Tuesday, August 01, 2006

WBCSD Electricity Report Sees The Light

In 2000, eleven electric utilities, most of which were WBCSD members, initiated a project to explore the sustainability issues facing their sector. The group published the results of its research in May 2002, in a report called Sustainability in the Electricity Utility Sector(1.0 Mb, pdf). The report was officially launched during a side event at the World Summit on Sustainable Development the following August.

The second phase of the project, led by Eskom and Ontario Power, was launched at the beginning of 2005 to take a closer look at the challenges identified in the first phase and set up a project plan through 2006 in order to:
  • Improve the understanding of the fundamental tradeoffs that decision-makers and society at large will have to face;
  • Develop common communication tools for dialogue with stakeholders and policy-makers, defining the role of utilities and that of other players;
  • Identify approaches to integrating sustainable development into long-term decision making);

The first report of second phase was published in May, this year. The 11 member companies in the project are determined to illuminate a more sustainable pathway for the rest of their industry to follow. (BC Hydro (Canada), British Energy (United Kingdom), EPCOR (Canada), Eskom (South Africa), Exelon Corporation (United States), Kansai Electric Power Company (Japan), Ontario Power Generation (Canada), Powergen (United Kingdom), Tokyo Electric Power Company (Japan), TransAlta Corporation (Canada), Western Power Corporation (Australia).

Electricity is more than energy. It is a prime mover for productivity, wages and jobs throughout the world, and the lifeblood of what is now being referred to as the new global economy.

Yet, like many other sectors of industry, the electric utilities sector is under pressure to become more efficient, reduce its costs and increase its revenues. This makes the new report, Sustainability in the electricity utility sector (2.2 Mb, pdf), published in May by the WBCSD’s Sustainable Electric Utilities project, particularly timely.

“Electric utilities are having to get to grips with new priorities while learning to compete in deregulated, or soon-to-be-deregulated, markets,” says the WBCSD’s Eric Dérobert, who is managing the project.

As well as deregulation, the trend toward globalization is also changing the way in which electric utilities function. Rather than serving a single country or area, many companies now face the new challenge of serving customers internationally, in both developed and developing areas of the world.

Laying the groundwork

The report, which concludes the first phase of the project, explores the sustainable development issues and challenges within the electricity industry. It provides an assessment of the industry’s current practices and identifies strategies that will help the sector progress toward its sustainability objectives.

“The sharing of the resources required to produce this report has generated a worldwide network of expertise on sustainable development in the electricity sector,” says Dérobert. “It has also led to the production of an all-important compendium of best practices among the 11 members of the project.” He adds that in order to ensure the project remained free from any taint of special pleading, third-party reviewers have validated its content.

Adapting to change

Electric utilities companies have already started to adapt to changing times. One way that they are making their practices more sustainable is by cutting their own internal electricity consumption. This increased energy efficiency saves natural resources and lowers costs to customers.

As well as taking advantage of new, energy-efficient technologies and appliances themselves, electric utility companies are also encouraging efficient energy use by their customers, so ensuring that sustainability is being practiced throughout the energy cycle.

Another recent development for the sector is its growing interaction with non-business stakeholders, for example governments, NGOs, local communities and, of course, customers. Dérobert says electric utility companies are working harder to meet the expectations of these stakeholders. “Given the 10 to 15-year timeframe for constructing new generating plants, each of which has a life span of 40 to 100 years, this is not an easy task,” he adds.

What does this mean for the future?

The report examines the major, foreseeable challenges confronting electric utilities as they progress toward sustainable development. It says that one of the most pressing goals for the industry is to reduce the environmental impact of its current operations. Because it is not economically feasible to start from scratch with brand new technologies, companies need to work on minimizing the adverse effects of their existing technologies.

The report also says that the sector needs to prepare for the future by continuing to invest in renewable energy options and in technologies that will help it make the step-change needed to move it further down the sustainable path. It highlights the need for the sector to start developing infrastructure in areas where there is no easy access to energy.

No less importantly, the report argues that electric utility companies need to focus more than they do at present on corporate social responsibility issues and consider the views of all stakeholders.

Moving ahead

“These goals will not be easy to achieve,” Dérobert says. “There are several challenges facing the industry now. The liberalization of electricity markets will force companies to refocus their approach to issues and asset management, human resources and long-term planning.”

They will also need a great deal of time and money to replace the traditional energy-generating infrastructure with one more suited to sustainable power sources, as well as to provide electricity infrastructure and services to markets where it is currently unavailable. At the same time, changing demands and shifting energy markets will mean companies have to think and act quickly.

These challenges are not to be taken lightly, says the report. There is a pressing requirement to determine how electricity needs can be met in a sustainable manner because energy is central to development. In particular, electrification is a major factor in bringing developing countries onto a sustainable development path.

“The key to meeting the future’s needs is to act now by engaging the right stakeholders and implementing sustainable policies all around the world,” the report concludes.

Source: WBSCD

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