The World Energy Council’s definition of energy sustainability is based on three core dimensions: energy security, energy equity, and environmental sustainability. Balancing these three goals constitutes a ‘trilemma’ and is the basis for the prosperity and competitiveness of individual countries.
The World Energy Trilemma Report 2017, prepared in partnership with global consultancy Oliver Wyman, along with the Global Risk Centre of its parent Marsh & McLennan Companies, tapped into the global insights of the traditional and emerging players in the electricity sector – including policymakers, regulators, traditional utilities, large consumers, prosumers, and technology providers – to capture a wide range of views on the evolution of the energy sector.
The report identifies key focus areas for regulators and policymakers in the context of balancing the Energy Trilemma and driving forward progress on each dimension of the Energy Trilemma.
The Council produce an annual Index that ranks over 100 countries on the three dimensions of the Trilemma while also producing a deeper dive report into an area affecting how to navigate the Trilemma. The 2017 Energy Trilemma Index reveals signs of progress on all dimensions of the Energy Trilemma. Efforts to increase resource productivity and manage energy demand growth will be key in ensuring a balanced Energy Trilemma.
World Energy Trilemma Report 2017
The digitisation, decarbonisation and decentralisation are rapidly changing global energy systems, but are having a significant impact on electricity systems. Digitalisation and decentralisation are helping to move the electricity systems from the traditional one supplier to many users to the new many-to-many model with more suppliers and more proactive consumers. These changes will have profound implications for participants in the electricity system and prompted this year͛’s report to focus on how distributed energy resources could help navigate the Energy Trilemma.
This is happening at a time when we are seeing a shift in final energy consumption with demand for electricity doubling globally by 2060. There will be new opportunities and challenges for policymakers to navigate the Energy Trilemma. This will require managing a greater diversity of market actors and technologies without fragmenting the energy system. Provided governments and regulators allow and plan for it, empowered consumers can play a key role in the grand energy transition. While the transmission system will remain important, the potential changes support the increasing significance of the distribution level to the optimal operation of energy systems.
The 2017 Trilemma report defines measures to progress on the three goals of energy security, energy equity and environmental sustainability with the aim to accelerate the energy transition and lead countries to prosperity and increased competitiveness of their individual economies. It provides guidance in the complex task of translating the trilemma goals of security, equity and sustainability into tangible actions.
- Countries that do not integrate distributed energy resources properly into their electricity system are likely to have problems, with potential supply risks, redundancy of infrastructure and challenged getting investment. Such problems will be reflected in the Energy Trilemma performance for those countries.
- Decentralisation will add new energy resources and create new market actors where the regulatory framework will to evolve to realise the potential opportunities.
- New resources and market actors will make system management more complex but also offers the opportunity to improve resilience and performance.
- Distributed generation could provide fast and low cost electricity access that may enable some developing economies to bypass some centralised generation.
- Energy use and access will change with consumers becoming more involved in how their energy needs are met that will require regulatory frameworks to evolve to grasp the new opportunities.
Evolving technology and customer demands are two key drivers of a transition of the electricity system at an unprecedented pace. Policymakers should develop their own in-depth analysis of the potential opportunities and challenges that may arise in their own countries or regions from adopting distributed energy resources. Regulatory frameworks must evolve to integrate new opportunities to balance the Energy Trilemma effectively. The 2017 World Energy Trilemma research has identified three key focus areas for policymakers and industry leaders to consider in order to build a resilient energy system of tomorrow:
- Enable a dynamic and resilient market framework with the agility to adapt with the transitioning system.
- Establishing robust technology-neutral regulations supported by agreed standards with all stakeholders will be key to building a more dynamic and resilient market framework that supports transitioning energy systems.
- Allow and plan for aggregator services to empower consumers to be more proactive by ensuring that the market framework can adapt to their evolving and shifting needs.
The energy transition is an unstoppable phenomenon and adapting to it will require innovative policy responses and business models. The ability of companies and policymakers to respond creatively, collaboratively and speedily will decide how the transition happens and how they navigate the Energy Trilemma.
World Energy Trilemma Index 2017
The 2017 Energy Trilemma Index reveals signs of progress on all dimensions of the Energy Trilemma. Eight of the 125 countries assessed achieved a triple-A score, down from 13 in last year’s index. Efforts to increase resource productivity and manage energy demand growth will be key in ensuring a balanced Energy Trilemma.
This year Denmark, Sweden and Switzerland top the Index once more, with Denmark also achieving the highest score for energy security. While not in the top 10 overall, Luxembourg maintains it position for most equitable (affordable and accessible) and the Philippines is leading the way on the environmental sustainability dimension. In Latin America, Uruguay ranks the highest, while in the Middle-East, Israel outperforms its regional peers. In Sub-Saharan Africa, Mauritius performs best, and in Asia, New Zealand remains at the top of the regional leader board.
The World Energy Council recognises that countries situated in different parts of the world will face significantly different challenges in trying to balance their energy trilemma performance. Therefore, the 2017 Index puts a special emphasis on regional profiles.
- North America continues to be challenged by extreme weather and ageing infrastructure.
- Europe still leads the energy transition but needs its regulations to evolve to realise the potential of Distributed Energy Resources.
- The Latin American and Caribbean countries are making positive steps towards improving their energy resilience and sustainability.
- Asia will face rising energy demand from economic growth that will create challenges for energy policies.
- The Countries in the Middle East and North Africa are working on slowly diversifying away from oil and gas, to exploit their great potential for solar power generation.
- Sub-Saharan Africa’s key challenge of energy access could be helped by using the opportunities of distributed energy resources.