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Europe’s chronic lack of investment in new energy technologies- How it started and what to do now

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Europe’s chronic lack of investment in new energy technologies: How it started and what to do now. Mario Pagliaro's lecture at the MA Course in Entrepreneurship and Management, University of Palermo, organised by the Research methodologies for organizational management chair held on November 23, 2022.
mario.pagliaro@cnr.it
23-Nov-2021
Europes chronic lack of investment in new energy
technologies: How it started and what to do now
Wednesday
23
NOVEMBER
Research methodologies for organizational
management MA Course in Entrepreneurship
and Management, University of Palermo
23-Nov-2022
Europe’s chronic lack of investment in new energy technologies:
How it started and what to do now
Mario Pagliaro
Italy’s Research Council Academia
Europaea
Palermo, Italy
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Mario Pagliaro
üResearch chemist, CNR. Founder, Polo
Fotovoltaico della Sicilia (2008).
üIn year 2008 he introduced the term
Helionomics to indicate the
forthcoming solar energy economy
üElected member, Academia Europaea
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Outlook of my talk today
üA brief insight into renewable
energy technologies
üWhy renewable energy is a global
economic need
üRenewable energy technologies:
China, Europe, USA
üThe need for government
investment in Europe, USA and
India
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Electricity is most valued form of energy
üUsage: Only electricity can be easily
converted to other forms of energy:
mechanical energy, light,
electromagnetic waves, cooling air,
heat
üTransmission: It is easy and relatively
cheap to transport electricity over
long distances. With the option to
vary current and voltage easily, we
can transmit electricity better than
other energy form.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
For over a century electricity was produced
using fuels to produce steam, though the
first power plants used hydropower
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Key concept: water, sunlight and wind are free
(but intermittent)
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
The energy landscape has changed: from
centralized to distributed energy production
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Key concept: distributed generation using
building-integrated solar modules, production
takes place on-site where energy is consumed
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
2000-2010: Unexpected energy revolution
üUnexpectedly, the sale price of
photovoltaic modules, once thought
to be “physically limited” by the cost
of crystalline silicon (until recently a
cost price of $1.00/Wwas referred
to as a “tipping point” for the solar
industry), decreased to <$0.5/Was
of May 2015
üRather than grid parity”, a true
generation parity” with the cheapest
energy source, namely coal, is now
being approached.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Hermann Scheer: “pay them for the energy
produced and fed into the grid”
üFor decades photovoltaic modules were
mainly sold to customers in the oil,
telecommunication and naval regulation
sectors at high price.
üAll changed starting in year 2000 with
the introduction, in Germany, of the Feed-
in Tariff (FiT) program conceived by
Hermann Scheer, rewarding for 20 years
with a high and flat tariff every kWh of a
PV plant connected to the grid, overcame
the financial barrier that for decades had
limited solar power market penetration.
üSuddenly, the high-priced solar PV plants
became bankable
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Success: booming demand drove price decrease
üMost of the cost declines over the past
decade can be attributed to an 85%
cost decline in module price due to
booming production (Swanson empirical
law: the cost of the photovoltaic cells
needed to generate solar power falls by
20% with each doubling of global
manufacturing capacity.)
üIn year 2000, the module alone cost
around $6-7 per watt. Now an entire
utility-scale PV system costs around $1
per watt.
üWith similar reductions in hardware
costs for storage systems, PV and
storage have become vastly more
affordable energy resources across the
world
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
A decade of cost reductions across utility,
commercial, and residential sectors
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Solar energy needs storage: production in
winter months is too low
üMost of the energy produced in one year is
generated between March and October
üStorage of the summer energy surplus is
needed
üOne storage technology is already available
at affordable cost: the Li-ion battery
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Renewable energy is a
global economic need
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Energy plays a key role in driving growth
üThe role played by energy in
driving economic growth is
generally larger than
conventionally assumed
üThis would suggest to first
focus efforts and resources on
improving energy efficiency to
promote general economic
growth.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Focus on energy efficiency? Wrong
üYet, as understood by Jevons as
early as of 1885, this could well
eventually result in higher overall
energy consumption in an
unwanted economy-wide rebound
effect
üIndeed, if a fraction 1/n of the
population starts saving energy,
then the price of primary energy
decreases, enabling the remaining
(n
1)/n fraction of the population
to purchase higher amounts of
energy, eventually restoring or
even worsening the overall
balance of energy consumption.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Renewable energy: an economic necessity
üThe path to restoring true
economic growth in most world's
countries, goes through mass
scale adoption of renewable
energy in place of oil
üOil energy return on energy
invested (EROEI) has dramatically
decreased from the beginning of
the oil era in the early 1900s, and
has continued to do so going from
about 30 in 2000 to 17 in 2013
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Economic growth paradox
üOil: the lower the EROI the higher
the price. which implies that
increasing the oil supply by
exploiting unconventional and
hence lower EROI sources of oil
would require high oil prices.
üHence, increasing the oil supply to
support economic growth will
require high oil prices that will
undermine that economic growth
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Read this study
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
The wealth, population, energy nexus
üFrom a global viewpoint, the rapidly
declining EROI of oil coupled to rapid
global population growth, creates the
conditions for energy poverty
üWe have shown in 2016 that growth
in energy demand is driven by the
concomitant growth in global
population and gross domestic
product
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Power vs. linear growth
üYet, whereas relationship between
total energy consumption and
population is linear, that between
global wealth and global population is
a power function of the global
population
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
11 million new b/d by 2025
üAccording to the Meneguzzo-Pagliaro
equation,
üIf global population will keep growing
along the current trajectory, the 800
million people that will add to the
global population in 2025 will need
about 1700 000 ktoe (kilotonne of
oil equivalent) of energy over the
2016 level. Even to keep the oil
fraction in the energy mix at the
2016 level (33%), this translates
into more than 11 million extra oil
barrels per day.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
S.-H. Jun, et al.
Polymers 11 (2019) 1044
We simply don’t know where to get this extra oil
üGlobal demand for crude oil (including
biofuels) in 2020 fell to 91 million
barrels per day in 2020 and
increased to 96.5 million barrels per
day in 2021
üWhen compared to the daily oil
demand of 86.4 million barrels in
2010, the increasing demand
trajectory that occurred in the past
decade is nevertheless still clear
www.statista.com/statistics/271823/daily-global-crude-oil-demand-since-2006/
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
A single Autumn cold wave enough to bring crisis
üEuropean gas price edges higher
as colder weather boosts gas
demand
üThe gas price at the TTF financial
market reaches 119 EUR/MWh
on November 22
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
The crazy choice to financialize the gas market
üEurope in the early 2010s drives
member States to switch natural
gas price from industrial long-term
contract to a the Dutch TTF index
üSince then, the natural gas price
has become a financial variable,
legitimate subject of financial
speculation, rather than an
industrial price
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
France and Germany nationalize energy
companies
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Renewable energy
technologies: China,
Europe, USA
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
All major economies are aware of this situation
üAll major economies are aware of this
situation: uptake of renewable energy
generation is growing at fast rate in
China, EU and USA
üThe major difference concerns the
industrial ownership of the new
energy technologies
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Renewable energy systems: high quality
energy at lower cost
üToday’s renewable energy systems,
comprising solar photovoltaic and
wind electricity generators, coupled
with the storage of electricity in Li-ion
batteries and solar hydrogen allow to
escape the Jevon’s paradox
üFamilies, companies, and entire
regions can now safely rely on
renewable energy to meet their
energy needs.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
A solar-powered school in Sicily
üMatilde di Canossa” primary school,
Catania
üIn 2020 the school has a 50 kW
photovoltaic array installed along
with a 20 kWh energy storage
system based on Li-ion batteries of
the safest and cheapest variant
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
“Lower cost, higher energy quality”
üThe electricity bill of the Matilde di
Canossa” primary school, Catania,
drops by 70%
üNo longer blackouts or other energy
supply problems
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Every single technology made in China
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
What are the problems with this model?
üThe economic model called
globalization: China produces all sort
of goods, Europe and USA consume
those goods paid in USD and EUR
üThere are two problems: one with
the payments balance, now negative
by 300 bn EUR
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Deindustrialization in a strategic field
üThe second main problem is
deindustrialization
üEurope (and USA) lose the industrial
base in a strategic field: jobs,
technology, know-how and eventually
its industrial future
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
China this year makes 310 GW solar panels
üThe solar PV industry is forecast to
produce 310 GW of modules in
2022, representing an incredible
45% year-on-year increase
compared to 2021,
üChina produced 90% of polysilicon,
99% of wafers, 91% of c-Si cells and
85% of c-Si modules.
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
China meets a global societal megatrend
üSocietal megatrends concerning the
environment, health, and energy
which permeate societies on a global
scale creating huge and so far
mostly unmet demand for truly
green products, starting from
consumer products
üThe same holds true for energy
Angewandte Chemie International Edition, 58 (2019) 11154
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
An economy model that does not work
üAll new energy technology jobs are
in SE Asia
üAll economic value goes to SE Asia
üSystem vulnerable to any
geopolitical crisis: what happens if
China halts exports?
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Green jobs?
üThe biggest market for renewables
jobs is China, where 5,368,000
(0.7% of the total workforce) were
employed in renewable energy in
2021.
üChina dominates the solar sector
with 63% of global jobs in the
photovoltaic panel industry,
www.energymonitor.ai/tech/renewables/weekly-data-renewables-industry-now-employs-0-7-of-the-workforce-in-eu-and-china
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
The need for
government
investment in Europe,
USA and India
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
What about Europe’s chemical companies?
üBattery technology and silicon
solar cells are chemical
technologies. Not a single
European chemical company has
invested in Europe in Li-ion
battery and solar cell production
in the last 30 years (2002-
2022)
üAll battery and photovoltaic
companies are Chinese
Northvolt facility in Skelleftea, Sweden
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
South Korea chemical kombinat, instead
üWhen summed up, LG will have 215
GWh/year of capacity in 2025 in
North America, from 13 GWh/year
in 2022
üIn South Korea, LG will raise the
capacity of its Ochang plant to 33
GWh/year in 2025 from a current
21 GWh/year. In China, it will boost
the output of its Nanjing and
Binjiang plants to 145 GWh/year, a
55.9% hike from 93 GWh/year in
2022
üIn Europe, LGES will increase the
output of its Wroclaw plant in
Poland to 115 GWh/year in 2025
from 68 GWh/year in 2022
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Government investment: only feasible option
ü"Nobody will give you an order on
the strength of a PowerPoint," said
David Roberts, who has invested in
several British firms to focus on
zero-emission cars. "You're looking
at six years before you have real
sales, so where the hell do you get
$5 billion plus operating costs
without an order?"
üThat's why a number of European
startups are taking the slower
route, building smaller, cheaper
plants with a capacity below 1
gigawatt-hour (GWh) -dubbed
"megafactories" -to produce cells at
scale and then win contracts from
carmakers.
www.ibtimes.com/europe-leans-asia-homegrown-ev-batteries-3631531
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Renewable energy a financial bubble?
üNo. PV electricity generation no
longer needs incentives
üLarge PV arrays selling electricity on
the day ahead market in Italy: highly
profitable due to overly low cost of
PV generation technology
üInvestors finalize with PV plant
owners power purchase
agreements (PPA) with fixed and
variable return on investment
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Can I really find a well paid job?
üYes. As long as you get a deept
knowledge of the energy market as
well as of the new energy
technologies
üVery few energy «professionals» in
Italy have such knowledge
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
S.-H. Jun, et al.
Polymers 11 (2019) 1044
How things are going in Africa?
üAfrica is going solar
üAfter decades of failed attempts,
most Africa’s countries are uptaking
both utility scale solar energy plants
and distributed generation via solar
systems
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
üRenewable energy is an economic need
(environment comes second)
üSolar photovoltaic generation coupled
storage is already technically and
economically viable, killing conventional
energy
üIn Europe, North and South America the
new energy technology industry is nearly
non-existent
üMassive government intervention is
needed, likewise it was done with oil and
gas industry
üYou can find a well paid and rewarding job
in the new energy industry
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
S.-H. Jun, et al.
Polymers 11 (2019) 1044
Suggested readings
üRead the articles of this
presentation, each cited in its slide
üGet the following books
mario.pagliaro@cnr.it
23-Nov-2021
Europe’s chronic lack of investment in new energy
technologies: How it started and what to do now
Thank you for your attention, and
greetings from Palermo, Sicily
www.qualitas1998.net
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