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Setting speed-limit on Industry 4.0 – an outlook of power-mix and grid capacity challenge
ScienceDirect
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ScienceDirect
Procedia Computer Science 00 (2019) 000–000
Available online at www.sciencedirect.com
www.elsevier.com/locate/procedia
Procedia Computer Science 00 (2019) 000–000
ScienceDirect
www.elsevier.com/locate/procedia
Procedia Computer Science 158 (2019) 107–115
3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE) 3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE) Setting speed-limit on Industry 4.0 – an outlook of power-mix and capacity Setting speed-limit ongrid Industry 4.0 –challenge an outlook of power-mix and grid capacity challenge 1
Tarik Zaimovic
1
Abstract
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Tarik Zaimovic
University of Sarajevo, Bosnia and1Herzegovina
University of Sarajevo, Bosnia and Herzegovina
As we are approaching critical tipping point in greenhouse emissions, aligning the overall structure of energy sector will require Abstract major shift in both the approach and production portfolio. At the same time the Industry 4.0 transformation is gaining speed and its core are developing in ever-increasing paste. emissions, The accelerated developments, especially in the domain of Artificial As wetechnologies are approaching critical tipping point in greenhouse aligning the overall structure of energy sector will require intelligence robotics, are alreadyportfolio. visible. Coupled withtime thethe energy demand in transportation sector, speed especially the major shift inand bothindustrial the approach and production At the same Industry 4.0 transformation is gaining and its electric vehicles are impact on production patters andpaste. grid-balancing, the developments, long-term energy production create core technologies developing in ever-increasing The accelerated especially in thedisbalance domain of will Artificial unprecedented ever-growing electricity intelligence andchallenges industrial for robotics, are already visible.needs. Coupled with the energy demand in transportation sector, especially the The environment production and patters distribution needed electricity one the main ones.production The Industry 4.0 changing electric vehicles friendly impact on production and of grid-balancing, the islong-term energy disbalance will demand create will create excessive pressure on companieselectricity and governments unprecedented challenges for ever-growing needs. to rethink their long-term production strategies. For most, this will be a paradigm shift infriendly overallproduction sectoral approach. Although, windelectricity and solar will bethe themain two dominating renewable technologies The environment and distribution of the needed is one ones. The Industry 4.0energy changing demand in the upcoming decades, the “integration costs” of wind and solar energy: gridlong-term costs, balancing costsstrategies. and cost effects on conventional will create excessive pressure on companies and governments to rethink their production For most, this will be plants – varies tremendously depending on the specific system. The task of transformation andtechnologies alignment of apower paradigm shift in overall sectoral approach. Although, the windpower and solar will be thedaunting two dominating renewable energy existing transmission grid, withcosts” the need to build new grid capacity beyond 2020, are estimated nearly today’s in the upcoming decades, thecoupled “integration of wind and solar energy: grid costs, balancing costs and cost to effects ondouble conventional capacity just –tovaries facilitate today envisaged industrial and electric developments only. power plants tremendously depending on theautomation specific power system.vehicles The daunting task of transformation and alignment of By all accounts, the majority of European countries facing unprecedented challenges electricity portfolio. It's existing transmission grid, coupled with the need toare build newangrid capacity beyond 2020, in areitsestimated toproduction nearly double today’s not onlyjust thetonature of production or theindustrial power mix that is in question, but also developments balance-load, only. merit order principal as well as capacity facilitate today envisaged automation and electric vehicles monumental challenge of new grid requirements. overview we provide challenges an outlookin atits energy trendsproduction in EU by portfolio. 2050, coupled By all accounts, the majority of European countriesIn arethis facing an unprecedented electricity It's withonly electric core Industry technologies on electricity power-mixmerit and grid challenge. not the vehicles nature ofand production or the4.0power mix thatimpact is in question, but demand, also balance-load, ordercapacity principal as well as monumental challenge of new grid requirements. In this overview we provide an outlook at energy trends in EU by 2050, coupled with electric vehicles and core Industry 4.0 technologies impact on electricity demand, power-mix and grid capacity challenge. © 2019 The Author(s). Published by Elsevier B.V. © 2019 The Authors. Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and © 2019 The Author(s). Published by Elsevier B.V. Entrepreneurship Entrepreneurship Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship Keywords: Industry 4.0; electricity production; power-mix; grid capacity; electric vehicles Keywords: Industry 4.0; electricity production; power-mix; grid capacity; electric vehicles
* Corresponding author. E-mail address: [email protected] * Corresponding author. E-mail address: [email protected]
1877-0509 © 2019 The Author(s). Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship 1877-0509 © 2019 The Author(s). Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship
1877-0509 © 2019 The Authors. Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship 10.1016/j.procs.2019.09.033
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1. Introduction As the Industry 4.0 transformation in gaining speed and its core technologies are developing in ever-increasing rate, the new and emerging challenges as well as concerns are already visible. Unanticipated speed of Artificial intelligence development and it’s for now foreseen industrial impact as well as job-related questions have been recognized by the legislators and the academia. Still, the overall concern with AI impact on workplace and its societal effects, as well as the associated ethical questions, thus far remain unanswered. The same can be observed in looking at automation and robotics. We are on the verge of robotics tipping point with technology advancement moving away from traditional look at industrial robots to more comprehensive and complex automation robotics –combined with advanced Machine Learning algorithms, will enabling leapfrog in industrial development unseen so far. The same can be sad for almost all technologies behind, what we commonly known, the Industry 4.0 transformation. At the same time we are approaching critical tipping point in greenhouse emissions. The overall structure and the capacity of energy sector will require major shift in both the approach as well as production portfolio. Coupled with the specifics of energy demand in Industry 4.0 transformation and transportation sector, especially the electric vehicles impact on production patters and grid-balancing, the long-term energy production and facilitation of existing power production disbalance will create unprecedented challenges for ever-growing electricity needs of most European countries. In other words, some of the major speed-bumps and speed-limit are in our pathway. The environment friendly production and distribution of this newly needed electrical energy is one the main ones. The changing electricity demand structure will create additional pressure on companies and governments to rethink their long-term strategies as well as overall approach to the demands of Industry 4.0 disruptive technologies. For some, this will be a paradigm shift in sectoral approach as such, but also in overall look at national energy strategies. Today, more than 60 percent of Europe’s coal power plants are older than 30 years, and next to nuclear, coal power plants still represent a major energy generation capacity for most of EU countries. Although, the wind and solar PV will be the two dominating renewable energy technologies in the upcoming decades in EU, the wind and solar share in overall operating power capacity will have to increase from less than 15% today to over 50% by 2050. The “integration costs” of wind and solar energy: grid costs, balancing costs and cost effects on conventional power plants – varies tremendously depending on the specific power system and methodologies applied. The daunting task of transformation and alignment of existing transmission grid, coupled with the need to build new grid capacity beyond 2020, are estimated to nearly double today’s capacity just to facilitate envisaged automation and EV developments. Estimated impact of electric vehicles (EV) alone will force the entire energy production sector into paradigm shift. By all accounts, the Europe is facing an unprecedented challenge in both the structure of energy portfolio. The unstoppable technology development, especially industry 4.0 driven automatization, or electric vehicles, as well as other IT devices (EV in the tertiary sector, home-appliances, industrial and home application of Internet of Things, anticipated development of industrial robots, etc.), will creates additional pressure as well as incentive for new approach in suppling "electricity". This tectonic shift will force the overall sector in realignment unlike anything that we have seen. It's not only the nature of electricity production or the power mix that is in question, but also balance-load, merit order principal as well as monumental challenge of grid requirement; all will change the overall picture of energy sector for decades to come. In this paper we provide an outlook at energy trends in EU by 2050, coupled with estimated impact of electric vehicles and core Industry 4.0 technologies impact on electricity demand, power-mix as well as overall grid structure and capacity. 2. Key data and trends in EU electricity production There are number of factor affecting EU energy needs over the coming decades. Often, the development of EV and the fast generation of technological advancement related to Industry 4.0 remains underestimated and overlooked. The overall role of Industry 4.0 technologies coupled EV and their potential impact will define the paradigm shift in energy production and its transportation (electrical grid challenge). Still, we have to start our analyses with major data and trend as they are more than sufficient to understand the need for extended, somewhat different, look at energy production focused only on meeting changing Europe's energy needs. In looking at EU energy reference scenario 2050 [1] the overall share of energy consumption by fuel clearly indicates a steady rise from 21% to 28% in electricity share over the coming decades (in Mtoe/Million tonnes of oil equivalent).
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At the same time, electrification is a persisting trend in final energy demand. The increase of share of electricity in the transport, tertiary service, households and services is ever-present trend. For example, in residential energy demand by fuel we can see a drop in oil needs from over 70Mtoe to less than 20Mtoe, while at the same time we see increase in demand for electricity [1]. In general, energy efficiency in the residential sector (as well as in the tertiary sector) will be improved by using more efficient energy equipment (e.g. lighting, electric appliances, heating and cooling appliances), upgrading energy characteristics of buildings (e.g. thermal integrity of buildings), and inducing changes in energy consuming behaviour (smart houses and EV's are one of the main elements of changes in consuming behaviour). In other words, we will use less oil but significantly more electricity. Needless to emphases that all of this "new" electricity has to come from somewhere. In order to get the full picture we have to look at the changes in the structure of energy production. The EU 2030 targets [2] to generate at least 27 percent of its total energy needs from renewables. According to the EU Commission this translates into 45 to 53 percent share of renewable electricity in the power sector [1]. Still, achieving 50 or more percent annual average share of electricity from renewable sources presents a formidable challenge. By looking at current trends, photovoltaic installations (solar) and onshore wind turbines will make up the largest share of newly installed renewable energy capacity. As illustration, since 2000, 443 GW of new power capacity was installed in Europe, 58 percent of which was renewables, mostly wind and solar [2]. Looking at 2050, a share of wind power and solar PV up to 72 percent in the electricity mix [3]. This trend holds not only in Europe, but worldwide also [4]. Still here we have to emphasize that over 60 percent of Europe’s coal power plants are older than 30 years – and next to nuclear, they still represent a major electricity generation capacity for most of EU countries and the major source for foundation-balance of industrial consumption. According to almost all available scenarios, majority will reach the end of its lifetime in the coming 15 years and this urgent need for transformation of old power plants is only partly included in the graphs below, especially regarding nuclear power plants. Still, we can clearly see a commanding shift towards Renewable Energy Sources (RES) in the net electricity generation need.
Fig. 1. Share of net electricity generation by fuel type [1]
In addition, over the following years, the implementation of supportive financial instruments such as feed-in-tariffs as well as the set of EU and national specific policies that promote RES (notably) will perpetuate significant portion of RES penetration in overall power generation (as seen from the graph with the structure of operating power capacities till 2050). Consequently, till 2020 the RES are projected to increase to 35% or 37% of net electricity generation (up to 56% in 2050 of net power generation in EU28); more than half are projected from wind and solar. Beyond 2020, we can expect phasing out of accelerated investments in RES in EU and adherence to market forces driven supply. As for
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the structure of RES itself. While it will provide growing shares in electricity generation, the contribution of variable RES (i.e. solar, wind etc.) by 2020 will remain rather lower. The variable RES will most likely reach up to 20% of total generation in 2020, 25% in 2030 and 36% in 2050. Still, having all in mind, and especially resistance towards hydro-power as todays' major part of RES, the wind power and solar PV technologies will most likely win in the race for bringing down technology costs. Currently, significant cost-reductions are expected – particularly for PV. From purely technology cost perspective, renewables – especially onshore wind and solar PV – already outcompete the other zero-carbon technologies. The levelised cost of electricity (LCOE) for these two technologies has fallen dramatically; onshore wind has seen a cost decrease of over 50 percent since 1990 and new turbines produce electricity throughout Europe for as low as 3.15 ct/kWh up to11 ct/kWh [5]. Furthermore, the todays' wind turbines are 15 times more powerful than 20 years ago. Costs for solar PV have fallen even quicker; by up to 80 percent since 2008. Today, the LCOE for solar PV has reached 8 ct/kWh at the best sites in Europe [6]. According to IRENA analyses, the levelised cost of electricity for solar PV is expected to fall to 4-6 ct/kWh by 2025, reaching 2-4 ct/kWh by 2050, while the range for onshore wind in 2030 is 2-7 ct/kWh. Offshore wind is still relatively expensive, but could see significant cost reductions according to some analysts if further investments into this innovative technology advance the technology learning curve and enable the industry to further rationalize and up-scale its activities. In addition, most other renewable technologies are still significantly more expensive or constrained by available potential. The latter is especially the case for hydroelectric power, which constitutes the biggest share of renewable energy sources in the current systems. Nevertheless, this does not change the overall picture; the wind and solar PV will be the two dominating renewable energy technologies in the upcoming decades, especially in EU. Furthermore, in assessing the overall European energy policy one has to note overall trends towards strengthened EU Energy-Only Market (EOM) and a strengthened EU Emissions Trading scheme (ETS). Today, it's clear that over the coming decades, the power will be primarily produced by renewable and low-carbon generation assets. Regardless of the specific technology mix, it will pose an additional challenge since renewables, specifically wind and PV, have relatively high investment costs and relatively low or even zero marginal costs. They are typically in operation when wholesale power prices are low, and they only benefit from high prices to a limited extent. Thus, they are more vulnerable than conventional capacity to stochastic scarcity prices. Still, investments in so-called peaking plants are critical. This is because such plants operate for few hours only, at times when consumption is high and renewables production is low. Peaking plants require high power prices (so-called scarcity prices) during their (few) operating hours to enable total cost recovery (including initial investments). Finally, by compering various sensitivity/reference scenarios and sources, and by bringing qualitative and quantitative insight into the effects of changing specific elements of the power system (supply – transmission – demand), towards 2030 the model of power production mix will most likely be; 50% renewable energy sources (12% wind onshore, 10% wind off-shore, 6% solar PV, 10% biomass, 11% hydropower and 1% geothermal), followed by 34% fossil fuels (28% gas, 6% coal) and 16% nuclear across Europe [7]. 3. Industry 4.0 trends Despite the undergoing discussion about the merits of the title itself, the transition that we often refer as the 4th industrial revolution is gaining speed and impacting our life in every matter possible. The unprecedented technology breakthroughs in the fields of artificial intelligence (AI), automaton and robotics, the internet of things (IoT), electric and autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage or quantum computing, already are reaching an inflection point in their development as they amplify each other in a ways unthinkable just a few year ago. Over the last few years a number of different studies have looked at impact of Industry 4.0 driven automation. In 2016 report by Citibank [8] find that OECD countries on average 57% of jobs are susceptible to automation, while this number rises to 69% in India and 77% in China. A the same time, by looking at OECD countries and estimating the automatibility of tasks, the OECD working paper [9] found that in short term, on average, 9% of jobs across the 21 OECD countries are automatable. The World Economic Forum report from 2016 [10] estimates automation and technological advancements could lead to a net employment impact of more than 5.1 million jobs lost to disruptive labour market changes between 2015–2020, with a total loss of up to 7.1 million jobs. Finally, the McKinsey Global Institute [11] went a step further in their analysis by looking at disaggregation of occupations into 2000 constituent activities and rating each against human performance in
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18 capabilities. In their findings almost half of work activities globally have the potential to be automated using current technology. While less than 5% of occupations can be automated entirely. Still about 60% have at least 30% of automatable activities and technically automatable activities will impact 1.2 billion workers and $14.6 trillion in wages worldwide. In all, the advances in robotics, artificial intelligence, as well as machine learning will determine a new generation of automation, as machines match and/or outperform human performance in a wide range of work-related activities. Despite the fact that none of this will happen overnight, and the factors like; technical feasibility, cost of developing and deploying solutions, labor market dynamics, overall economic benefits as well as regulatory and social acceptance, will influence the pace and extent of its adoption – the inevitable outcome is that automation and disruptive technologies behind Industry 4.0 transformation will drive the new paradigm shift in the future of jobs [12]. Still, little is written about the underlying effects on supportive sector and industries. While it is certain that Industry 4.0 megatrend will change the broad landscape of technological drivers of the fourth industrial revolution, changes within the supporting sector often are left under-analysed. Among the major one is anticipated increase in power consumption - not only the nature of production or the power mix, but also balance-load, merit order principal as well as the monumental challenge of new grid requirements. The only sector in which we have some detailed estimates is the transportation sector, more precisely the effect of automation and electric vehicles. The EU reference scenario [1] estimates that the activity of the transport sector will shows significant growth. The highest increase takes place during the period 2010 to 2030, while passenger transport activity continues to grow post-2030, maintaining its dominant role throughout the 2050. Further analysis by transportation mode the growth of final energy demand in the transport sector has shown strong correlation with the evolution of transport activity and types. Over the past decade, statistically decoupling between energy consumption and transport activity has been recorded. This is particular apparent in the case of passenger transport activity. The Öko-Institut report [13] which finds that electric vehicles will become important consumers in power systems over the coming decades. The decoupling between energy consumption and activity is projected to continue and intensify in the future. Final energy demand from cars and powered two-wheelers is responsible for more than half (59% in 2010) of total final energy demand in transport (in Million tonnes of oil equivalent). This share is projected to decrease over the medium term and almost stabilize towards 2050 (51% and 49% in 2030 and 2050, respectively). In particular, in inroad passenger transport energy efficiency of vehicles improves by 17% in 2020 and 29% in 2030 relative to 2010, leading to a significant decline in energy demand in passenger road transport by 2050 in tonnes of oil per Million tonnes per kilometer (in toe/Mtkm). Over the coming decades almost all manufacturers will introduce even more fuel efficient vehicle into the market, and the next-gen of electric cars and trucks (starting with a big push in hybrid systems and then to fully electric vehicles). The Öko-Institut Report [13] finds that electric vehicle demand share of total electricity demand will go up to 25% among the EU-28 countries by 2050. As a transport fuel, electricity would become a relevant energy option with roughly 50% (around 450 TWh/a) of the passenger car fuel mix by 2050. In all, electricity will constitutes at minimum 25% of the final energy demand of passenger road transport. Today, the passenger car stock remains heavily dependent on fossil fuels, but with envisaged introduction of wide range of electric vehicles by all major car producers the EU Reference Scenario [1] estimates a share of battery electric vehicles (BEV) will increase from around 15% (2020) to reach almost 25% in 2030. Of course, these estimations differ among institution. For example, the EU Energy Roadmap 2050 [1] highdecarbonisation scenarios envisages massive shift to EV in road transport and energy efficiency gains, final energy demand drop of -38 to -43% in 2050 and EV market penetration of up to 80% of passenger cars by 2050. The World Energy Outlook [14] for European Union estimates final energy demand drop of -19% in 2040 compared to 2013 and small share of electric cars compared to other scenarios (share of electricity in transport energy demand of only 4%). On the other side of the spectrum is European Renewable Energy Council [15] and Greenpeace International targetdriven scenario, presenting a sustainable energy system that achieves the long-term EU CO2 emission reduction goals, which estimates a share of electricity in transport energy demand of 12% in 2030 and 50% in 2050. Finally, European Climate Foundation Roadmap 2050 [16] estimates that all passenger cars electrified in 2050 (80 % BEV and 20 % PHEV), and the electricity consumption from road transport in 2050 will be staggering 740 TWh. By comparison, this is 23% of 2015 total gross electricity production in EU-28. To better understand the implication of above mentioned scenarios we have to note that transportation demand will grow from around 2,800 Giga vehicle-kilometers (Gvkm) today to around 3,160 Gvkm in 2030 and to around 3,480 Gvkm in 2050.
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Finally, we will closely look at two most likely scenarios; the EV-mid scenario which assumes 50% electric car share in passenger car stock in 2050, where 60% of electric passenger cars in 2050 are pure electric vehicles due to the smaller market penetration of electric passenger cars, and the EV-high scenario which assumes 80% of electric driven cars in the passenger car stock in 2050 out of which 80% of electric passenger cars are pure battery electric vehicles and the remaining 20% of electric passenger cars are PHEV. Furthermore, the structure of consumption will not be the only challenge – the overall functioning of electricity market in Europe has to be look with special attention. The merit order principle might be a more of the challenge for majority EU countries. In most energy markets, prices are determined on the basis of the merit order principle, at the intersection between supply and demand. Specifically this means that the energy suppliers offer electricity from their available power plants on the power exchange at a particular price which is usually on the basis of short-term operating costs. These offers are then sorted by price. For example, today cheapest price offers come from nuclear and lignite power plants while gas- and oil-fired power plants produce expensive electricity (based on operating costs at least). Still, as we move toward more prominent role of RES in overall power system and the renewable energies are included in the power mix, following the logic of the merit order principle, renewable power plants are positioned in front of nuclear power and coal-fired power plants because they cause almost no (fuel) costs. As the ratio of electric cars in overall transportation increases, the total power demand in consumption will increases and the electricity will be needed from additional power plants to fulfil demand. In some countries, increased utilization of existing power plants may be able to compensate the demand increase in short term. Depending on the availability of existing (fossil) power plants, they may require some additional generation capacities from RES. At the same time, since the power demand needs to be satisfied at the right time and place, and since electric vehicles constitute a new type of power consumer (with specific load patterns and spatial distributions), if the EV share is more than 10% it would require major adaptation efforts to maintain system stability and adequacy in majority of EU countries. As estimated, total annual generation for electric cars in 2050 amounts 283 TWh for EV-mid scenario and 448 TWh for EV-high scenario, and according to majority of estimation and strategies more than half of this demand should be met by generation from renewable sources (solar, wind, hydro and biomass). The total needed for additional capacity in 2050 is significant. In the EV-mid scenario it amounts to 95 GW and in the EV-high scenario to almost 150 GW. Increases in capacity are the greatest for wind, natural gas and solar power plants. In the high scenario a total of 48 GW in wind, 35 GW in natural gas, and 25 GW in solar capacity are required to satisfy this additional EV-driven demand [13, 17, 19]. In all, the introduction of electric vehicles will inevitably lead to greater interaction between the mobility and the electricity sector. As electric car penetration reaches higher levels, the electricity demand from electric cars will become a relevant factor within the energy system and impacts the operation of power plants, as well as the grid infrastructure. Assuming a relatively fast development of electric cars (EV-high scenario) share of electric vehicles until 2050 and total electricity demand varies between 3% and 25% among the EU-28 countries. As a transport fuel, according to ÖkoInstitut Report [13] and based on EU Reference Scenario 2016 [1], electricity would become a relevant energy option with roughly 50% (around 450 TWh/a) of the passenger car fuel mix by 2050, while for the "average" (tech 2) scenario of rate of technology deployment in Fueling Europe Future [17] proportion of new vehicle sales will be predominantly EV already by 2025/30 and by 2050 almost entirely electric. In order to satisfy this additional electricity demand of 80% penetration, significant additional generation capacity should be required. Up to 150 GW of generation capacities will have to be added to the energy system due to electric cars. These new capacities require significant additional investments in particular for wind and solar power and increase land use for electricity generation as nuclear and coal power plants have negative environmental impacts and they do not fit into a future energy sector. This in turn means; 87 GW wind, 45 GW solar, 24 GW hydro and 13 GW biomass – of new capacities over the coming decades as a result of only electric vehicles introduction. Finally, most of the analyses related to EV impact on transport neglect the fundamental nature of EV – they are information technology driven product. The content and the speed of their development are governed by different set of rules and determinates. All best described in often cited Moore's law; the prediction that have proved accurate for several decades, and today is used in the semiconductor industry as a guide for long-term planning, research targets and development. The studies projecting the influence of EV, even the so-called EV-high estimations, fail in accepting one of the key premises on IT industry – "it will all change in two years", i.e. the dynamics of overall Industry 4.0 technologies is determined by accelerated speed of information technologies driven innovation, and regardless of associated systems ability to maintain and facilitate the paste of development, the change will inevitable disrupts the
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current foundation of industrial competiveness and structure, as well as create demand-driven pressure on governments and society as hole. 4. Power mix and the grid capacity challenge At the same time, it is clear that several key challenges lay ahead. While necessary transformation to a decarbonised and secure power sector is technically feasible at more or less similar overall cost, due to a major shift from operational costs to capital investments, the creation of overall power mix remains at the forefront of discussion and dilemmas within energy strategies for most EU countries. By comparing the levelised cost of electricity (LCOE) of wind power and solar PV with conventional generation technologies, it is clear that these two renewable sources can already produce electricity at the same cost level as new coal and gas plants, but significantly lower than the other zero-carbon technologies like nuclear and CCS. Still, it has to be noted that from "system perspective", costs of integrating variable wind and PV technologies into the power system is still rather high; so concerns do exist. The “integration costs” of wind and solar energy: grid costs, balancing costs and cost effects on conventional power plants – varies tremendously depending on the specific power system and methodologies applied. In all, the electrical system will have to respond more flexibly as the share of wind and PV increases. For example, the wind dies down in tandem with a drop in the generation of solar power. As a result, controllable power plants have to cover a major portion of the demand within a few hours. In a worst case scenario, demand might increase at the very same time – for example, if a large part of the population comes home at sunset and turns on electrical appliances, television sets and lights. In these hours, conventional power plants and imports will have to cover almost the entire load, irrespective of the amount of installed wind and PV capacities – and irrespective of the fact that in the preceding hours wind and PV might covered almost all of power demand. Thus, the future power plant mix will have to contain less baseload capacities and relatively more mid-merit and peak load capacities that quickly adjust their production. Also, according to Agora [18] report the storing electricity remains one of the key pertaining issues. Today, hydro plants constitute the most important storage technology. Only fey EU countries have significant storage capacities. However, for Europe as a whole, the potential for further expanding pumped hydro is rather limited, as plants usually have strong impacts on the environment and often stand in conflict with environmental protection goals or the preferences of local communities. On the other hand, new types of storage technologies, such as batteries, including the ones in electric vehicles, adiabatic compressed air storage, and power to-gas systems are from today’s perspective still expensive. The recent technological advancements, especially, wide-scale deployment of electric vehicles and largescale battery facilities (eg. Tesla, Hornsdale Energy Reserve in Australia) will, most certainly, enhance the flexibility of the power system in the long run. This is followed with the daunting task of transformation and alignment of transmission grid. According to Power Perspectives 2030 [7] estimations the significant new grid capacity is required beyond 2020. Investments in transmission grids, projected from 2020 to 2030 are 50% increase from the planned network in 2020 – nearly doubling of today’s existing capacity. Upgrading the grid infrastructure is, however, the most cost–effective way to keep a power system in transition secure and reliable. Less transmission build-out will lead to less optimal use of RES and additional need for back-up capacity. Anticipating further developments in battery storage technologies and solutions do become cost-effective alternatives; they will play an important role in optimizing system balancing in combination with transmission and backup. And, where possible, coupled with hydro power plans storage can create extensive competitive advantage in load balancing and disproportion in generation capacity of RES and market demand. Even more precise picture of overall changing trend in energy production can be observed by looking at the estimated primary energy supply transformation. The trend in total primary energy supply (PES) is downward till 2030 due to increased energy efficiency reflected on primary energy demand. In parallel, there is a significant shift in primary energy requirements towards renewables along with a decline in the demand for solid fuels. Nevertheless, the shift towards RES will most certainly lead towards their domination in primary energy supply as we approach 2050 – even sooner if EVhigh-scenario for electric vehicles is to be achieved with 25-30% (up to 50%) penetration rates [19]. The primary energy demand as well as supply, will most certainly, change as we move closer to 2020. The Renewable Energy Sources will double their share by 2050 and with natural gas represent half of all energy needs in Europe [1]. All this will have to be accompanied by grid investments which is higher than historical trends. The grid costs increase
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over time due to the augmenting share of RES. Building new and improved transmission grid infrastructure is essential to balance a decarbonised power system cost-effective and to integrate energy markets. Beyond 2020, the lowest cost solution calls for twice as much additional grid capacity as compared to the planned expansion in the current decade [7]. Having all this in mind, the “integration costs” of wind and solar energy, overall grid expansion cost, coupled with balancing costs and cost effects on conventional power plants, will be a major stepping stone in overall RES development. More importantly, it will - to some extent, set the "speed-limit" on the overall Industry 4.0 driven transformation. The daunting task of transformation and alignment of existing transmission grid, coupled with the need to build new grid capacity beyond 2020, is estimated to nearly double today’s capacity just to facilitate today envisaged industrial automation and electric vehicles developments. Futhermore, It's not only the nature of production or the power mix that is in question, but also balance-load, merit order principal as well as monumental challenge of investments in the new grid capacity. 5. Conclusion Looking at energy trend and combining them with Industry 4.0 development, the need for stable power supply will be and daunting task. Despite all the advancements in technologies behind fourth industrial revolution, we will ultimately be limited by the necessity for appropriate power mix as well as misaligned, inadequate and aging power grid. As we look at energy production mix globally, prevailing attitude is that we have to change how we see the future of energy production and our overall approach in aligning the energy sector to Renewable Energy Sources. In Europe the issue of Renewable Energy Sources receives additional urgency since more than 60 percent of Europe’s power generating capacities will reach the end of its lifetime in the coming two decades. At the same time, well before these deadlines, power utility companies will have to retrofit the old plants, and due to mounting pressure from general public, replace most of them with low or zero-carbon generation capacities. In addition, all new electricity production facilities will have to be predominantly from variable Renewable Energy Sources (wind, solar, etc.). It is highly unlikely that any new energy capacities in EU will run on coal or oil as primary source of energy. As it stands, the Europe is facing tremendous challenges in respect to electrical energy generation as well as installation of new production facilities, and will have to rethink its approach to both the structure of power production (renewable vs. traditional) but also, its overall approach to major emission generators – like passenger transportation vehicles. As we have seen from assessment of overall EU energy market the wind and solar PV will be the two dominating renewable energy technologies in the upcoming decades. By far, majority of energy related investments will go into Renewable Energy Sources and required electricity grid adjustments/improvements. Wind and solar share in overall operating power capacity will increase from less than 15% today to over 50% by 2050, and the shift towards RES will most certainly lead towards their domination in primary energy supply as we approach 2050. The primary energy demand as well as supply will most certainly change as we move closer to 2020 with natural gas meeting half of all energy needs in Europe. In the "short run" – and by 2030 is a "short run" for energy sector, the EU targets to generate at least 27 percent of its total energy needs from RES. For illustration, since 2000, 58 % of new electricity production facilities ware Renewable Energy Sources; predominantly wind and solar. The future power mix in EU will have to contain less baseload capacities and relatively more mid-merit and peak load capacities. Towards the end of 2030 the power production mix will be 50% renewable energy sources (12% wind on-shore, 10% wind off-shore, 6% solar PV, 10% biomass, 11% hydropower and 1% geothermal), followed by 34% fossil fuels (28% gas, 6% coal) and 16% nuclear across Europe. By 2050 this will change even more dramatically, and all types of Renewable Energy Sources will provide more than half of all energy needs in Europe. At the same time, and only assessing the challenges of energy demand in transportation sector, with specific focus on trends and the impact of electric vehicles, additional attention is required. Regardless of their development dynamics or penetration rates, the overall consensus is that the EV will be the mode of transport of Europe in coming decades. Despite different penetration scenarios, or overall share in all types of transportation needs, the overall impact of EV on energy sector will be tremendous. The impact of electric vehicles (EV) will force the entire energy production sector in to historic paradigm shift, and for some, into unique investments opportunities in long-term energy production facilitating disbalance in ever-growing electricity needs. The European Climate Foundation estimates that by 2050 most of passenger cars will be electrified creating subsequent electricity consumption from road transport at staggering 740 TWh which represents 23% of the total gross electricity production as compared to EU-28 2015 production output. In all, electricity will constitutes at minimum 25% of the final energy demand of passenger road transport by 2050. For
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example, total annual generation of newly generated electrical energy for electric cars only in 2050 amounts 283 TWh for EV-mid scenario and 448 TWh for EV-high scenario. More than half of this demand should be met from renewable sources like solar, wind, hydro and biomass. Coupled with the Industry 4.0 technologies, especially the increasing role artificial intelligence and automation/robotics in industrial production, as well as Internet of Things in our everyday life, this tectonic shift will force the overall sector in unprecedented realignment unlike anything that we have seen. It's not only the nature of electricity production or the power mix that is in question, but also balance-load, merit order principal as well as monumental challenge of grid requirement; all will change the overall picture of energy sector for decades to come. In all, and by all accounts, the Europe is facing an unprecedented challenge in both the structure of energy portfolio and its necessity for its re-profiling. The unstoppable technology development, e.g. electric vehicles as well as other Industry 4.0 driven disruptive technologies, will creates additional pressure as well as incentives for new approach in suppling energy. Our indispensable need for electricity will grow exponentially; especially after 2025. But the challenge of producing and facilitating transport of electricity at the right time will remain the key challenge in the coming decades. To some extent, our ability to produce and distribute electricity from RES will determine the overall speed and intensity of Industry 4.0 impact and development outreach.
References [1]
EU Energy Roadmap 2050, 2016
[2]
European Wind Association, Wind in power, 2016
[3]
EC, 2011: Impact Assessment Energy Roadmap 2050, SEC(2011) 1565/2, 2011
[4]
The International Renewable Energy Agency (IRENA) Renewable Energy Capacity Statistics, 2015
[5]
The Power Market Pentagon: A Pragmatic Power Market Design for Europe’s Energy Transition, Agora Energiewende, Germany, 2016
[6]
The International Renewable Energy Agency (IRENA), Renewable Power Generation Costs in 2014
[7]
Power Perspectives 2030, On the road to a decarbonised power sector, 2016
[8]
Technology at Work: The future is not what it used to be, Citibank, 2016
[9]
Melanie Arntz, Terry Gregory, and Ulrich Zierahn, The risk of automation for jobs in OECD countries: A comparative analysis, OECD Social, Employment and Migration working paper number 189, OECD, 2016
[10] The future of jobs: Employment, skills, and workforce strategy for the fourth Industrial Revolution, World Economic Forum, 2018 [11] McKinsey Global Institute, A future that works: Automation, employment, and productivity, 2017 [12] Klaus, Schwab, The Fourth Industrial Revolution, World Economic Forum, 2016 [13] Assessing the status of electrification of the road transport passenger vehicles and potential future implications for the environment and European energy system, Öko-Institut Report, 2016 [14] International Energy Agency, World Energy Outlook 2015, 2015 [15] Teske, S., Muth, J., Thoma, F. and Connolly, T., energy [r]evolution, Greenpeace; European Renewable Energy Council (EREC), Brussels, 2012 [16] European Climate Foundation, Roadmap 2050, Den Haag, 2010 [17] Fuelling Europe Future; How auto innovation leads to EU jobs, Cambridge Econometrics, Applica, Ricardo-AEA and Element Energy, 2014 [18] The Power Market Pentagon: A Pragmatic Power Market Design for Europe's Energy Transition, Agora Energiewende, Germany, 2016 [19] Electric mobility in Europe – Future impact on the emissions and the energy systems, 2016
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Procedia Computer Science 158 (2019) 107–115
3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE) 3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE) Setting speed-limit on Industry 4.0 – an outlook of power-mix and capacity Setting speed-limit ongrid Industry 4.0 –challenge an outlook of power-mix and grid capacity challenge 1
Tarik Zaimovic
1
Abstract
1
Tarik Zaimovic
University of Sarajevo, Bosnia and1Herzegovina
University of Sarajevo, Bosnia and Herzegovina
As we are approaching critical tipping point in greenhouse emissions, aligning the overall structure of energy sector will require Abstract major shift in both the approach and production portfolio. At the same time the Industry 4.0 transformation is gaining speed and its core are developing in ever-increasing paste. emissions, The accelerated developments, especially in the domain of Artificial As wetechnologies are approaching critical tipping point in greenhouse aligning the overall structure of energy sector will require intelligence robotics, are alreadyportfolio. visible. Coupled withtime thethe energy demand in transportation sector, speed especially the major shift inand bothindustrial the approach and production At the same Industry 4.0 transformation is gaining and its electric vehicles are impact on production patters andpaste. grid-balancing, the developments, long-term energy production create core technologies developing in ever-increasing The accelerated especially in thedisbalance domain of will Artificial unprecedented ever-growing electricity intelligence andchallenges industrial for robotics, are already visible.needs. Coupled with the energy demand in transportation sector, especially the The environment production and patters distribution needed electricity one the main ones.production The Industry 4.0 changing electric vehicles friendly impact on production and of grid-balancing, the islong-term energy disbalance will demand create will create excessive pressure on companieselectricity and governments unprecedented challenges for ever-growing needs. to rethink their long-term production strategies. For most, this will be a paradigm shift infriendly overallproduction sectoral approach. Although, windelectricity and solar will bethe themain two dominating renewable technologies The environment and distribution of the needed is one ones. The Industry 4.0energy changing demand in the upcoming decades, the “integration costs” of wind and solar energy: gridlong-term costs, balancing costsstrategies. and cost effects on conventional will create excessive pressure on companies and governments to rethink their production For most, this will be plants – varies tremendously depending on the specific system. The task of transformation andtechnologies alignment of apower paradigm shift in overall sectoral approach. Although, the windpower and solar will be thedaunting two dominating renewable energy existing transmission grid, withcosts” the need to build new grid capacity beyond 2020, are estimated nearly today’s in the upcoming decades, thecoupled “integration of wind and solar energy: grid costs, balancing costs and cost to effects ondouble conventional capacity just –tovaries facilitate today envisaged industrial and electric developments only. power plants tremendously depending on theautomation specific power system.vehicles The daunting task of transformation and alignment of By all accounts, the majority of European countries facing unprecedented challenges electricity portfolio. It's existing transmission grid, coupled with the need toare build newangrid capacity beyond 2020, in areitsestimated toproduction nearly double today’s not onlyjust thetonature of production or theindustrial power mix that is in question, but also developments balance-load, only. merit order principal as well as capacity facilitate today envisaged automation and electric vehicles monumental challenge of new grid requirements. overview we provide challenges an outlookin atits energy trendsproduction in EU by portfolio. 2050, coupled By all accounts, the majority of European countriesIn arethis facing an unprecedented electricity It's withonly electric core Industry technologies on electricity power-mixmerit and grid challenge. not the vehicles nature ofand production or the4.0power mix thatimpact is in question, but demand, also balance-load, ordercapacity principal as well as monumental challenge of new grid requirements. In this overview we provide an outlook at energy trends in EU by 2050, coupled with electric vehicles and core Industry 4.0 technologies impact on electricity demand, power-mix and grid capacity challenge. © 2019 The Author(s). Published by Elsevier B.V. © 2019 The Authors. Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and © 2019 The Author(s). Published by Elsevier B.V. Entrepreneurship Entrepreneurship Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship Keywords: Industry 4.0; electricity production; power-mix; grid capacity; electric vehicles Keywords: Industry 4.0; electricity production; power-mix; grid capacity; electric vehicles
* Corresponding author. E-mail address: [email protected] * Corresponding author. E-mail address: [email protected]
1877-0509 © 2019 The Author(s). Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship 1877-0509 © 2019 The Author(s). Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship
1877-0509 © 2019 The Authors. Published by Elsevier B.V. Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship 10.1016/j.procs.2019.09.033
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1. Introduction As the Industry 4.0 transformation in gaining speed and its core technologies are developing in ever-increasing rate, the new and emerging challenges as well as concerns are already visible. Unanticipated speed of Artificial intelligence development and it’s for now foreseen industrial impact as well as job-related questions have been recognized by the legislators and the academia. Still, the overall concern with AI impact on workplace and its societal effects, as well as the associated ethical questions, thus far remain unanswered. The same can be observed in looking at automation and robotics. We are on the verge of robotics tipping point with technology advancement moving away from traditional look at industrial robots to more comprehensive and complex automation robotics –combined with advanced Machine Learning algorithms, will enabling leapfrog in industrial development unseen so far. The same can be sad for almost all technologies behind, what we commonly known, the Industry 4.0 transformation. At the same time we are approaching critical tipping point in greenhouse emissions. The overall structure and the capacity of energy sector will require major shift in both the approach as well as production portfolio. Coupled with the specifics of energy demand in Industry 4.0 transformation and transportation sector, especially the electric vehicles impact on production patters and grid-balancing, the long-term energy production and facilitation of existing power production disbalance will create unprecedented challenges for ever-growing electricity needs of most European countries. In other words, some of the major speed-bumps and speed-limit are in our pathway. The environment friendly production and distribution of this newly needed electrical energy is one the main ones. The changing electricity demand structure will create additional pressure on companies and governments to rethink their long-term strategies as well as overall approach to the demands of Industry 4.0 disruptive technologies. For some, this will be a paradigm shift in sectoral approach as such, but also in overall look at national energy strategies. Today, more than 60 percent of Europe’s coal power plants are older than 30 years, and next to nuclear, coal power plants still represent a major energy generation capacity for most of EU countries. Although, the wind and solar PV will be the two dominating renewable energy technologies in the upcoming decades in EU, the wind and solar share in overall operating power capacity will have to increase from less than 15% today to over 50% by 2050. The “integration costs” of wind and solar energy: grid costs, balancing costs and cost effects on conventional power plants – varies tremendously depending on the specific power system and methodologies applied. The daunting task of transformation and alignment of existing transmission grid, coupled with the need to build new grid capacity beyond 2020, are estimated to nearly double today’s capacity just to facilitate envisaged automation and EV developments. Estimated impact of electric vehicles (EV) alone will force the entire energy production sector into paradigm shift. By all accounts, the Europe is facing an unprecedented challenge in both the structure of energy portfolio. The unstoppable technology development, especially industry 4.0 driven automatization, or electric vehicles, as well as other IT devices (EV in the tertiary sector, home-appliances, industrial and home application of Internet of Things, anticipated development of industrial robots, etc.), will creates additional pressure as well as incentive for new approach in suppling "electricity". This tectonic shift will force the overall sector in realignment unlike anything that we have seen. It's not only the nature of electricity production or the power mix that is in question, but also balance-load, merit order principal as well as monumental challenge of grid requirement; all will change the overall picture of energy sector for decades to come. In this paper we provide an outlook at energy trends in EU by 2050, coupled with estimated impact of electric vehicles and core Industry 4.0 technologies impact on electricity demand, power-mix as well as overall grid structure and capacity. 2. Key data and trends in EU electricity production There are number of factor affecting EU energy needs over the coming decades. Often, the development of EV and the fast generation of technological advancement related to Industry 4.0 remains underestimated and overlooked. The overall role of Industry 4.0 technologies coupled EV and their potential impact will define the paradigm shift in energy production and its transportation (electrical grid challenge). Still, we have to start our analyses with major data and trend as they are more than sufficient to understand the need for extended, somewhat different, look at energy production focused only on meeting changing Europe's energy needs. In looking at EU energy reference scenario 2050 [1] the overall share of energy consumption by fuel clearly indicates a steady rise from 21% to 28% in electricity share over the coming decades (in Mtoe/Million tonnes of oil equivalent).
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At the same time, electrification is a persisting trend in final energy demand. The increase of share of electricity in the transport, tertiary service, households and services is ever-present trend. For example, in residential energy demand by fuel we can see a drop in oil needs from over 70Mtoe to less than 20Mtoe, while at the same time we see increase in demand for electricity [1]. In general, energy efficiency in the residential sector (as well as in the tertiary sector) will be improved by using more efficient energy equipment (e.g. lighting, electric appliances, heating and cooling appliances), upgrading energy characteristics of buildings (e.g. thermal integrity of buildings), and inducing changes in energy consuming behaviour (smart houses and EV's are one of the main elements of changes in consuming behaviour). In other words, we will use less oil but significantly more electricity. Needless to emphases that all of this "new" electricity has to come from somewhere. In order to get the full picture we have to look at the changes in the structure of energy production. The EU 2030 targets [2] to generate at least 27 percent of its total energy needs from renewables. According to the EU Commission this translates into 45 to 53 percent share of renewable electricity in the power sector [1]. Still, achieving 50 or more percent annual average share of electricity from renewable sources presents a formidable challenge. By looking at current trends, photovoltaic installations (solar) and onshore wind turbines will make up the largest share of newly installed renewable energy capacity. As illustration, since 2000, 443 GW of new power capacity was installed in Europe, 58 percent of which was renewables, mostly wind and solar [2]. Looking at 2050, a share of wind power and solar PV up to 72 percent in the electricity mix [3]. This trend holds not only in Europe, but worldwide also [4]. Still here we have to emphasize that over 60 percent of Europe’s coal power plants are older than 30 years – and next to nuclear, they still represent a major electricity generation capacity for most of EU countries and the major source for foundation-balance of industrial consumption. According to almost all available scenarios, majority will reach the end of its lifetime in the coming 15 years and this urgent need for transformation of old power plants is only partly included in the graphs below, especially regarding nuclear power plants. Still, we can clearly see a commanding shift towards Renewable Energy Sources (RES) in the net electricity generation need.
Fig. 1. Share of net electricity generation by fuel type [1]
In addition, over the following years, the implementation of supportive financial instruments such as feed-in-tariffs as well as the set of EU and national specific policies that promote RES (notably) will perpetuate significant portion of RES penetration in overall power generation (as seen from the graph with the structure of operating power capacities till 2050). Consequently, till 2020 the RES are projected to increase to 35% or 37% of net electricity generation (up to 56% in 2050 of net power generation in EU28); more than half are projected from wind and solar. Beyond 2020, we can expect phasing out of accelerated investments in RES in EU and adherence to market forces driven supply. As for
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the structure of RES itself. While it will provide growing shares in electricity generation, the contribution of variable RES (i.e. solar, wind etc.) by 2020 will remain rather lower. The variable RES will most likely reach up to 20% of total generation in 2020, 25% in 2030 and 36% in 2050. Still, having all in mind, and especially resistance towards hydro-power as todays' major part of RES, the wind power and solar PV technologies will most likely win in the race for bringing down technology costs. Currently, significant cost-reductions are expected – particularly for PV. From purely technology cost perspective, renewables – especially onshore wind and solar PV – already outcompete the other zero-carbon technologies. The levelised cost of electricity (LCOE) for these two technologies has fallen dramatically; onshore wind has seen a cost decrease of over 50 percent since 1990 and new turbines produce electricity throughout Europe for as low as 3.15 ct/kWh up to11 ct/kWh [5]. Furthermore, the todays' wind turbines are 15 times more powerful than 20 years ago. Costs for solar PV have fallen even quicker; by up to 80 percent since 2008. Today, the LCOE for solar PV has reached 8 ct/kWh at the best sites in Europe [6]. According to IRENA analyses, the levelised cost of electricity for solar PV is expected to fall to 4-6 ct/kWh by 2025, reaching 2-4 ct/kWh by 2050, while the range for onshore wind in 2030 is 2-7 ct/kWh. Offshore wind is still relatively expensive, but could see significant cost reductions according to some analysts if further investments into this innovative technology advance the technology learning curve and enable the industry to further rationalize and up-scale its activities. In addition, most other renewable technologies are still significantly more expensive or constrained by available potential. The latter is especially the case for hydroelectric power, which constitutes the biggest share of renewable energy sources in the current systems. Nevertheless, this does not change the overall picture; the wind and solar PV will be the two dominating renewable energy technologies in the upcoming decades, especially in EU. Furthermore, in assessing the overall European energy policy one has to note overall trends towards strengthened EU Energy-Only Market (EOM) and a strengthened EU Emissions Trading scheme (ETS). Today, it's clear that over the coming decades, the power will be primarily produced by renewable and low-carbon generation assets. Regardless of the specific technology mix, it will pose an additional challenge since renewables, specifically wind and PV, have relatively high investment costs and relatively low or even zero marginal costs. They are typically in operation when wholesale power prices are low, and they only benefit from high prices to a limited extent. Thus, they are more vulnerable than conventional capacity to stochastic scarcity prices. Still, investments in so-called peaking plants are critical. This is because such plants operate for few hours only, at times when consumption is high and renewables production is low. Peaking plants require high power prices (so-called scarcity prices) during their (few) operating hours to enable total cost recovery (including initial investments). Finally, by compering various sensitivity/reference scenarios and sources, and by bringing qualitative and quantitative insight into the effects of changing specific elements of the power system (supply – transmission – demand), towards 2030 the model of power production mix will most likely be; 50% renewable energy sources (12% wind onshore, 10% wind off-shore, 6% solar PV, 10% biomass, 11% hydropower and 1% geothermal), followed by 34% fossil fuels (28% gas, 6% coal) and 16% nuclear across Europe [7]. 3. Industry 4.0 trends Despite the undergoing discussion about the merits of the title itself, the transition that we often refer as the 4th industrial revolution is gaining speed and impacting our life in every matter possible. The unprecedented technology breakthroughs in the fields of artificial intelligence (AI), automaton and robotics, the internet of things (IoT), electric and autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage or quantum computing, already are reaching an inflection point in their development as they amplify each other in a ways unthinkable just a few year ago. Over the last few years a number of different studies have looked at impact of Industry 4.0 driven automation. In 2016 report by Citibank [8] find that OECD countries on average 57% of jobs are susceptible to automation, while this number rises to 69% in India and 77% in China. A the same time, by looking at OECD countries and estimating the automatibility of tasks, the OECD working paper [9] found that in short term, on average, 9% of jobs across the 21 OECD countries are automatable. The World Economic Forum report from 2016 [10] estimates automation and technological advancements could lead to a net employment impact of more than 5.1 million jobs lost to disruptive labour market changes between 2015–2020, with a total loss of up to 7.1 million jobs. Finally, the McKinsey Global Institute [11] went a step further in their analysis by looking at disaggregation of occupations into 2000 constituent activities and rating each against human performance in
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18 capabilities. In their findings almost half of work activities globally have the potential to be automated using current technology. While less than 5% of occupations can be automated entirely. Still about 60% have at least 30% of automatable activities and technically automatable activities will impact 1.2 billion workers and $14.6 trillion in wages worldwide. In all, the advances in robotics, artificial intelligence, as well as machine learning will determine a new generation of automation, as machines match and/or outperform human performance in a wide range of work-related activities. Despite the fact that none of this will happen overnight, and the factors like; technical feasibility, cost of developing and deploying solutions, labor market dynamics, overall economic benefits as well as regulatory and social acceptance, will influence the pace and extent of its adoption – the inevitable outcome is that automation and disruptive technologies behind Industry 4.0 transformation will drive the new paradigm shift in the future of jobs [12]. Still, little is written about the underlying effects on supportive sector and industries. While it is certain that Industry 4.0 megatrend will change the broad landscape of technological drivers of the fourth industrial revolution, changes within the supporting sector often are left under-analysed. Among the major one is anticipated increase in power consumption - not only the nature of production or the power mix, but also balance-load, merit order principal as well as the monumental challenge of new grid requirements. The only sector in which we have some detailed estimates is the transportation sector, more precisely the effect of automation and electric vehicles. The EU reference scenario [1] estimates that the activity of the transport sector will shows significant growth. The highest increase takes place during the period 2010 to 2030, while passenger transport activity continues to grow post-2030, maintaining its dominant role throughout the 2050. Further analysis by transportation mode the growth of final energy demand in the transport sector has shown strong correlation with the evolution of transport activity and types. Over the past decade, statistically decoupling between energy consumption and transport activity has been recorded. This is particular apparent in the case of passenger transport activity. The Öko-Institut report [13] which finds that electric vehicles will become important consumers in power systems over the coming decades. The decoupling between energy consumption and activity is projected to continue and intensify in the future. Final energy demand from cars and powered two-wheelers is responsible for more than half (59% in 2010) of total final energy demand in transport (in Million tonnes of oil equivalent). This share is projected to decrease over the medium term and almost stabilize towards 2050 (51% and 49% in 2030 and 2050, respectively). In particular, in inroad passenger transport energy efficiency of vehicles improves by 17% in 2020 and 29% in 2030 relative to 2010, leading to a significant decline in energy demand in passenger road transport by 2050 in tonnes of oil per Million tonnes per kilometer (in toe/Mtkm). Over the coming decades almost all manufacturers will introduce even more fuel efficient vehicle into the market, and the next-gen of electric cars and trucks (starting with a big push in hybrid systems and then to fully electric vehicles). The Öko-Institut Report [13] finds that electric vehicle demand share of total electricity demand will go up to 25% among the EU-28 countries by 2050. As a transport fuel, electricity would become a relevant energy option with roughly 50% (around 450 TWh/a) of the passenger car fuel mix by 2050. In all, electricity will constitutes at minimum 25% of the final energy demand of passenger road transport. Today, the passenger car stock remains heavily dependent on fossil fuels, but with envisaged introduction of wide range of electric vehicles by all major car producers the EU Reference Scenario [1] estimates a share of battery electric vehicles (BEV) will increase from around 15% (2020) to reach almost 25% in 2030. Of course, these estimations differ among institution. For example, the EU Energy Roadmap 2050 [1] highdecarbonisation scenarios envisages massive shift to EV in road transport and energy efficiency gains, final energy demand drop of -38 to -43% in 2050 and EV market penetration of up to 80% of passenger cars by 2050. The World Energy Outlook [14] for European Union estimates final energy demand drop of -19% in 2040 compared to 2013 and small share of electric cars compared to other scenarios (share of electricity in transport energy demand of only 4%). On the other side of the spectrum is European Renewable Energy Council [15] and Greenpeace International targetdriven scenario, presenting a sustainable energy system that achieves the long-term EU CO2 emission reduction goals, which estimates a share of electricity in transport energy demand of 12% in 2030 and 50% in 2050. Finally, European Climate Foundation Roadmap 2050 [16] estimates that all passenger cars electrified in 2050 (80 % BEV and 20 % PHEV), and the electricity consumption from road transport in 2050 will be staggering 740 TWh. By comparison, this is 23% of 2015 total gross electricity production in EU-28. To better understand the implication of above mentioned scenarios we have to note that transportation demand will grow from around 2,800 Giga vehicle-kilometers (Gvkm) today to around 3,160 Gvkm in 2030 and to around 3,480 Gvkm in 2050.
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Finally, we will closely look at two most likely scenarios; the EV-mid scenario which assumes 50% electric car share in passenger car stock in 2050, where 60% of electric passenger cars in 2050 are pure electric vehicles due to the smaller market penetration of electric passenger cars, and the EV-high scenario which assumes 80% of electric driven cars in the passenger car stock in 2050 out of which 80% of electric passenger cars are pure battery electric vehicles and the remaining 20% of electric passenger cars are PHEV. Furthermore, the structure of consumption will not be the only challenge – the overall functioning of electricity market in Europe has to be look with special attention. The merit order principle might be a more of the challenge for majority EU countries. In most energy markets, prices are determined on the basis of the merit order principle, at the intersection between supply and demand. Specifically this means that the energy suppliers offer electricity from their available power plants on the power exchange at a particular price which is usually on the basis of short-term operating costs. These offers are then sorted by price. For example, today cheapest price offers come from nuclear and lignite power plants while gas- and oil-fired power plants produce expensive electricity (based on operating costs at least). Still, as we move toward more prominent role of RES in overall power system and the renewable energies are included in the power mix, following the logic of the merit order principle, renewable power plants are positioned in front of nuclear power and coal-fired power plants because they cause almost no (fuel) costs. As the ratio of electric cars in overall transportation increases, the total power demand in consumption will increases and the electricity will be needed from additional power plants to fulfil demand. In some countries, increased utilization of existing power plants may be able to compensate the demand increase in short term. Depending on the availability of existing (fossil) power plants, they may require some additional generation capacities from RES. At the same time, since the power demand needs to be satisfied at the right time and place, and since electric vehicles constitute a new type of power consumer (with specific load patterns and spatial distributions), if the EV share is more than 10% it would require major adaptation efforts to maintain system stability and adequacy in majority of EU countries. As estimated, total annual generation for electric cars in 2050 amounts 283 TWh for EV-mid scenario and 448 TWh for EV-high scenario, and according to majority of estimation and strategies more than half of this demand should be met by generation from renewable sources (solar, wind, hydro and biomass). The total needed for additional capacity in 2050 is significant. In the EV-mid scenario it amounts to 95 GW and in the EV-high scenario to almost 150 GW. Increases in capacity are the greatest for wind, natural gas and solar power plants. In the high scenario a total of 48 GW in wind, 35 GW in natural gas, and 25 GW in solar capacity are required to satisfy this additional EV-driven demand [13, 17, 19]. In all, the introduction of electric vehicles will inevitably lead to greater interaction between the mobility and the electricity sector. As electric car penetration reaches higher levels, the electricity demand from electric cars will become a relevant factor within the energy system and impacts the operation of power plants, as well as the grid infrastructure. Assuming a relatively fast development of electric cars (EV-high scenario) share of electric vehicles until 2050 and total electricity demand varies between 3% and 25% among the EU-28 countries. As a transport fuel, according to ÖkoInstitut Report [13] and based on EU Reference Scenario 2016 [1], electricity would become a relevant energy option with roughly 50% (around 450 TWh/a) of the passenger car fuel mix by 2050, while for the "average" (tech 2) scenario of rate of technology deployment in Fueling Europe Future [17] proportion of new vehicle sales will be predominantly EV already by 2025/30 and by 2050 almost entirely electric. In order to satisfy this additional electricity demand of 80% penetration, significant additional generation capacity should be required. Up to 150 GW of generation capacities will have to be added to the energy system due to electric cars. These new capacities require significant additional investments in particular for wind and solar power and increase land use for electricity generation as nuclear and coal power plants have negative environmental impacts and they do not fit into a future energy sector. This in turn means; 87 GW wind, 45 GW solar, 24 GW hydro and 13 GW biomass – of new capacities over the coming decades as a result of only electric vehicles introduction. Finally, most of the analyses related to EV impact on transport neglect the fundamental nature of EV – they are information technology driven product. The content and the speed of their development are governed by different set of rules and determinates. All best described in often cited Moore's law; the prediction that have proved accurate for several decades, and today is used in the semiconductor industry as a guide for long-term planning, research targets and development. The studies projecting the influence of EV, even the so-called EV-high estimations, fail in accepting one of the key premises on IT industry – "it will all change in two years", i.e. the dynamics of overall Industry 4.0 technologies is determined by accelerated speed of information technologies driven innovation, and regardless of associated systems ability to maintain and facilitate the paste of development, the change will inevitable disrupts the
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current foundation of industrial competiveness and structure, as well as create demand-driven pressure on governments and society as hole. 4. Power mix and the grid capacity challenge At the same time, it is clear that several key challenges lay ahead. While necessary transformation to a decarbonised and secure power sector is technically feasible at more or less similar overall cost, due to a major shift from operational costs to capital investments, the creation of overall power mix remains at the forefront of discussion and dilemmas within energy strategies for most EU countries. By comparing the levelised cost of electricity (LCOE) of wind power and solar PV with conventional generation technologies, it is clear that these two renewable sources can already produce electricity at the same cost level as new coal and gas plants, but significantly lower than the other zero-carbon technologies like nuclear and CCS. Still, it has to be noted that from "system perspective", costs of integrating variable wind and PV technologies into the power system is still rather high; so concerns do exist. The “integration costs” of wind and solar energy: grid costs, balancing costs and cost effects on conventional power plants – varies tremendously depending on the specific power system and methodologies applied. In all, the electrical system will have to respond more flexibly as the share of wind and PV increases. For example, the wind dies down in tandem with a drop in the generation of solar power. As a result, controllable power plants have to cover a major portion of the demand within a few hours. In a worst case scenario, demand might increase at the very same time – for example, if a large part of the population comes home at sunset and turns on electrical appliances, television sets and lights. In these hours, conventional power plants and imports will have to cover almost the entire load, irrespective of the amount of installed wind and PV capacities – and irrespective of the fact that in the preceding hours wind and PV might covered almost all of power demand. Thus, the future power plant mix will have to contain less baseload capacities and relatively more mid-merit and peak load capacities that quickly adjust their production. Also, according to Agora [18] report the storing electricity remains one of the key pertaining issues. Today, hydro plants constitute the most important storage technology. Only fey EU countries have significant storage capacities. However, for Europe as a whole, the potential for further expanding pumped hydro is rather limited, as plants usually have strong impacts on the environment and often stand in conflict with environmental protection goals or the preferences of local communities. On the other hand, new types of storage technologies, such as batteries, including the ones in electric vehicles, adiabatic compressed air storage, and power to-gas systems are from today’s perspective still expensive. The recent technological advancements, especially, wide-scale deployment of electric vehicles and largescale battery facilities (eg. Tesla, Hornsdale Energy Reserve in Australia) will, most certainly, enhance the flexibility of the power system in the long run. This is followed with the daunting task of transformation and alignment of transmission grid. According to Power Perspectives 2030 [7] estimations the significant new grid capacity is required beyond 2020. Investments in transmission grids, projected from 2020 to 2030 are 50% increase from the planned network in 2020 – nearly doubling of today’s existing capacity. Upgrading the grid infrastructure is, however, the most cost–effective way to keep a power system in transition secure and reliable. Less transmission build-out will lead to less optimal use of RES and additional need for back-up capacity. Anticipating further developments in battery storage technologies and solutions do become cost-effective alternatives; they will play an important role in optimizing system balancing in combination with transmission and backup. And, where possible, coupled with hydro power plans storage can create extensive competitive advantage in load balancing and disproportion in generation capacity of RES and market demand. Even more precise picture of overall changing trend in energy production can be observed by looking at the estimated primary energy supply transformation. The trend in total primary energy supply (PES) is downward till 2030 due to increased energy efficiency reflected on primary energy demand. In parallel, there is a significant shift in primary energy requirements towards renewables along with a decline in the demand for solid fuels. Nevertheless, the shift towards RES will most certainly lead towards their domination in primary energy supply as we approach 2050 – even sooner if EVhigh-scenario for electric vehicles is to be achieved with 25-30% (up to 50%) penetration rates [19]. The primary energy demand as well as supply, will most certainly, change as we move closer to 2020. The Renewable Energy Sources will double their share by 2050 and with natural gas represent half of all energy needs in Europe [1]. All this will have to be accompanied by grid investments which is higher than historical trends. The grid costs increase
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over time due to the augmenting share of RES. Building new and improved transmission grid infrastructure is essential to balance a decarbonised power system cost-effective and to integrate energy markets. Beyond 2020, the lowest cost solution calls for twice as much additional grid capacity as compared to the planned expansion in the current decade [7]. Having all this in mind, the “integration costs” of wind and solar energy, overall grid expansion cost, coupled with balancing costs and cost effects on conventional power plants, will be a major stepping stone in overall RES development. More importantly, it will - to some extent, set the "speed-limit" on the overall Industry 4.0 driven transformation. The daunting task of transformation and alignment of existing transmission grid, coupled with the need to build new grid capacity beyond 2020, is estimated to nearly double today’s capacity just to facilitate today envisaged industrial automation and electric vehicles developments. Futhermore, It's not only the nature of production or the power mix that is in question, but also balance-load, merit order principal as well as monumental challenge of investments in the new grid capacity. 5. Conclusion Looking at energy trend and combining them with Industry 4.0 development, the need for stable power supply will be and daunting task. Despite all the advancements in technologies behind fourth industrial revolution, we will ultimately be limited by the necessity for appropriate power mix as well as misaligned, inadequate and aging power grid. As we look at energy production mix globally, prevailing attitude is that we have to change how we see the future of energy production and our overall approach in aligning the energy sector to Renewable Energy Sources. In Europe the issue of Renewable Energy Sources receives additional urgency since more than 60 percent of Europe’s power generating capacities will reach the end of its lifetime in the coming two decades. At the same time, well before these deadlines, power utility companies will have to retrofit the old plants, and due to mounting pressure from general public, replace most of them with low or zero-carbon generation capacities. In addition, all new electricity production facilities will have to be predominantly from variable Renewable Energy Sources (wind, solar, etc.). It is highly unlikely that any new energy capacities in EU will run on coal or oil as primary source of energy. As it stands, the Europe is facing tremendous challenges in respect to electrical energy generation as well as installation of new production facilities, and will have to rethink its approach to both the structure of power production (renewable vs. traditional) but also, its overall approach to major emission generators – like passenger transportation vehicles. As we have seen from assessment of overall EU energy market the wind and solar PV will be the two dominating renewable energy technologies in the upcoming decades. By far, majority of energy related investments will go into Renewable Energy Sources and required electricity grid adjustments/improvements. Wind and solar share in overall operating power capacity will increase from less than 15% today to over 50% by 2050, and the shift towards RES will most certainly lead towards their domination in primary energy supply as we approach 2050. The primary energy demand as well as supply will most certainly change as we move closer to 2020 with natural gas meeting half of all energy needs in Europe. In the "short run" – and by 2030 is a "short run" for energy sector, the EU targets to generate at least 27 percent of its total energy needs from RES. For illustration, since 2000, 58 % of new electricity production facilities ware Renewable Energy Sources; predominantly wind and solar. The future power mix in EU will have to contain less baseload capacities and relatively more mid-merit and peak load capacities. Towards the end of 2030 the power production mix will be 50% renewable energy sources (12% wind on-shore, 10% wind off-shore, 6% solar PV, 10% biomass, 11% hydropower and 1% geothermal), followed by 34% fossil fuels (28% gas, 6% coal) and 16% nuclear across Europe. By 2050 this will change even more dramatically, and all types of Renewable Energy Sources will provide more than half of all energy needs in Europe. At the same time, and only assessing the challenges of energy demand in transportation sector, with specific focus on trends and the impact of electric vehicles, additional attention is required. Regardless of their development dynamics or penetration rates, the overall consensus is that the EV will be the mode of transport of Europe in coming decades. Despite different penetration scenarios, or overall share in all types of transportation needs, the overall impact of EV on energy sector will be tremendous. The impact of electric vehicles (EV) will force the entire energy production sector in to historic paradigm shift, and for some, into unique investments opportunities in long-term energy production facilitating disbalance in ever-growing electricity needs. The European Climate Foundation estimates that by 2050 most of passenger cars will be electrified creating subsequent electricity consumption from road transport at staggering 740 TWh which represents 23% of the total gross electricity production as compared to EU-28 2015 production output. In all, electricity will constitutes at minimum 25% of the final energy demand of passenger road transport by 2050. For
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example, total annual generation of newly generated electrical energy for electric cars only in 2050 amounts 283 TWh for EV-mid scenario and 448 TWh for EV-high scenario. More than half of this demand should be met from renewable sources like solar, wind, hydro and biomass. Coupled with the Industry 4.0 technologies, especially the increasing role artificial intelligence and automation/robotics in industrial production, as well as Internet of Things in our everyday life, this tectonic shift will force the overall sector in unprecedented realignment unlike anything that we have seen. It's not only the nature of electricity production or the power mix that is in question, but also balance-load, merit order principal as well as monumental challenge of grid requirement; all will change the overall picture of energy sector for decades to come. In all, and by all accounts, the Europe is facing an unprecedented challenge in both the structure of energy portfolio and its necessity for its re-profiling. The unstoppable technology development, e.g. electric vehicles as well as other Industry 4.0 driven disruptive technologies, will creates additional pressure as well as incentives for new approach in suppling energy. Our indispensable need for electricity will grow exponentially; especially after 2025. But the challenge of producing and facilitating transport of electricity at the right time will remain the key challenge in the coming decades. To some extent, our ability to produce and distribute electricity from RES will determine the overall speed and intensity of Industry 4.0 impact and development outreach.
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