provision. For example, we lose considerable exergy in

the conversion of gasoline into mechanical energy in our cars. We lose even more

exergy by having a single person sitting in a car that is designed for multiple

users. These are therefore the areas with the largest potential efficiency gains in

the transport sector.

► Second, a focus on energy efficiency means that there is a much greater

multiplier effect due to the greater investments that are mobilised in end-use


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investments (up to 4 trillion $ per year) compared to energy supply side

investments (about one trillion $ per year).

► Third, focusing on end use will help with innovation on the supply side as well.

The less energy consumed and the more efficient we are, the more resilient our

energy supply will become.

► Finally, the nature of the technology itself. A significant drawback of focusing on

energy end user efficiency is its small scale – this is an area characterised by a

myriad of projects that are difficult to organise. However, that small scale also

means that it is cheap to innovate and the price of failure is also small.

In conclusion, case studies of innovation successes and failures tend to focus only on

successes; they hardly ever mention innovation failures. Nevertheless, we know that only

5% of innovation projects actually make it to the market which makes smaller-scale end-

use innovation projects much more resilient compared to large-scale, multi-billion Dollar

supply-side innovation projects.

Christoph Frei

Which new sets of technologies do you consider are at the forefront of innovation?

You emphasised the energy efficiency side. However, in virtually every area in which we

touch on energy efficiency, there are three stakeholders that have to be aligned:

the owner, the user and the regulator. Can we therefore be hopeful that energy efficiency

will realise its potential?

Arnulf Grubler

The key here is organisational innovation. We have to overcome the principle of market

segmentation based on the principal agent model – a model that did not exist in the past.

For example, during the industrial revolution, it was the engineers working in the

coalmines who developed the steam engine. We have now institutionalised this principal

agent model, which was very successful for the car industry, for example. Going forward,

new business models such as Uber or Prosumers are needed.

There is an old adage in the literature that technological change is difficult but institutional

or organisational change is easy. I firmly believe that the opposite is true: it is

organisational change that is the most difficult to achieve.

Christoph Frei

We have heard the research perspective and will now turn to a country transitional

perspective. What are the innovation drivers that industry would like to see?

The voice of German industry

Carsten Rolle, Head of Department, Federation of German

Industries

BDI is the umbrella organisation of the manufacturing industries

in Germany. We often talk about the challenges of the

Energiewende but a study commissioned by BDI shows that the

German economy could also benefit in multiple ways from the energy transition. First, it

would lead to an increase in revenue potential for German technology producers.

Second, it would improve energy independence by reducing the need for fuel imports.


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Third, it would contribute to climate protection by lowering the volumes of CO2 emissions

in Germany.

Total public energy RD&D budgets are quite cyclical, peaking at $20 billion in 1980 and

then declining for the following 20 years. RD&D budgets also vary greatly by country.

In countries such as Finland, Norway Canada or France, this has a high priority. In other

countries such as Spain, Portugal or the Czech Republic, the energy RD&D spend per

capita is much lower. The focus on different technologies has also changed over time and

tends to follow policy shifts. In 2014, European utilities increased RD&D expenditures for

the first time since 2011, mainly driven by the French utilities EDF and ENGIE.

BDI assessed 27 technology fields related to energy on the basis of four different criteria

(weight in %).

► First, the benefits of the technology itself in terms of emissions, resource efficiency,

security of supply, and so on (25%).

► Second, R&D effectiveness: the benefits that each euro of R&D would bring (30%).

► Third, economic importance for the German energy system and for the German

economy as a whole referring to its global market shares (25%).

► Fourth, societal and political acceptance and relevance (20%).

As a result of that assessment, 10 technology fields were identified as crucial priorities

for policy makers: material storage, fuel cells, energy efficient industrial processes, EU

super grid, offshore wind, e-mobility, multi-modal systems, smart grids, energy efficient

buildings, and PV. Digitalisation was identified as an 11th field that applies to the 10 other

fields and is penetrating all areas of tomorrow’s energy world. When it comes to

digitalisation, this is a technology-driven trend rather than a policy-driven one.

Sector coupling or multimodal systems is one of the 10 fields that is worth highlighting.

This is a long-term trend that is rapidly increasing in importance.

We propose taking a strategic approach based on such a priority list of technologies, the

first of its kind in Germany.

Christoph Frei

Did I understand you correctly that RD&D is not strategic for the state but for private

players only?

Carsten Rolle

We do indeed see fields for public spending and the increasing amount of public money

spent in the last years is an indicator that it gains more importance strategically. Part of

that R&D can be done by private companies but there is a significant amount that should

be publicly funded. On the one hand, we want to see that support being technology open,

not picking singular technologies by politicians. On the other, it is not possible to support

all technologies. It is therefore necessary to set some priorities.

Christoph Frei

In the latest World Energy Trilemma report, which is currently being prepared, we have

found that those policies that we would call “measured” policies are not visible after 5 or

6 years. On the research side, is there a call for massive cyclical investment?

Carsten Rolle

We could have done more with respect to climate change issues if we had invested more

on energy efficiency. We tend to see flexibility and efficiency as separate factors.


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However, these two issues should be bound together more closely, especially in times

when there is more electricity from volatile renewables produced than we can consume.

Christoph Frei

We have now heard a research perspective and a country perspective, both of which

have pointed to the energy efficiency side of this topic. We will now hear from a company

perspective that is more focused on the supply side. What are your views of the

technology priorities in the energy transition?

The utilities perspective

Raphaël Schoentgen, Research & Technologies Director,

ENGIE

I will provide the perspective of utilities, which are in the middle

of the energy transition. That transition represents a major shift

for a company like ours. In the past, our assets were extremely

large systems that required hundreds of talents (engineers, lawyers, finance experts,

etc.). The quality of a company such as ENGIE was to be able to deliver new projects on

time. That is, it was concerned with the integration of all the different parts, including

technology. As regards the technology and technology providers, we have an array of

different suppliers that have been involved in this for decades. They identify the best

technologies available, and integrate them into their offers. Once they have developed a

new solution, it is available on the market for everyone to use. That is the world of energy

as it was 5 years ago.

The energy transition means that the relevant systems are divided in terms of size by a

factor of 1/1,000. That means that the entry ticket to develop a new energy plant is much

lower: with a few million euros it is possible to start to play at any level of the chain. We are

therefore seeing the emergence of a new array of players and a complete shift in the way

a company like ENGIE looks at technologies. We are also seeing a shift from very open

large systems to a world where technology may no longer be accessible to all.

That has led ENGIE to change its policies with respect to the ecosystem of technologies

and innovators in recent years. First, 2 years ago, we created a new venture fund through

which we invest directly in new projects. Second, at the Group level, we have decided to

push for a portfolio of large tech pilots, for example the Gaia second-generation biomass

project. Third, we are exploring the development of new competencies, for example

batteries – not with a view to becoming a key player in batteries but in order to better

understand battery technologies and their impact on our business. We have also

developed a 3-D printing lab that enables us to print pieces in methyl. This transition is

therefore a major lead for a group like ours to integrate with technologies in a completely

different way.

When it comes to investment levels, the question of the level of intensity is probably not

the best KPI to track. The real question is how one connects to innovation ecosystems.

The fact that you are connected means that there is a significant return on even limited

amounts of investment. The approach of having open systems with closed loops is the

new world in which we are living.

I believe that there are 6 major disruptions underway today.

► First, the division of systems by 1/1,000.

► Second, people want green energy and a mix of green energy.


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► Third, people are concerned with CO2 emissions. In this area it is difficult to find

technologies that are major disrupters, and CCS remains a major challenge.

► Fourth, for the first time we have an interconnection between the gas system and

the power system at the local level, and there are many companies active in this

field.

► Fifth, we are seeing the emergence of new energy chains: power-hydrogen-

mobility, biomass-biogas-other products, and so on.

► Sixth, digital is everywhere and represents a major transformation. This raises

many issues such as cyber security, the development of apps, the Internet of

things, and data analytics.

In that context, ENGIE today can be characterised as being extremely open and

connected.

Christoph Frei

You referred to the move from large systems to connected systems. What is the unique

sales proposition for large companies in that context?

Raphaël Schoentgen

Our unique sales proposition is that we have a large customer base that we know

extremely well. That is something that cannot be built up overnight and, without that, no

technology is worth anything.

Carsten Rolle

R&D expenditure alone is not the right indicator here. I believe that being connected and

implementing innovations from outside into the company is essential. It is also important

to be much better at cooperating with other companies. So it is about the innovation

culture of the whole company.

Christoph Frei

We all underestimated the speed at which solar technology developed. Why were we all

so wrong and what can we learn from our mistakes?

Arnulf Grubler

It was very interesting to see that Raphaël Schoentgen’s industrial perspective resonates

so closely with the theoretical perspective.

With respect to solar, scenarios that took an alternative view, in which PV was a prototype

of a distributed technology rather than a large utility-scale option, were correct: the market

conformed to expectations, albeit with subsidies. We are very good at bringing granular

technologies to market, and I am often asked about my favourite technologies. From an

equity standpoint I very much like bicycles and radio receivers, which are the most widely

distributed technologies worldwide. These technologies are used by the bulk of the

world’s people, including the poorest. Today, we have a third technology that has joined

their ranks: the mobile phone, which has grown to 5 billion users in only 15 years.

The reason for its spectacular success of all these technologies is their granular nature

and the fact that they all represent a value proposition for the consumer and a new

combination of knowledge (banking, social media, etc.).


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Carsten Rolle

I am not sure that renewables are always decentralised and that traditional power sources

are centralised. For example, there is a lot of wind in Germany but it is highly concentrated

in a small number of locations. We see different trends, and there are drivers for

decentralised systems from the investors’ point of view.

Raphaël Schoentgen

One factor here is the capacity to take a given technology and reduce its costs. In this

area, the scale effect matters. In the PV field, for example, there was a bottleneck in the

production of silicium/silicon, which was in the hands of about 10 companies worldwide.

Once the Chinese players were able to do overcome that bottleneck by re-thinking the

production process, they were able to flood the market with products and drive prices

down. That same principle applies to new technologies – they will only be massively

introduced once their prices are driven down. Another factor is the industrialisation of

projects. The most successful projects have surfed on the wave of new business models

and subsidies. The roll out of a technology is therefore linked to these effects. The next

question is the future development of solar after PV.

Christoph Frei

That provides a very good example of how to overcome fixations as presented earlier

today by Pascal le Masson.

Arnulf Grubler

With respect to solar, it is clear that scale matters. There are two phenomena of scale

that are paramount to the energy sector. First, economies of scale, using larger turbines,

larger power plants, and so on. To date, all the cost improvements achieved in wind

turbines have resulted from making the turbines bigger and bigger. However, there are

limits to unit scales: it is possible to be “too big”. It remains to be seen whether a 20 MW

offshore wind turbine will not be at the frontier of that economy of scale. Second, the

manufacturing scale. Here, ironically, there is no limit to size. There is only one drawback:

having a single monopoly manufacturer will dictate prices.

As to the future of solar, I would sum that up in one phrase: too cheap to meter!

Christoph Frei

With respect to rural electrification, the cheap availability of both direct current (DC)

technology and mobile financing has led to breakthrough business models in rural

electrification. I find that a fascinating coming together of technologies. In which areas do

you see the most fascinating clusters of technologies emerging?

Arnulf Grubler

I will answer that with a trick question: What is the largest energy flow in our human

system? Waste. That is, it is the most important energy source that could be tapped but

one that is being wasted. We now have new technologies on the market that could

revolutionise this at the smaller scale. The usual model for innovation is government

funded R&D with a strong military component that is then cascaded down into the civilian

sector. The only massive way that thermal electric technology has cascaded down into

civil society is in fuel-efficient cooking stoves used in developing countries, with a

ventilator that works on the basis of a thermo-convection. This allows people to charge

their cell phones via the stove. That is a very surprising application of a high technology

product into a low technology product, and we could perhaps learn more from this

example.


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Carsten Rolle

I believe the greatest challenge lies not in the 10 technology fields that I highlighted but

in the organisational and innovation management structures within companies. Shifting

our companies to more open, risk-taking management cultures is a huge challenge that

requires a complete change in mind sets. We also have to find a way to integrate a myriad

of decentralised, small-scale solutions into a profitable business model. Managing this

range of ideas so as to both allow them to develop and to generate profit is our greatest

challenge.

Raphaël Schoentgen

In the field of electrons, artificial intelligence networks are a key driver of energy efficiency.

If we want the different devices in a home to “talk” to each other, they need to talk the

same language and the same contextual language. They must also be able to trade their

electrons on the power network. On the basis of weather forecasts, the system would

work automatically to optimise energy use and reduce energy bills. What comes next in

technological terms are peer to peer sales of electrons on the network that occur without

the intervention of the power companies – the Airbnb of electrons, if you like.

In the field of gas molecules, Mercedes, for example, is now developing fuel cell

manufacturing plants for its fuel cell cars. It is also developing energy related products in

those plants. Something similar is underway in the area of hydrogen, and this is an area

of interest for the future.

Christoph Frei

Of course, when it comes to artificial intelligence systems, an important question is who

will control the associated multiple payment streams and financing. That is a fascinating

question for the future.


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Session 3: Deployment and dissemination of innovations, the key role of demonstration and learnings


Session 4: Research and Innovation policies

Keynote speech

Roundtable 2: Connections between research and innovation policies, corporate strategies and industrial policies

Closing speech


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Session 3: Deployment and dissemination of innovations, the key role of demonstration and learnings

Thomas Flaherty, Partner, Strategy&

Jim Watson, Director, UK Energy Research Centre

Eric Lagandré, Energy Specialist, ANAH (French National Housing Agency)

Creating the culture of innovation

Thomas Flaherty, Partner, Strategy&

We are probably living in the most important of times for the

development of the power sector since Thomas Edison. The next

10 years are going to see more innovation than the last 50, and

this industry is therefore a great place to be in today.

1) A global view of innovation

It is crucial to understand that it does not matter how much you spend. What really matters

is what you accomplish from what you spend.

Old technologies such as telephones, electricity, and automobiles have taken over

50 years to reach 50 million units in US households. In contrast, the computer, cell phone,

and Internet technologies have taken only about 10 years to achieve the same market

penetration. From a technology push perspective, we are seeing much better

performance in terms of functionality and technology, and are also seeing costs drop quite

dramatically.

On the flip side, customer behaviour has evolved significantly. Customers want more

instant gratification and have a lower tolerance for delay. The problems in the energy

sector reflect the fact that people are finding their information from sources other than

their normal providers. The challenge for the industry is to stay ahead of both the

technology curve and the curve of customer expectations.

Industries are having a challenging time moving from highly effective idea generation to

highly effective idea conversion, that is, commercialisation. In our annual Global

Innovation 1000 Survey, covering the 1,000 highest spenders globally in technology and


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R&D innovation, only 25% of respondents claimed they were highly effective at both idea

generation and idea conversion.

Globally, innovation-related spending has been growing at a rate of about 5% per year.

We look at three categories of that spending: where the innovation is headquartered or

carried out domestically, where it is exported, and where it is imported.

By region, Asia has become the greatest recipient of R&D spending. Of the $55 million

spent for R&D innovation in China in 2015, 81% was imported from companies

headquartered elsewhere around the world. Companies from other regions moved

locations, divisions, and research facilities to China to conduct research in order to be

proximate to the markets, to the supply base and to talent pools. In some cases,

companies are exporting innovation to both higher cost countries and lower cost

countries.

2) Linking innovation with value

The list of the Top 10 most innovative companies according to our survey respondents of

our survey shows a significant differentiation between the revenues and market cap of

these companies, several of which were not on the list of the top 20 R&D spenders.

These companies were nonetheless widely recognised for the quality of their innovation

and for what they accomplished in the marketplace. Once again, innovation is not a matter

of how much you spend, but a matter of where and how you spend it.

The respondents of our survey fall into three categories: need seekers, market readers,

and technology drivers. The need seekers, focused on the customer, obtain most of their

intelligence by talking to the customer and trying to anticipate and fill unmet, and often

unperceived, needs. The market readers try to follow trends. The technology drivers

spend much of their time talking within their communities. Of these three categories,

the need seekers do the best job in creating highly aligned business and innovation

strategies and in financially outperforming their competitors.

Key developments in new technology in the utility industry have historically taken a 15 to

20 year horizon before market adoption and deployment. The power and natural gas

sectors are behind relative to other service industries and are very much in danger of

being too slow for successful development. The industry is weak in commercialisation,

that is, in bringing things to market.

In market and technology innovation, industries have moved from the notion of providing

products to that of providing services globally, while in the utilities sector everything has

been focused on products for a long period of time. Moreover, the most important

dimension of innovation is based around the concept of the business model.

Although many may talk about a new business model for the utilities industry, there will

be multiple business models, which means that companies will have to be very agile in

how they position themselves.

It will be crucial for companies to develop all of the capabilities of top performers in

commercialisation. The key in performance is how well business strategies are linked to

innovation strategies. At times, the gap between these two strategies is quite large,

because they are developed differently by different people.

3) Embedding a culture of innovation

The first level of an innovation pursuit consists of the incremental gains within the

business. The second level entails advanced thinking that moves the business forward to

advanced market positioning. The highest level of innovation creation involves

breakthrough strategic moves that create or unlock markets and build the business

models of the future.


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Only a very small proportion of innovation spending is currently going into this final stage

of breakthrough innovation, and it will be extremely challenging for companies to move to

this advanced phase very quickly. It will be necessary for them to evolve toward

commercialisation and to focus more on market phasing and on transforming their

business models.

In order for companies to evolve from a strategy that they would like to pursue to a high

degree of commercialisation, they will need the right talent, the right incentives, the right

accountability, and an organisation that enables people to work in a collaborative manner.

It will be necessary for them to challenge the status quo in order to define an innovative

culture. It is fine to have innovation as a focus, but if companies do not change the

fundamentals of their incentives and if they do not create a different accountability

structure, they will not obtain the results they desire.

If companies are afraid to make a move, if they are afraid to fail fast, they will be very

slow in being able to adapt their culture to the needs for innovation. The objectives of an

innovation agenda must be highly aligned with strategy. The power sector must define its

role and the purpose it wishes to fulfil. Finally, the amount of financial contribution differs

significantly between innovators and spenders. However, that does not necessarily mean

that high innovation automatically yields high financial contribution.

The challenges of low carbon

technology demonstration and

deployment: The case of carbon

capture and storage

Jim Watson, Director, UK Energy Research Centre

The timescale in the energy industry for innovation is still extremely long, particularly in

larger scale technologies. The technology of Carbon Capture and Storage (CCS) is

struggling to cross the “valley of death” between the laboratory demonstration site and

full-scale commercial deployment.

1) Context: Why is CCS important?

In some countries, CCS is rather controversial and the very idea of it has given rise to

public protests. Nonetheless, global analyses see CCS technologies as essential

ingredients for reaching global climate change targets. According to the IEA, 13% of the

CO2 emissions reduction effort by 2050 could be due to CCS. In the UK analysis,

the costs of meeting the target limit on global warming could be about twice as expensive

without CCS than with it.

The policy drivers for CCS are quite different in different countries. In addition to

motivations related to climate change, countries have put forward a number of other

reasons for implementing CCS. In the US, the importance of the indigenous coal

industries supports the need for CCS. The motivation for CCS in Canada has been due

to international pressure to clean up the fossil industry and to the decentralised

responsibility for natural resources. In the UK, the rationale for CCS until quite recently

has been to demonstrate a technology that would be usable in other countries.

At the same time, Carbon Capture and Storage technologies are characterised by a range

of uncertainties in policy and regulations, in economic and financial viability, in the variety

of methods and of technologies, in public acceptance, in the scaling up and the speed of


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innovation, in the integration of CCS systems, and in safe storage. The probability of a

successful business endeavour in CCS has not yet been established. The real challenge

is to bring these new technologies across the so-called “valley of death”.

2) International progress to date

CCS projects currently in operation are very much concentrated in North America.

Plans for new projects are spread around the world, but some of those plans may not

become reality. In the past 5 or 10 years, a huge number of plans have developed

globally, but a large number of them have failed to reach the building phase, quite often

due to a lack of financial support, particularly from the public sector.

Some important differences between the US, Canada and the UK help to explain why the

US and Canada tend to move faster. First, in North America, CCS projects in the power

sector are usually in monopoly utilities, that do not face any competition. If these projects

prove to be too expensive, the costs are simply passed on to the customers. In the UK,

however, the projects take place in competitive markets, which would make it impossible

to carry out such a practice. Second, in North America the well-established enhanced oil

recovery industry adds value to the CO2 capture as it could be used to recover more oil

from oil fields. Such a market does not exist in the UK.

3) Case study of UK CCS policy

For 13 years, the UK has been an enthusiastic supporter of CCS technology and has set

up a strong policy framework to support it. However, CCS has simply not yet happened

in the country. This illustrates some of the key challenges associated with technology

demonstration.

The UK government first stated its support for CCS in 2003, but that proved too early for

the government to commit to funding. A first competition with government funding took

place in 2007, with a focus on post-combustion CCS at a coal-fired plant. In retrospect,

the government’s big mistake was to focus on a very specific form of CCS, even though

there is still a great deal of uncertainty about the best way to do CCS. The power station

that would have hosted the lead project in Scotland is now going to close. The CCS

project did not proceed due to a lack of sufficient funds and the gap between the cost of

the project and what the power company could afford.

A new and better designed competition was launched in 2012. Two projects (Peterhead

and White Rose) were awarded funds for engineering design work. White Rose was also

awarded funding under the EU recovery policy for infrastructure. Unfortunately, due to

significant changes in the public budget last November, this competition was also

cancelled – a decision that took everyone by surprise.

We have seen in the past for various technologies that costs often fall with increasing

deployment. In some cases, costs actually rise in early deployment before they fall

substantially, and patience is paid off when innovation and learning effects kick in. It is

important to get the government involved in the early stages of the process so that we

can kick-start technology innovation and start creating markets. The process could result

in significant cost reductions over time. However, public policy wants results very quickly

due to the huge sums of taxpayers’ money invested into these technologies. It is not at

all clear what the UK will do next, apart from continuing with its R&D programmes.

The government has not come up with a new plan for CCS demonstration.


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4) Conclusions

Many assessments conclude that CCS technology is essential to tackling climate change.

Nevertheless, CCS is challenged by technical, economic, policy, social, and

environmental uncertainties.

Overcoming these challenges will require a great deal of patience as costs may rise

before the learning effects dominate. Unfortunately, there is still a large gap between CCS

ambitions and current public policies that are often not patient enough to see these

technologies through.

Housing energy consumption in

France: Synergies between energy

efficiency strategies and action on

fuel poverty in France

Eric Lagandré, Energy Specialist, ANAH (French National Housing Agency)

I will discuss how energy efficient strategies can meet the deployment of thermal retrofit

innovations and how action on fuel poverty in France can contribute to this deployment.

In particular, we will have to organise a dialogue between three paradigms: a) the current

trend to maximise energy performance, b) industrial strategies, and c) the development

of local economic sectors.

1) The demand for energy efficiency

We have been able to make several observations about the energy efficiency demand in

existing housing. Private housing makes up about 90% of the energy retrofit demand,

the remaining 10% made up of public housing.

The key factors of this demand are not technical. As energy retrofit is related to household

budgets, it faces fierce competition from market sectors such as the automobile industry

and the audio-visual, leisure, and health industries.

A methodology for the diagnosis of energy performance in housing, based on a “Home

Energy Certificate” (DEP) was developed in 2007 to enable an approach to improving

energy performance. The certificates have become mandatory for all real estate

transactions. The DEP scale rates the performance of a household, from “A” for excellent

performance to “G” for very poor performance, according to the average kWh consumed

per square meter per year.

Generally speaking, energy performance in France is very uneven: public social housing

shows the best performances, while private single-family houses and collective private

housing show the worst performances.

2) The contributions of commerce and industry

Commerce and industry have contributed to bringing about energy efficiency due to, first,

a growth in insulating materials and an improvement of the technical performances of

heating systems. Second, there has been a growth in retrofit market prices, although that

has remained slower than the rate of GDP growth in France. Third, vertical integration

strategies, including improvements in the relationships between industries and

tradespeople, and between tradespeople and the end consumers. Finally, horizontal


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integration strategies seem to be more efficient from a civil engineering and technical

perspective. However, few companies have been applying these strategies and their

growth seems to be slow.

In terms of operating results, the growth of overall retrofits has not been established.

Partial retrofits (only heating or only insulation) are very common, involving 2 million

dwellings per year. The retrofitting of inside walls remains an undeveloped activity, while

external thermal insulation is an emerging sector. Several sectors may remain side-lined,

such as dwellings for people on very low incomes and private collective buildings for

which energy retrofits would require collective decisions.

The ANAH “Live Better” programme seeks partnerships with local authorities in order to

meet impoverished households and to provide technical and social advice for operations

producing tangible results. It also helps bring about more efficient and effective

relationships between social and technical advisors, industries, and tradespeople.

3) Conclusion: Developing synergies

Developing synergies requires dialogue between commerce and industry, tradespeople,

craftsmen, architects, local authorities, and private individuals. Avoiding overly long

training periods seems to be a major challenge, and public programmes for residential

renovation may take several years before they become efficient.

Due to the existence of huge potential markets, it does not seem likely that counter-

productive competition could arise between the diverse strategies. Technical and social

support between ANAH and local authorities may help stimulate market participation.

There is also a huge potential for cross-fertilisation.

Panel Discussion

Jean-Michel Trochet, EDF

First, could you explain why the Boundary Dam in Canada is not working as well as

expected? Second, how do you solve the problem of the massive storage of CO2 over

the next 50 years?

Jim Watson

The Boundary Dam project began operations at a performance level that was below its

targets, but its performance improved over time. That is entirely normal for a first-of-a-

kind demonstration. There have also been questions about whether the enhanced oil

recovery is being used and whether the commercial arrangement is working. Some of

those problems may now have been solved.

The storage of CO2 needs to be monitored over time to see whether CO2 is behaving the

way we think it should. Oil geologists have been monitoring sites of disused oil and gas

fields for an extremely long time in order to be able to make predictions about CO2.

This leads to some legal questions concerning the length of time a private sector

developer should be responsible before that responsibility falls back to the state.

Carsten Rolle, Federation of German Industries

First, were you also referring to innovation policy when you ascertained that money does

not matter when it comes to research? Second, to what extent is the slow roll out rate in

the energy sector related to culture or to lower levels of competition? To what extent is it

due to other factors?


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Thomas Flaherty

There is certainly a price in the R&D space. My point is that it is not about the total of what

you spend, but it is about what you accomplish. R&D has typically been carried out in the

most industrial companies, and less so in the chemicals and energy sector. Going

forward, there will have to be infrastructures inside the companies to support innovation

and commercialisation. Those resources tend to be much smaller in scale than the

resources required for R&D. Resources will not come from single entities but from an

entire ecosystem. The question is how to connect the different parts and the different

providers to the energy of the system. In that respect, utilities have a long way to go in

understanding the parameters of the ecosystem. They cannot get there without

leveraging other people’s resources to complement their own.

The delays in the roll out period are related to the fact that the industry environment was

not competitive. In addition, the industry is dominated by engineers and they take a long

time to reach a consensus. Most importantly, the industry is extremely risk-adverse and

there has not really been any impetus to try to move and accelerate the curve of adoption.

Einari Kisel, World Energy Council

Thomas Flaherty spoke about the slow pace of innovation in the utilities industry and the

failure of the industry to understand customer needs. Eric Lagandré raised the issue of

customers not understanding efficiency gains. Would you agree that utilities have a role

to play by helping to support energy efficiency investments? In that way, they could also

benefit by better understanding customer needs.

Thomas Flaherty

The utility industry does not communicate very well about the future: it tends to treat each

issue separately rather than as a holistic whole, and has no commitment to educating the

customer base. The key is to move energy efficiency to the demand side and to see the

increased opportunities for the industry. Customers are going to be looking for solutions

that will make life simpler for them. It will be the responsibility of industry to paint a picture

of what the future will look like – a picture that goes beyond energy efficiency and shows

new uses and linkages between the different technologies.

Eric Lagandré

The energy efficiency industry has to better understand customer needs and also has to

be able to explain its offers. I am not sure that customers will believe in the value of the

new technologies. The best strategy might be in trying to provide assistance in

maintaining gas boilers.

Thomas Flaherty

Most utilities today operate from a position of high reputation for quality, safety, and

reliability. They do not operate from a position of great respect for innovation or of

enhancing the value of a site. The greatest challenge for industry will be for it to reposition

its role. In this, it has certain competitive advantages: data, ubiquity, and the ability to

invest and to understand certain customer needs. Nonetheless, it does not really know

the customer at all. This is a perfect opportunity for industry to be an educator. It can

acquire a high degree of believability because of its history and of what it can offer.

Jim Watson

In the UK, utilities are not trusted at all, partly because of a history of competition inquiries,

and of potential overcharging of consumers. Working through local authorities and local

agencies is a much better way of getting into people’s homes to do energy efficiency


44

retrofits. The challenge in the UK is with skills: we have experts who work in a

conventional manner, but the challenge is to have different skills working together in order

to retrofit a home.


When you speak of “the customer”, who exactly are you referring to? Is the customer the

owner of the housing unit, or is it the tenant? Who is responsible for paying for the

renovation? How do you deal with this issue?

Eric Lagandré

In France, if you rent your private dwelling (except in social housing), you are probably

living in a collective building made up of many owners who have to make collective

decisions. The real customer is the collective decision-making body.

Dominique Finon, CNRS Senior Research Fellow, CIRED

My first question is addressed to Jim Watson. I am surprised by the arbitrary decisions

concerning the long lasting development program of the CCS taken by the UK

government and by the centralised decision-making carried out by the Prime Minister and

his advisors. How would you protect long-lasting programmes from the risk of a similar

decision being made? Could an alliance between equipment firms and utilities protect

them from such risks?

My second question which is addressed to Eric Lagandré concerns the thermal

renovation policies. What is the role of incentive policies such as loans and tax credits for

consumers and for energy suppliers? Beyond that, is the information provided to

consumers about their energy efficiency obligations designed to force energy suppliers

to keep consumers informed?

Jim Watson

The CCS competition cancellation was a great change in strategic terms, and appeared

to be an arbitrary decision to many. CCS has been a high priority for a number of years

and crossed a number of governments of different political persuasion. The decision to

cancel the latest demonstrations took the energy industry by surprise. As to how to protect

against such risks, people argue in favour of independent agencies and structures.

The independent Committee on Climate Change, which advises the UK government on

its climate change targets, does not protect against individual decisions about particular

technology programmes. Arguably, we perhaps need some form of independent energy

agency to do that.

Eric Lagandré

For 50% of the population, the people on lower incomes, the major role of incentives is to

grant public aid. For the other 50%, people on higher incomes, financing is not really an

issue. The real issue is that of the organisation of retrofit industries. The issue of tax

credits is a difficult matter, because tax credits are a supply policy but they appear after

the demand policy. The greatest merit of home energy certificates is that they

demonstrate the results that can be achieved.


If the retrofit industry can construct the right organisation and the right training

programmes, could we imagine that in 10 or 20 years’ time, the total costs of retrofitting

could be reduced by half or one-third?


45

Eric Lagandré

I would not expect the costs to decrease very soon. I believe they will remain stable for a

rather long time.


I presume that wages represent a significant proportion of those costs, and that they

would therefore not decrease.


I ask because, in the long-term, energy efficiency is key. We will have to estimate

investment costs compared to the volumes of MWh sold. My aim is to decrease those

costs, which are mainly investment costs. Could we achieve that through better training

and better performance?

Eric Lagandré

There is a need for vertical integration here. That is very expensive as can be seen in the

replacement windows market.


When it comes to CCS, there is clearly an issue of public acceptability. How do you deal

with the fact that the acceptance of innovation is very often a bottleneck in this process?

Thomas Flaherty

CCS is not really a technology in itself. It is simply a chemical plant. That is what the

industry did not understand, at least in the US. The issue is not about economics per se

but is more about how it affects the system and its reliability. People will recognise the

business case because the cost curve has dropped so dramatically. The bottleneck will

be the bridge between the provider and the customer.

Philippe Baptiste, TOTAL

When developing new technologies, we have to take into account the fact that society

may not always accept the new technologies.

Jim Watson

That is true to some extent, particularly for power lines. Fracking is also extremely

controversial in the UK and in some states in the US. This all raises major questions about

how we decide on what the energy transition should look like. Traditionally, it has been

the engineers, the people who run power companies, and the governments who have

made those decisions. It is increasingly important that we involve citizens in those choices

and that we take account of their views, particularly at the local level.


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Jean-Louis Schilansky, President, Unconventional Hydrocarbons Centre

Vincent Champain, General Manager, General Electric Digital Foundry

Progress on hydraulic fracturing for

unconventional hydrocarbons

Jean-Louis Schilansky, President, Unconventional Hydrocarbons Centre

1) CHNC overview

The Unconventional Hydrocarbons Centre (CHNC) was founded in

February 2015 with the aim of collecting, evaluating, and disseminating factual

information on unconventional hydrocarbons in the economical, technical, environmental

and societal areas. Close to 20 companies have joined our forces, including the whole

gamut of companies involved in unconventional shale oil and shale gas.

The CHNC is built around a Scientific Council composed of a dozen of top French

scientists in all of the fields related to unconventional hydrocarbons: energy, medicine,

physics, aeronomy, economics, geology, hydrology, agronomy, sociology, and

engineering. Everything carried out by the Centre has to obtain the approval of the

Scientific Council. Our first publication, ”Shale oil and gas: technical and environmental

issues”, was a series of documents describing all of the areas relevant to unconventional

hydrocarbons.

2) Hydraulic fracturing

A great deal of progress is currently being made in the area of unconventional

hydrocarbons, especially in hydraulic fracturing. Hydraulic fracturing is the combination

of two very well-known techniques: rock fracturing and horizontal drilling. Rock fracturing

dates from 50 to 60 years, and is a well-mastered technique. A large number of wells in

the world have already been fractured.

The second technique, horizontal drilling, has been used since the 1980s or 1990s. At its

onset, it was used mainly in offshore drilling to access single reservoirs from one platform.

The extraordinary innovation lies the combination of these two techniques. It involves the

drilling of several wells on one pad, in order to reduce the land imprint. It enables access

to formations in hydrocarbons in vast areas usually 2,000-4,000 metres below the

surface.

3) R&D at the heart of shale development

Extensive R&D in hydraulic fracturing started in the early 1980s led by the US Department

of Energy, at the heart of the “shale gas revolution”. For several decades, it involved only

very small operations. It only became a real phenomenon in 2008, when the production

of gas started to increase enormously. We did not quite see what was happening with our

own market until it collapsed in June 2014.


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Hydraulic fracturing has become an exponential development that is changing the global

energy paradigm. At the moment, the US is the largest producer of gas, before Russia,

and approximately 50% of its gas production is from shale. The US is now starting to

export natural gas (LNG) to the rest of the world.

Large-scale R&D developments by service companies, operators, institutes, and

contractors have been showing continuous improvement. Operational optimisation,

leading to higher productivity per well, has led to better safety and a greatly reduced

impact on the environment, which is key to public acceptance. The sharing of industry

best practices is contributing to progress. Current developments outside of the US are

bringing new perspectives and contributions to this technique.

Hydraulic fracturing is probably still at a very early stage, and IEA forecasts show that

approximately one-third of all international gas will be shale gas in 15-20 years’ time.

4) Progress in lowering environmental impacts

The ultimate goal is to constantly reduce the environmental impact of these practices.

To date, progress has been made in the following areas:

► Reducing the land footprint, thanks to development pads that bring together 10

horizontal wells.

► Reducing water usage, due to water treatment and recycling.

► Using improved additives, with transparency on products used and the usage of

biodegradables.

► Having fewer emissions, using no open lagoons and only sealed containment.

► The risk management of seismicity.

► The protection of aquifers.

Digital-based energy systems

Vincent Champain, General Manager, General Electric Digital Foundry

1) Digitalisation: A major lever for carbon reduction

Digitalisation is coming to every large industrial sector. In the

context of the COP21 conference, a panel analysed more than

100 green solutions for reducing carbon emissions at the lowest possible cost. It found

that the biggest category of levers for the reduction of emissions at the lowest possible

cost would be to optimise the use of existing products through big data – in short,

by making the existing technologies smarter. This means that, in the short term,

this optimisation would be more successful in reducing emissions than switching to low-

carbon products, developing emission capture technologies, or optimising the financing

of “green” low-carbon technology.

The macro analysis of the International Energy Agency (IEA) confirms that smart energy

would be the greatest lever for achieving the 2030 targets. The good news is that the

hardware components of these digital-based energy systems are becoming cheaper and

cheaper. As a consequence, there is more demand for software, and its cost becomes

increasingly more expensive. The cost factor is therefore no longer in hardware but in

software.


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2) Examples of applications

a) Power Generation

The old model was a stand-alone power plant. The new model is a power plant better

integrated into a network. Such a plant can be reconfigured automatically, and is able to

provide immediate availability. It provides flexibility as well as better resilience and safety.

Equipment can be monitored and controlled much more efficiently, and shared services

can be accessed to enable greater integration.

Three processes are vital to improving production capacity, maximising uptime, and

reducing costs.

► Get connected: machine and production efficiency is possible thanks to visibility and analytics.

► Get insights: this includes quality, material and production analytics, tracking, and management.

► Get optimised: this includes factory optimisation as well as dynamic routing, scheduling, and maintenance management.

Using data can lead to significant results: reduced operation and maintenance costs,

reduced start-up fuel costs, improved fuel efficiency, reduced unplanned events, and

improved MW output.

b) Smart Grids

Smart grids connect all the heterogeneous assets together and ensure an optimised

transmission and distribution of energy by means of digital substation technology, smart

cables, smart sensors, key assets, and data. Smart grids are slow to roll out, but they

provide numerous benefits: cost reduction, improved operability, enhanced

maintainability, increased reliability, and improved safety. Digital substation technology is

more efficient and less expensive than the conventional approach and results in savings

of about 10% in CAPEX and 5% in OPEX.

Data optimisation is all about finding needles of value in haystacks of data.

Most companies use the available methods: either the “plug and play” methods or the

context-specific methods. Transforming a business into a part of a larger ecosystem also

increases its capacity for collaboration and makes it easier to leverage a large community.

It is much easier to transmit data than to transmit know-how and equipment.

3) The GE Digital Foundry for Europe

The GE Digital Foundry for Europe will include 4 types of expertise: (a) software design

and co-creation, (b) ecosystem and incubation, (c) industrial Internet expertise, and (d)

training and Production. Expertise in software design and in ecosystems creates real

value for the industry, while the latter two kinds of expertise are simply catalysers for the

first two.

In conclusion, hardware is getting cheaper and cheaper. Consequently, the value of

software is rising. In order to find a “needle of value in a haystack of data”, it is absolutely

crucial to work with the ecosystem. Finally, this is not “business as usual”. Rather, new

approaches, new talents, and new skills are key here.


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Panel Discussion


Why is it that the technology that has been so successful in the US has been rejected, or

not seen, by the major oil companies and the so-called experts? Why did they not see

what those technologies would bring?

Jean-Louis Schilansky

The first reason is that, as in many areas, some technological innovations came from

small enterprises. We see that in the pharmaceutical industry where all the start-ups begin

their life outside the major pharma companies only to be acquired by those companies at

a later stage.

The second reason is even more important. This is now a different business. Big oil and

gas are used to massive investments and massive explorations. However, in the case of

shale gas, this involves a succession of drilling and hydraulic fracturing. It took them a lot

of time to realize what this business is about and how different it is from the usual model

of exploring, developing, and producing. This is a far more flexible model.

Vincent Champain

Companies sometimes find it difficult to innovate. For digital, we are creating digital

foundries all around the world to innovate like a start-up. This initiative is needed because

competitive advantages you need in order to succeed in conventional oil are different

from the ones you need for shale. That is why new companies with different skill sets will

win this game. Companies that enjoyed comfortable profits in the past, did not feel the

need to find and pursue new technologies.


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Session 4: Research and Innovation policies


Mark Van Stiphout, Deputy Head of Unit in DG Energy, European Commission

Marcello Capra, Italian Member of the Strategic Energy Technology (SET) Plan,

Ministry of Economic Development

Designing energy technology

innovation policies


The IEA has stated that in order to reach the targets for CO2

emissions, investments in RD&D need to be increased by 25%

by 2020 and by 50% by 2050. But it is not an issue of money in

first, but a question of objectives selection and efficient organisation; the complex nature

of energy technology innovation policies needs to be recognised, as these policies reflect

a combination of many different issues.

1) The changing context of energy technology innovation policies

Periods of low priorities in policy objectives result in low public R&D efforts. After the

counter-shock and liberalisation of the utilities industries, energy companies decreased

their R&D, in particular the electricity companies. The new oil prices increase in the

nineties and twenties has only incited oil and gas companies and oil service industry to

maintain their R&D effort.

Currently, the new priority is decarbonisation and transition. The first stage is a public

decentralised and fragmented R&D effort. The second stage will be to have a more

coordinated approach. Private enterprises tend to invest in incremental innovation in fossil

fuels and in centralised power generation rather than in low carbon and in renewables.

Most of the investments in alternative energies in the richest OECD countries come from

public R&D efforts ($3.9 billion in 2012) rather than from the private sector ($0.8 billion on

the same year).

2) R&D and innovation policies: Spanning all innovation chains

I challenge the “market” and “technology-neutral” view that claims that governments

should provide funding for general early-stage R&D while the private sector is in a better

position to identify promising technologies and to develop them further. According to this

view, a tax on carbon emissions would be the best tool for a technology-neutral policy.


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In fact technologies need support after the RD and demonstration stages, but this support

should be differentiated, depending upon the technological regime of each one.

a) Specific aspects of energy technology innovation

The intensity of R&D is much lower in the energy sectors than in industrial knowledge-

based sectors. Oil and gas producers and electricity companies contribute an average of

0.3% - 0.5% of their budgets to R&D. At the other extreme, pharmaceutical and

biotechnology companies and IT companies allocate up to 14% of their budgets into R&D.

They are able to do so because their product turnover is extremely rapid and product

development is more rapid and cheaper than for large-size and complex energy

technologies.

On the other hand, in energy and transport, low carbon technologies need to pass through

a long, expensive, and risky chain of innovation to move from idea to market. The market

pull and the technology push are both quite weak. It is necessary to take account of the

differences in the characteristics of energy technologies (complex, large-size technology

systems as well as mid-size and small-size renewables plants) and the differences in the

governance of the respective technology innovation systems.

b) An integrated approach to the entire innovation chain

In order to develop an integrated approach that would cover all of the innovation chain,

we need to recall the concept of crossing the “valley of death” – the gap between

laboratory, demonstration and full-scale commercial deployment. Some of the barriers to

crossing this gap are the long lead times from basic research to deployment, high capital

costs, and long payback periods for investors in many new energy technologies.

Private financing is not sufficient to enable the pursuit of commercialisation after the

demonstration phase. It will be necessary for us to adopt an integrated view of the

innovation chain and to fill the need for market pull incentives after the technology push.

► Technology Push Policy. Several instruments are available in technology push

policy, including R&D public investments from public agencies, possibly with

private partnerships; public-private partnerships; public procurement for niche

creation; incubators and technology transfer services.

► Demand Pull in the Low Carbon Context. Assuming that diffusion would yield

enough cost reductions to make technologies competitive, the creation of a

market is crucial from the start. This would involve the creation of niches by public

procurement; capital cost subsidies; production subsidies combined with long-

term risk-sharing arrangements; clean energy or renewables obligation on

energy suppliers; and carbon pricing by emissions trading systems of taxes;

and standards on new emitting technologies.

3) Structuring and assessing an energy technology innovation policy

a) The structure of an energy technology innovation policy

The highlights of a policy could come from a Technology System Innovation approach,

which is quite common in “institutionalist and evolutionary economics”. This involves an

identification of the relevant organisations (agencies or companies), the characteristics of

the innovation policies, the legal and market rules and regulations, and the social values.

It is first necessary to strike a balance between basic and applied researches. In order to

realise an efficient adaptation of supports along the innovation chain, it is necessary to

have tailored and steady supports for each technology as it moves from one stage to the


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next. It is also necessary to determine how far priority-setting processes should go and

whether they should be extended to deployment support. I do believe that, in the power

sector, carbon capture domain and biofuels, it is crucial for the processes to be extended

to deployment.

Risk management during commercial deployment is crucial in particular in countries in

which energy sector is fully liberalized because the market risks increase the technology

and investment risks, and only instruments that do not create additional risks should be

used: for example, contracts for differences or feed in tariffs which guarantee on the long

term a revenue which covered the fixed costs should be used rather than renewables

obligation.

b) Selecting and assessing innovation policy

We need a clear process by which governments can make choices between different

technology options. We need to define different scenarios of competition between

technologies, and we also need to define key milestones. In this, it is important to develop

standard assessment methods that include innovation priorities linked to social benefits

or political objectives, the estimated value of cutting costs and risks, an identification of

the cases for public intervention, export opportunities, and social acceptance.

When selecting technologies, it is also necessary to take account of local conditions, such

as natural resources like wind or solar potential, and of the technology resources in

national equipment construction companies. It is also important to carry out regular

assessments and updates based on the most recent national and international

developments. Finally, governments must be able to stop programmes that no longer

have positive perspectives.

c) Governance

The aim is to involve industry in the design of programmes, but in such a way to avoid

the risk of regulatory capture by developing an independent expertise. Governance

should include a centralised administrative structure for coordination among ministries

and an arms-length agency that sets broad priorities, monitors overall progress, and

evaluates performance.

4) Conclusions

It is crucial to recognise that we are seeking radical innovations rather than incremental

changes. We therefore need to adopt an integrated approach to the innovation chain so

that we can move beyond the “valley of death”. Finally, we need to avoid a technology-

neutral approach during the deployment stages of each technology, and we also need

coordination and strong governance.


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Research, Innovation &

Competitiveness in the EU:

The 5th pillar of the Energy Union

Mark Van Stiphout, Deputy Head of Unit in DG Energy, European Commission

1) The Energy Union

When this new European Commission took up office, its framework was designed to

create a real Energy Union. One year ago, the Commission released an integrated

strategy to show the linkages between 5 different energy: the internal market,

decarbonisation, security of supply, energy efficiency, and Research & Innovation (R&I).

R&I is therefore one of the main pillars of the framework and has a clear place in the EU’s

energy policy.

One of the important new aspects of the Energy Union is that it strives to take an

integrated approach to energy policy.

2) Priorities of the R&I pillar

The R&I pillar has four core priorities:

► To make the EU a world leader in renewables.

► To make the consumer the centre of the energy system, with smart grids, smart home appliances, smart cities, and home automation systems.

► To create efficient energy systems.

► To create more sustainable transport systems.

Two additional research priorities are also crucial for the EU:

► To create a forward-looking approach to CCS and to CCU for the power and industrial sectors.

► To ensure safety in the use of nuclear energy.

3) Energy research and innovation policy: the SET Plan

The 2008 Strategic Energy Technology (SET) Plan was issued as part of the energy and

climate change policy. The SET Plan focused on research to ensure that the EU would

be ready to bring new technologies to the market.

The focus in the past few years has been on the integration of various systems.

In September 2015, a new Integrated Strategic Energy Technology (SET) Plan was

issued in order to accelerate the transformation of the European Energy System.

We reviewed the priorities and confirmed that the path for the decarbonisation of the

energy system is a long-term commitment of the EU. With the new agreement in Paris

last year, our commitments for 2020, 2030, and 2050 have become even stronger.

The Integrated SET Plan of 2015 identified three major questions to be addressed.

First, what are the key technologies for the transition to the energy system of the future?

Second, in those technologies, where does the biggest potential for cost reduction lie?

Third, what opportunities do those technologies have for creating jobs and driving growth

in Europe?

In response to our priorities, we have identified 10 key actions to be taken.

► Core priority: to become n°1 in renewables.


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o Action 1: develop highly performing renewables technologies, such as PV

panels, and ensure their integration into the system.

o Action 2: develop cost efficient key technologies by means of regional

cooperation.

► Core priority: the consumer must be at the centre of the future energy system.

o Action 3: focus on smart homes and smart cities.

o Action 4: focus on resilience, security, and the smartness of the energy

system.

► Core priority: efficient energy systems.

o Action 5: design new materials and technologies for energy efficiency

solutions for buildings.

o Action 6: continue efforts to make EU industry less energy intensive and

more competitive.

► Core priority: sustainable transport.

o Action 7: become competitive in the global battery sector.

o Action 8: develop renewable fuels for sustainable transport solutions.

► Additional priority: a forward-looking approach to CCS and CCU for the power and industrial sectors.

o Action 9: develop a forward-looking approach to CCS and CCU.

► Additional priority: safety in the use of nuclear energy.

o Action 10: promote coordination and innovation among countries to increase

safety in the use of nuclear energy.

4) Next steps

We are now holding discussions between the Commission, the stakeholders, and the

member states in order to develop, by year end, concrete targets as to what we wish to

achieve. We are also working on market design to make renewables fit for the market

and competitive. We also need financing, and that means we must become more

intelligent about how we use funding, in particular with a view to de-risking investments.

Going forward, we will work to deliver on the Integrated SET Plan’s priority actions,

identify EU synergies, measure efforts and progress made, and develop an overarching

research, innovation, and competitiveness strategy.

Promotion of technology innovation

in the Italian energy sector

Marcello Capra, Italian Member of the Strategic Energy Technology (SET) Plan, Ministry of Economic Development

I will provide an overview of the Italian approach to Research and

Development (R&D) in the energy sector, sharing the experience

of a member state within the SET Plan.

1) Italy’s national energy strategy

In Italy, the institutional framework of Energy RD&D is made up of three main ministries:

the Ministry of Research, the Ministry of Economic Development, and the Ministry of the

Environment. We also have some R&D Boards and a system of enterprises, many of

which are state-owned.


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The main financial contributions to RD&D come from public institutions, at both the

national and regional levels. Following a period of decline in the 1990s, public funding

began to increase again as of 2000. In recent years, there has been a marked shift

towards energy efficiency and renewable, and away from nuclear.

The National Energy Strategy (NES) issued by the Italian government in 2013 set up four

main objectives for the energy policy (competitiveness, environment, security, and

growth) and defined seven main priorities, including RD&D in the energy sector.

The NES aims to pave the way for wider and more effective cooperation among industries

and research centres in future R&D programmes. It has defined research priorities and

the main actions to be carried out. It aims to ensure that Italy’s technology innovation

activities are closely coordinated with Europe’s SET plan, and that it aligns incentive

schemes to the SET Plan’s priorities.

2) EU funding for sustainable energy

The funding scheme for SET Plan projects involves a common roadmap and

implementation plan. The higher the risk of the projects, the higher the public contribution

at the national or European level. For infrastructure projects, we need another level of

public funding that could include loans or guarantees from the European Investment

Bank.

We often face challenges in moving from the R&D phase to the demonstration phase of

a project, the so-called “first-of-a-kind” approach. We need help from the Commission in

addressing the difficulties faced in raising funding for these demonstration projects.

Within the EU Framework Programme, 12% of the overall EU budget for energy went to

Italian programmes in the period 2007-2013 compared to 8.1% in the period 2014-2015

of the Horizon 2020 Programme. The top 20 organisations to obtain funding from the

European Commission in the period 2007-2013 included many Italian actors. We have

also set up a number of funding schemes in Italy.

3) Examples of Italy’s R&D approach: Smart grids and solar power

Italy has had the highest level of investment in energy projects of all EU members, in

particular in the field of smart energy. Testing on concentrated solar power is another

important sector of research in Italy.

Smart grids play a very important role in our R&D strategy, and we have set up the three

main phases for smart grids in the innovation chain: R&D, demonstration, and pilots.

The funding for this comes in particular from the electricity bill and from EU funding on

regional scale.

During the G8 Summit in L’Aquila in 2009, we launched an important initiative in smart

grids in partnership with South Korea: the International Smart Grid Action Network

(ISGAN). This enables stakeholders from around the world to work together to accelerate

the development and deployment of smarter electric grids.

4) Feedback from the Italian experience

Public policies have recently focused on balancing a series of budget cuts and

streamlining research funds. The overall framework remains oriented towards direct

grants and loans. Nonetheless, a shift of some of this direct financing towards demand-

driven innovation in key R&I areas is being initiated as non-competitive funds are phased

out.

Integration with the European SET Plan and the Horizon 2020 Programme is underway

and funding problems have been simplified. In order to achieve the objectives set out in


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the NES, the possibilities provided by the R&D policies should be fully explored. The NES

is an opportunity to promote cleaner energy technology policies that can galvanise the

interests and resources of the scientific and national communities.

The level of resources devoted to R&I, both private and public, is significantly lower in

Italy compared to other EU countries. Nevertheless, Italy ranks second in Europe after

Germany in terms of the presence of innovative SMEs. Italy can count on excellent

research resources in areas such as renewable energy and systems integration.

The Italian Ministry of Economic Development considers the Smart Cities programmes

as an opportunity to empower the country’s competitiveness and growth. They provide

the opportunity to apply research and testing of innovative solutions to urban problems.

Italy was 1 of 20 countries to sign the “Mission Innovation” initiative at COP21. As such,

it committed to doubling its clean energy R&D public investment over the next 5 years.

Italy considers the Mission Innovation initiative a powerful opportunity to accelerate clean

energy innovation.

Panel Discussion

Jim Watson, UK Energy Research Centre

My critique of Mission Innovation is that, while having more R&D is good news, Dominique

Finon highlighted the fact that innovation is about the system, and is also about creating

market demand for new technologies and their demonstration. What is your response to

the criticism that simply putting more money into R&D will not address the problem of

climate change rapidly enough?

Marcello Capra

I agree completely. A Ministerial meeting of the Mission Innovation countries will be held

on 1 June in San Francisco. It will take 5 years for us to double our public R&D

expenditures; we cannot change our approach over night. There is also the private

component of the Mission – the Breakthrough Energy Coalition in which Bill Gates is

involved and which aims to set up a $20 billion investment fund. That is the real challenge

of this Mission.

François Moisan, ADEME

France is also a member of the Mission Innovation initiative. As far as I am concerned,

government funding involves not only research, but also development and

demonstrations. Private investors come from the digital economy for which the research

process is much more short-term.

Paul Zagamé, University Paris 1

Marcello Capra’s slides on the intensity of R&D energy expenditures showed an

enormous increase in 2007, 2008, and 2009. Is the investment in energy related to the

beginning of the crisis?

Dominique Finon noted a figure of 0.5% for R&D intensity in energy. Is that not the result

of a problem of denominator? For pharmaceutical products, the value added is important

to production, but that is not the case for energy. I do not agree with your statement that

pharmaceutical product turnover is quite rapid and that product development is very

cheap.


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Mark Van Stiphout spoke about the Energy Union but did not mention the Innovation

Union. Is there a consistency between the Energy Union’s R&D policy and the 34

commitments of the Innovation Union?

Marcello Capra

The explanation for the increase in energy expenditures during those years is that the

Italian government decided to return to nuclear.

Dominique Finon

My intention was to show the contrast between the technology regimes in the energy

industry and the technology regimes in the knowledge sectors. Sometimes statistics are

not well calibrated to the purpose. Nevertheless, the message remains that R&D does

not have the same structure in the energy sector as in the equipment or knowledge

sectors. With the fertilisation of ITC with energy networks and uses, R&D structures in

the energy firms could possibly change, but I remain sceptical.

Mark Van Stiphout

When the Innovation Union was set up, it was very much inspired by the energy

innovation policy that had already been taking place due to the first SET Plan. With the

Energy Union, innovation has another push but it will also have feedback on what has

happened in innovation policy, in areas such as the Smart Cities. The interaction of

innovation in the energy field with innovation in ICT, health and mobility will become more

and more important, particularly from the perspective of job creation and economic

growth.


58

Keynote speech

Louis Schweitzer, General Commissioner for Investment (France)

Ladies and Gentlemen, good afternoon. I am pleased and

honoured to have been invited to address such a

distinguished group of people. I am not an expert in this area

but I had a long-term interest in energy and climate change

issues as President of Renault from 1992 to 2005. I believe

that climate change is an essential and urgent issue, and I

very much welcome the COP21 decisions. I hope they will

be implemented with full speed and maximum energy. I am

not certain that that will happen but I very much hope that it will.

I will begin with a few words about my experience as an automobile manufacturer, where

we considered that climate change was the major issue facing the car. The car industry

faces a number of challenges: pollution, congestion, and safety. For these 3 major issues,

the combination of improved technologies and regulations will lead to significant and

continuous progress toward an acceptable future. That is not the case for fuel

consumption, which remains an issue that is not fully addressed by the automobile

industry.

There are 2 main reasons for this. First, the technology. There is no significant alternative

today to the internal combustion engine in terms of cost, range or efficiency. Second, and

more importantly, there is no price or market pressure to improve the current situation.

That is true for almost all cases of fossil energy consumption. The current drop in oil

prices has led, in the United States, to unprecedented levels of sales in sports vehicles,

4x4s, light trucks and so on – the most inefficient vehicles one can buy. In Europe, the

largest profits are generated by overweight machines that are able to move at over 200

km/h. Therefore, the market does not push towards lean and light vehicles, and fuel

consumption is not being reduced as it should.

This is even more worrisome because the cars being sold today will be on our streets for

15 years or more to 2030, while the climate change issues we face are urgent and

immediate. We are therefore in a situation where the problem is known, and the solution

is at hand, but it is not being implemented as fast as it should be because of an inadequate

market and economic environment.

I will now focus on my present activity as General Commissioner for Investment, in the

context of which I am responsible for France’s Future Investment Programme

(Programme d’investissement d’avenir). This Programme was set up in 2010 by the then

French President Sarkozy. Responsibility for defining the programme was conferred on

a committee chaired by 2 former Prime Ministers from both sides of the political spectrum:

Alain Juppé and Michel Rocard. They defined the programme and still chair the

Supervisory Committee that oversees our activity.

The programme is funded by the French state, to the level of €47 billion made up of

subsidies, grants (that are reimbursable only in the case of success), and equity. It is

managed by a small team of 35 people, with the support of a number of entities that

manage the funds. Funds are allocated, on the basis of advice from international juries

and experts, to programmes or projects that fulfil the following characteristics.


59

► First, they must be excellent. We fund the best research, the best companies and

the best programmes.

► Second, we only fund innovation. That is we would not fund a company that is

very active but in a more traditional manner.

► Third, we fund projects that involve cooperation between different players –

between universities and companies, between public research and private

research bodies, or between large companies and small companies.

In all this area of cooperation, France is probably lagging behind both Germany and the

United States.

This investment programme is now complemented by the EU’s Juncker programme which

is located downstream of our programme. The Juncker initiative funds programmes that

are already mature and could easily become self-sufficient in the current market.

Energy transition and climate change were considered as a top priority by our Committee.

We are therefore supposed to be active in the 4 fields of energy production, energy

distribution, energy storage and efficient energy use. Out of the €47 billion fund, €4 billion

have been set aside for energy efficiency (which also covers renewables), including

€3 billion that have already been committed to specific projects. That is significantly less

than what was envisioned at the start. Frankly, we have more funds than projects to fund.

In addition, the projects we fund are taking longer to mature than we expected.

Why is that? First, we are seeing that, at the large scale, this is a sector of step-by-step

innovation rather than breakthrough innovation. Second, there is clearly a lack of

confidence by economic players in the growth of this activity. In the digital economy –

another area where we are very active – everyone is rushing towards digital. However, no

one is rushing to the low carbon economy. Some innovative research is underway but the

economic actors, as a whole, are dragging their feet. This is primarily due to price volatility

and the lack of a clear price signal. There is a no sign of an efficient carbon market, and

there is no sign of a significant carbon tax. Therefore, even though everyone agrees on

the need to move, we are not moving full steam ahead.

We are now preparing a third programme of €10 billion in funds, in line with the previous

programmes. First, we fund research. We have specifically created a number of ITEs

(energy transition institutes) that are dedicated to collaborative research between the

public and private sectors. Second, we are supporting investment in start-ups in the

energy field. We provide grants of up to €200,000 that can be complemented by

refundable grants of up to €2 million and by up to €20 million in equity. The idea is to fund

ideas and the growth of real companies. Third, we are investing in new technologies,

for example, floating wind turbines, tidal energy, and so on. Our principle of investment is

to accept a high risk in return for a reward in the case of success that is in line with the

risk taken. We invest in equity only if we find private investors who are also prepared to

invest. However, it is not particularly easy to find people who are ready to invest significant

funds on the energy transition.

Finally, when we subsidise innovation or improvement plans in others fields, we require

that whenever possible there will be a positive impact on the environment.

In conclusion, the main message I would like to leave you with is that (a) there is money

available, and (b) we are looking for ideas and projects that have an impact on France.

These are French public funds and we expect them to have an impact on France.


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Roundtable 2: Connections between research & innovation policies, corporate strategies and industrial policies

Laurent Michel, Director General for Energy and Climate Change, French Ministry

of the Environment, Energy and the Sea, France

Olivier Appert, Chair, Conseil Français de l’Énergie, France

Louis Schweitzer, General Commissioner for Investment, France

Moderator: Jean-Marie Dauger, Chair of the Communications and Strategy Committee,

World Energy Council

Jean-Marie Dauger, Chair of the Communications and Strategy Committee, World Energy Council

We have three topics for discussion:

► What are your views on the research or the disruptive

technologies in the energy sector?

► What is most promising or concerning and what is to be tackled

with the most focus?

► What can be most disruptive for our industry?

Laurent Michel, Director General for Energy and Climate Change, French Ministry of the Environment, Energy and the Sea

From the point of view of reducing emissions of greenhouse gases,

the situations are different in different countries. In order to have a

systemic view, it is necessary to act on many levels and many

sectors. It is not only a matter of producing renewables at the lowest

price. There are also questions related to the storage and the

integration of renewables and the organisation of production. In France, when we look at

reaching our targets for greenhouse gas emissions in 2025, we see that 15-25% will come

from the circular economy. There are also technologies related to cheaper solutions for

the renovation of homes and to recycling as well as financing by means of grants or


61

subsidies. Another issue is transport and the organisation of low carbon, intelligent,

autonomous vehicles. We have to look into all the technologies related to global efficiency

in the use of resources.


As a member of the Academy of Engineering in France, I am

struck by two key game changers: the digital transition and the

biotechnologies.

With respect to the digital transition, we are at the end of the

beginning, not at the beginning of the end. The business model

of the energy sector will change dramatically, and digital

transition will impact every sector in the energy system. We are

not yet able to clearly anticipate what will happen. The digitalisation of the energy sector

is already impacting everything related to the end user of electricity, and new services are

already being offered to the final consumer. This is a real game changer.

Biotech is also a key game changer in many different sectors. I believe that the energy

companies should think seriously about the possible impacts of biotechnologies both at

supply and demand levels.

I also believe that CCS is crucial. In that context, the European situation over the past 10

years has been a disaster. In 2005, we were leaders in CCS technologies, and it was

clear that with further research we would be able to reduce costs. At the same time the

price of CO2 was assumed to increase, making for an ideal business model. After that,

unfortunately, CO2 prices dropped and public findings for RDD were not available:

so investment stopped in Europe.

Louis Schweitzer, General Commissioner for Investment

I agree with the 2 experts who have just spoken, with only a few

slight differences. I believe that the digital transition will have a

major impact. However, I am slightly wary of biotechnologies.

Biofuels were presented as a significant development but have

proved to be totally ineffective to date from a climate change

point of view.

I put emphasis on energy storage and batteries. After a long

period of no real development, batteries have recently undergone enormous change.

That is possibly a game changer or at least a necessary brick in the whole system.

There is no clear signal on the market that would allow us to obtain the funds necessary

to develop disruptive technologies. Public investment can only do so much. If large

companies do not consider investments in new disruptive technologies as of value, such

technologies will simply not emerge.

Jean-Marie Dauger

The second topic is concerned with R&D efforts. We have been complaining for years

that the R&D effort in Europe is lagging behind the rest of the world. What are your views

on the efficiency of our R&D efforts? How should public spending toward R&D be

directed? Should it be centralised or decentralised? How should we select effective

projects? How can we avoid the dispersion of means? What is the most efficient way to

monitor and to evaluate the use of public funds?


62

Louis Schweitzer

First, let us recognise that Europe as an energy field does not exist as such and that the

European Commission has very little power. When Germany decided to abandon nuclear

power, it turned to coal, which was clearly not in line with the European goal of energy

efficiency and the reduction of emissions. In contrast, the Danes have been very efficient

in renewables on their own. Second, I hope that advanced research is being carried out

in universities and research centres in the field of energy that will lead to disruptive

technologies. However, those involved in this research do not know if it will lead to

development by companies. In industry, demand leads to the production of new

technology, but we have too little demand today.

Laurent Michel

It is not possible to always rely on the cheapest solutions, such as petroleum or gas, and

they are also the most polluting ones. In order to solve the question of demand for new

technologies, we need policy signals and regulations. To be more efficient, we have to

streamline and simplify our procedures so that they are more attractive for industry.

We also have to be as consistent as possible in choosing a technology or a range of

technologies so that R&D efforts can move toward pre-commercial deployment.

Louis Schweitzer

To answer your question about avoiding dispersion, I would reply that dispersion is not to

be avoided. Instead, we should try all avenues and stop those that do not work. Failure in

itself is not an issue. The issue is not trying or not following up on interesting leads.

Olivier Appert

However, it is important to remember that it can be difficult to stop projects once they are

underway.

Regarding the claim that Europe’s R&D efforts are less important than elsewhere, we first

need to consider that R&D statistics may not present the full picture. Moreover, we need

to consider the quality of the research rather than the quantity.

Regarding the so-called mismatch between R&D funding and the huge subsidies to large

companies for mature technologies, I would be interested to know the efficiency of the

huge subsidies paid to wind and solar in Germany in terms of job creation and the

reduction of CO2 emissions.

The criteria used for project selection appear to play a very important role. One important

criteria is the maturity of the project. Another element is its economic impact. We need to

bear in mind that job creation is an important element of the Energy Trilemma.

Finally, to ensure that public R&D funding is used efficiently, it is necessary to mobilize

private R&D. However it is very difficult to invite private industry to respond to calls for

tenders because the costs of the transactions are higher than the amounts received as

subsidies for the project.

Jean-Marie Dauger

Are there any questions or comments from the floor?

Philippe Baptiste, TOTAL

One of the objectives of the French Programme de l’Investissement de l’Avenir was to

improve cooperation in R&D between the public and private sectors. Several institutions

were created to that end. At the same time, the existing institutions have maintained their


63

objectives. All of this creates a very complex landscape in France and makes cooperation

quite a challenge.

Louis Schweitzer

It is an established fact that there is some complexity in the French institutional landscape!

That is why we decided not to create any new institutions in the third Programme except

in the medical field. It is also why we evaluate new institutions after 4 years: if their

complexity is greater than their productivity, we may decide to stop them. If we had a

tradition of cooperation in France between universities, public research organisations,

and industry, the specialised institutions we have created would naturally disappear.

They were after all created to bring people together.

Jean-Marie Dauger

How can you evaluate an R&D project 4 years after its launch? What are the measures

you intend to use to evaluate the financing of R&D projects? Would the proper evaluation

of public profitability on R&D programmes include externalities and the value created in

sectors other than the one for which financing was awarded?

Louis Schweitzer

One can clearly measure the level of commitment. When it comes to evaluation, we need

to rely on independent experts.

Olivier Appert

It is important for evaluation to have external views. In France, the president of an

evaluation committee is always non-French, and 50% of the committee members are

non-French. A key success factor is to ensure that we will not continue to work only

among ourselves.

Laurent Michel

An evaluation committee needs to be flexible and adapted to each project.

Olivier Appert

In my experience, problems arise when a research programme is not well-structured due

to the fact that the interests of the stakeholders are not aligned. In that case, it is difficult

to evaluate the quality of the work that has been carried out.

Jean-Marie Dauger

Our third topic for discussion is the fact that the energy sector has big actors, and they

can have a huge impact on market design, on the political environment, and on

technology. Those companies are being forced to innovate very rapidly. What are your

views on how organisations should be structured in order to bring about innovation in

sectors that were not formerly innovative?

Laurent Michel

On the one hand we are speaking about a huge need for innovation. On the other, we

are speaking about fewer funds available in the traditional energy sector and in the major

utilities. These companies need an openness of view and a willingness to select projects

and to work with other companies including digital specialists and start-ups. They need a

commitment to start new projects.


64

Olivier Appert

First, I believe that there is significant difference from one sector to another within the

energy scene. Second, I think that disruptive technologies will not emerge from the inside

of these big organisations but can only emerge outside of their structures. The big actors

have a complex called NIH: “not invented here”. It is also important for big companies to

liaise with start-ups and other external entities: the concept of “open innovation” may be

very efficient

Louis Schweitzer

I am not sure that one can force anybody to innovate. In times of difficulty, large

companies tend to focus on their essentials. They can sometimes change their minds if

they see a strong trend emerging: that they believe will last over time. We have to

convince companies that something will consistently be important for a long period of

time. When it comes to world health, everyone realises that climate change is a major

issue. However, that is not yet the case in energy today from an economic point of view.


65

Closing speech


I have the challenging task of presenting the conclusion of this Forum

– an impossible task due to the very rich presentations and

discussions that we have had. I will therefore present my personal

comments, which may be slightly provocative.

I started my professional activity in 1973 during the first oil shock and

I have been involved in the energy sector since that time. This long

experience means that, when I hear certain politicians or media,

I have a distinct feeling of déjà vu. In 1973, everyone was looking for

a panacea and waiting for breakthroughs that would solve all our problems. That is still

the case today. People are still dreaming of those same panacea and breakthroughs.

However, something has changed, as demonstrated by the following anecdote.

In 1979, André Giraud, the then French Minister of Industry, was approached by an

inventor with a new concept of water engine. The inventor advised that foreign companies

were offering him millions for this invention but he wanted to create jobs in France. André

Giraud told the inventor not to miss this opportunity and to sign immediately with the

foreign firms. Today, in the context of the Internet and social media, no politician would

take the risk of being criticised for missing an opportunity to create jobs in France. It is

not always easy to evaluate the costs and economies of new technologies. But it is

mandatory to evaluate these figures at each time of development. I am convinced that it

is not possible to build sustainable business models for new technologies on the basis of

non-sustainable subsidies.

When it comes to energy technologies, we need to consider why the panacea did not

emerge. Let me provide several examples that are still topical. First, hydrogen. The first

combustion engine in 1805 was fuelled with hydrogen – the “cycle de Beau de Rochas”.

The fuel cell was invented in 1829. The hydrogen economy was invented by Jules Verne

in 1872 (“Vingt milles lieux sous la mer”). In 1973, everyone was convinced that the

hydrogen economy was on its way. At the time, there was a consensus that, thanks to

France's nuclear energy programme, the hydrogen car was to be available as of 1985.

There were also references to nuclear fusion in 1973. This was considered the game

changer than would be deployed 50 years’ later. Today, this is still not the case. We are

spending billions of dollars, and told that this will be the panacea at the end of this century!

A final example is that of electricity storage, where there is a general consensus today

that this is a priority. However, in the European Strategic Energy Technology Plan of

2008, there was no reference to electricity storage at all. Nor was there any reference to

today’s other game changer: the digital transition.

Will there be breakthroughs in the future? I hope so. However, in my experience, we

cannot simply decide that there will be a breakthrough. Politicians and the media cannot

decide on the breakthroughs that will occur. Instead it is necessary to work seriously on

possible breakthroughs. When it comes to energy storage, we have to learn the lessons

of the past and think about what could be the game changer of the future, in a context of

digitalisation. We talk about smart grids and smart cities – it seems that nothing can

happen if it is not smart! Clearly, however, our cities will change, our cars will change,


66

and our networks will change. We need to consider seriously the opportunities and threats

for the energy sector.

As stated in our last roundtable, it is not possible to invest in all technologies at the same

time and in the same way. We must therefore prioritise our research policies. We need to

consider the maturity of each technology, their TRL, their cost and economic profitability.

It is necessary to treat differently the technologies that are at pre-lab stage (those at proof

of concept level) from those that are further along in their development.

I was struck by the fact that, while electricity only represents 20% of our overall energy

consumption, it represented 95% of all comments made. That is the case in the public

debates and, unfortunately, the case in too many fora. In the last 2 days, we had many

discussions on electricity and few discussions on the rest of the energy scene. Is that

because all the relevant solutions will emerge from the electricity sector? Is that because

there are no real issues with the remaining 80% of energy consumption? Is that because

we do not know how to solve the problems associated with that 80%? We talked

extensively about wind and solar, but they represent only 0.5% of primary energy

consumption. When and where will we discuss the 99.5% of primary energy consumption:

heating, transport, and industry? I believe it is important to take a wider perspective and

a wider debate on all of these issues, without ignoring the most important part of energy

consumption in the coming decades, in France, in Europe and in the world.

When it comes to energy efficiency, we all agree that this is the most important issue we

face. However, only a few concrete actions were presented in these two days by

companies and by industry. I am somewhat puzzled by the mismatch that exists between

political and media statements and the reality of efforts on the ground.

You should note that all of the presentations made in this meeting will be available on our

website. The Minutes of the meeting will also be available in the next 2 to 3 months. I hope

to welcome you to our 6th European Energy Forum in 2017. Before that, I hope to see you

all in Istanbul for the 23rd World Energy Congress.

I would like to thank you all for your active participation in this 5th European Energy Forum,

and I wish you all a safe journey back home.


67


68

Le Conseil Mondial de l'Énergie

Fondé en 1923, le Conseil Mondial de l’Énergie (World Energy Council, WEC) est la principale organisation

multi-énergétique mondiale. Organisation à but non-lucratif et non gouvernementale, agréée par l’Organisation

des Nations Unies, le Conseil Mondial de l’Énergie est doté d'un statut de bienfaisance au Royaume-Uni et est

partenaire stratégique d’autres organisations clés dans le domaine de l’énergie. Il est constitué de comités

nationaux, représentant près de 100 pays dans le monde et composé de dirigeants du secteur énergétique. Il

est régi démocratiquement par une Assemblée Exécutive, composée de représentants de tous les comités

membres. Son siège est à Londres, il comprend parmi son personnel des coordinateurs régionaux qui exercent

leurs activités en Asie, en Europe centrale et orientale, en Afrique et en Amérique latine/Caraïbes. Il est financé

essentiellement par les cotisations des comités nationaux.

Le Conseil Mondial de l’Énergie couvre une gamme complète de questions liées à l’énergie. Il s’intéresse à

toutes les énergies (le charbon, le pétrole, le gaz naturel, l’énergie nucléaire, l’hydraulique et les nouvelles

énergies renouvelables). Il réalise des projections à moyen terme et long terme et travaille sur un grand nombre

de thèmes liés à l’énergie (efficacité énergétique, environnement et énergie, financement des systèmes

énergétiques, prix de l’énergie et subventions, pauvreté et énergie, éthique, normes, nouvelles technologies,...).

Le Conseil Mondial de l’Énergie réalise des analyses, des recherches, des études de cas et des orientations

stratégiques publiées sous forme de rapport et utilisées par les principaux décideurs. Des cycles de travail de

trois ans aboutissent au Congrès Mondial de l’Énergie, événement majeur de l’industrie énergétique attirant

plus de 5 000 délégués, incluant un programme technique, des réunions, des séances de travail en réseau et

une importante exposition sur l’énergie.

Plus d'informations sur www.worldenergy.org et @WECouncil (twitter)

Comités membres du Conseil Mondial de l'Énergie

Afrique du Sud Egypte Kazakhstan Qatar

Albanie Espagne Kenya République tchèque

Algérie Émirats Arabes Unis Koweït Roumanie

Allemagne Équateur Liban Royaume-Uni

Arabie Saoudite Estonie Lettonie Russie

Argentine États-Unis Libye Sénégal

Autriche Éthiopie Lituanie Serbie

Bahreïn Finlande Luxembourg Slovaquie

Belgique France Macédoine Slovénie

Bolivie Gabon Maroc Sri Lanka

Botswana Ghana Mexique Suède

Brésil Grèce Monaco Suisse

Bulgarie Hong Kong, Chine Namibie Swaziland

Cameroun Hongrie Népal Syrie

Canada Inde Niger Taiwan, Chine

Chili Indonésie Nigéria Tanzanie

Chine Irak Nouvelle-Zélande Tchad

Chypre Iran Pakistan Thaïlande

Colombie Irlande Paraguay Trinidad-et-Tobago

Congo Islande Pays-Bas Tunisie

Corée Israël Pérou Turquie

Côte d'Ivoire Italie Philippines Ukraine

Croatie Japon Pologne Uruguay

Danemark Jordanie Portugal Zimbabwe


69

Le Conseil Français de l'Énergie

Fondé en 1923, le Conseil Français de l'Énergie (CFE) est le comité national français du Conseil Mondial de

l'Énergie. Ce dernier rassemble plus de 3 000 organisations et représente une centaine de pays dont les deux

tiers de pays en développement. Il représente ses membres dans toutes les activités internationales du Conseil

Mondial de l'Énergie.

Le Conseil Français de l'Énergie est une association qui a pour objectif de promouvoir la fourniture et l'utilisation

durables de l'énergie pour le plus grand bien de tous. Le Conseil Français de l'Énergie regroupe des acteurs

français (entreprises, administrations, organisations professionnelles ou universités) impliqués dans des

réflexions qui privilégient les dimensions d'accessibilité, de disponibilité et d'acceptabilité de l'énergie dans une

perspective mondiale ; toutes les ressources et les technologies de l’énergie sont représentées.

Le Conseil Français de l'Énergie soutient les recherches en économie de l’énergie et participe aux débats

énergétiques, notamment par l’intermédiaire de publications et de conférences.

Le Conseil Français de l'Énergie assure la diffusion des résultats des recherches qu'il a financées. De plus, le

français étant l'une des deux langues officielles du Conseil Mondial de l'Énergie, le Conseil Français de l'Énergie

contribue à la promotion de la francophonie en traduisant en français et en diffusant les travaux les plus

importants du Conseil Mondial de l'Énergie.

Plus d'informations sur www.wec-france.org et @CFE_WEC_France (twitter)

Membres du Conseil Français de l'Énergie (au 1er mai 2016)

Membres partenaires

ADEME - Areva - CEA - EDF - ENGIE - FIM Energétique - IFPEN - PricewaterhouseCoopers - Total - UFIP

Membres scientifiques et professionnels

ANAH - AFG - ASTEE - ATEE - CGEMP - CIRED - CPDP - CNISF - Enerdata SA - FEDENE - FNCCR - FAIF

IESF - OIE - UNIDEN

Membres associés

Pascal Faure, Directeur Général de la Direction générale des entreprises (DGE)

Laurent Michel, Directeur Général de l’Énergie et du Climat (DGEC)

Virginie Schwarz, Directrice de l’énergie à la Direction Générale de l’Énergie et du Climat (DGEC)

Pascal Dupuis, Chef du Service Climat et Efficacité énergétique (DGEC)

Patricia Blanc, Directrice Générale de la Direction générale de la prévention des risques (DGPR)

François Ailleret – Olivier Appert – Jean Bergougnoux – Marcel Boiteux – Claude Destival – Pierre Gadonneix

Jacques Maire – Bruno Weymuller

http://www.ademe.fr/

http://www.areva.com/

http://www.cea.fr/

http://www.edf.fr/

http://www.fimenergetique.org/

http://www.ifpenergiesnouvelles.fr/

http://www.pwc.fr/

http://www.ufip.fr/

http://www.anah.fr/

http://www.afgaz.fr/

http://www.astee.org/index.php

http://www.atee.fr/

http://www.cgemp.dauphine.fr/

http://www.centre-cired.fr/

http://www.cpdp.org/

http://www.cnisf.org/

http://www.enerdata.net/enerdatafr/

http://www.fedene.fr/

http://www.fnccr.asso.fr/

http://www.sfen.org/Le-Forum-Atomique-Francais-FAF

http://www.oieau.fr/

http://www.uniden.fr/index.htm

http://www.industrie.gouv.fr/dgcis/

http://www.developpement-durable.gouv.fr/-Energies-et-Climat-.html




70

Publications

« Les enjeux énergétiques mondiaux

vus par les acteurs français »,

Conseil Français de l'Énergie, 2016

« 4th European Energy Forum – On the

Way to COP21 »

Conseil Français de l’Énergie, 2015

« Trilemme Énergétique Mondial -

Financement : mythes et réalités »


« 3rd European Energy Forum –

What Policy Measures for Energy

Transition in Europe? »


« 22ème Congrès Mondial de l’Énergie

– Incertitudes et résiliences »


« Scénarios Mondiaux de l’Énergie à

l’horizon 2050 – Mises en musique du

futur de l’énergie »,


« Les politiques d’efficacité

énergétique dans le monde – ce qui

marche et ce qui ne marche pas »,


« Trilemme Énergétique Mondial –

Investir dans l’énergie durable »,


« Trilemme Énergétique Mondial –

Le programme du changement »,


« Les enjeux énergétiques mondiaux

vus par les acteurs français »,


« 60ème Congrès AFSE Économie des

Énergies : prix et incertitudes »,


« Politiques pour demain »,


« Le gaz de schiste : résumé et

commentaires »,


« Montréal 2010 : parole aux jeunes »,


« Objectif : développement durable »,


« Énergie et innovation urbaine »,


« Efficacité énergétique : la recette

pour réussir »,


« Conséquences de la crise sur le

secteur de l'énergie »,


« Cahiers de l'Énergie n°1 »,


« Choisir notre futur : scénarios de

politiques énergétiques en 2050 »,


« Une seule planète pour tous »,

Conseil Français de l'Énergie, 2003.


2

Promouvoir la fourniture et l’utilisation

durables de l’énergie

pour le plus grand bien de tous

Conseil Français de l’Énergie

12 rue de Saint-Quentin

75010 Paris - France

T (+33) 1 40 37 69 01

F (+33) 1 40 38 17 38

E [email protected]

www.wec-france.org

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