Partha S. Ghosh

1. The Frontiers of New Energy Paradigm:Cultivating the Courage to Create The New Dynamics…Rest of the Story…? Partha S. Ghosh

2. Contents • Laws of Large Numbers & Network Effect? Slow Pace of Large scale World wide Energy disruption? • More & better of the Same or New Game? Market Mechanisms vs Cross Border Strategic Diplomacy? • A Call for a Renaissance: Time to rethink, repurpose and reform?

3. Multiple Powerful Forces at Work? Net, a Tornado is in the making? Changing Geopolitics NOCs versus IOCs New Technologies Ecology Concerns Increasing Capital Intensity Equity Volatile Prices Wall Street Expectations Sudden events: Terrorism, Natural Disasters Interruption free Hydrocarbon infrastructure New requirements of Digitization Mega Infrastructure/P&L large Stakes Reliable, Affordable and eternal source

4. Energy driven Power Plays Heavy spending on Infrastructure and/or weak manufacturing base Very Vulnerable if resource constraint Benefit form strong manufacturing demand Four Types of Nations in the Game? Who will win? Two Critical Vectors Positive Net Energy Balance Negative Positive Negative Balance of Trade

5. India is most vulnerable ? Percentage Trade Balance/GDP vs. Net Energy Balance of Selected Countries (2003)1,2,3 Net Export of Energy (US$ B) Saudi Arabia Algeria Venezuela Canada Indonesia Nigeria % Surplus/GDP % Deficit/GDP Malaysia Brazil China India France Italy Korea Germany Japan US - 200 Net Import of Energy (US$ B) Boston Analytics Research 1. International Energy Agency (http://www.iea.org) 2. International trade statistics, 2004, world trade organization 3. Energy Information Administration (http://www.eia.doe.gov)

6. Contents • Laws of Large Numbers & Network Effect? Slow Pace of Global Energy disruption? • More & better of the Same or New Game? Market Mechanisms vs Cross Border Strategic Diplomacy • The Challenge: Time to rethink, repurpose and reform?

7. India & US will require similar strategic moves beyond Nuclear Energy Coop Positive Create New Energy Game Investment in Next generation Knowledge Intensive Energy Start-ups? Net Energy Balance Manufacturing Competitiveness Negative Positive Negative Balance of Trade

8. 1947 2050 2005 Era of Extraction & Automation • Overcoming barriers • New Relationship of Space & Time • Supply to Fuel Unidirectional Demand Era of Multidimensional Energy Renaissance • Multi track models of social Experiments ? • New Paradigm of Knowledge Creation & Recycling ? 3. Hybrid Infrastructure ? Mega Challenge = Managing a Mega Transition to avoid Mega disruption • Concentrated Economic Growth • Ecological disequilibrium • Complex Politics of Supply Chain

9. Contents • Mega World wide Energy disruption? Laws of Large Numbers & Network Effect • More & better of the Same or New Game? Market Mechanisms vs Cross Border Strategic Diplomacy • The Challenge (7 Imperatives) : Time to Rethink, Repurpose and Reform?

10. Energy Equity Ecology Imperative 1 : Holistic Approach? PROBLEMS  OPPORTUNITIES Holistic Approach Renewable and Clean Energy Source Energy ,Food and Health for All Sustainable Economic Developed

11. Imperative 2 : Equal amount of commitment on Supply and Demand side Supply-Demand Dynamics of Energy Balance • Demand • Clean Energy • Six Sigma Power • Efficiency of Consumption • Education to shape habits • Design of living and work spaces • Supply • New Materials • Precision Controls • Nanotechnology / Catalysts • Miniaturization • Convergence / Broadband infrastructure

12. Imperative 3: Aggressive use of New technologies Energy Industry Reconfiguration Information Technology Nano Technologies 10011000101110 Upstream Downstream Opto Technologies Biotechnology

13. Imperative 4: Equipment efficiency? Equipment Efficiency vs. Equipment (2004)1,2,3,4,5 Thermodynamic Efficiency=100% 20% improvement 35% improvement Equipment Efficiency 10% improvement Equipment Boston Analytics Research

14. The proposed increase in efficiency could have saved ~3.4 B barrel crude oil of energy in 2004… Energy Consumption vs. Equipment(Million Barrel Crude Oil) (2004)1,2 Existing Energy Consumption by key applications Energy Consumption (Million Barrel Crude Oil) Energy Consumption with improved efficiency of key applications Equipment Note : Conversion factor used: 1 barrel crude oil = 5.8 million Btu Boston Analytics Research 1. Energy Information Administration (http://www.eia.doe.gov) 2. http://en.wikipedia.org/wiki/Energy_conservation

15. India could reduce its energy consumption by as much as 45.4% in the year 2025 = 13.3 QB Btu Energy Demand* in India in Quadrillion Btu (1980 to 2025)1,2 Savings of 21.5% @ energy intensity of US over the years 6.3 13.3 Energy Demand (Quadrillion Btu ) 7.0 Energy Saving by 45.4% India’s projected energy demand1,2 @ 70% of energy intensity of US over the years Year Note : Energy Demand* = (Population)*(Energy Intensity)*(GDP per Capita) Boston Analytics Research 1. Energy Information Administration (http://www.eia.doe.gov) 2.“World Energy and Economic Outlook”, Energy Information Administration/ International Energy Outlook 2005

16. Reduction in energy intensity could reduce world energy demand by 14% in 2025 World Energy Demand in Quadrillion Btu (2025)1 :If Energy Intensity is Reduced in Selected Regions 10.3 645.0 38.2 15.2 26.5 554.8 Quadrillion Btu Reduction in Western Europe Reduction in India Reduction in US Reduction in China Projected Energy Demand Projected Energy Demand after Reduction • Assumptions: • Energy intensity is reduced by 35% for India and China • Energy intensity is reduced by 20% for Western Europe (WE) and US Boston Analytics Research 1. Energy Information Administration (http://www.eia.doe.gov) 2.“World Energy and Economic Outlook”, Energy Information Administration/ International Energy Outlook 2005

17. BioEnergy PV Array Wind Farm Stirling Engines Transmission and Rooftop PVs Distribution Fuel Cells Microturbines Fuel Cells Fuel Cells Reciprocating engines Commercial Residential Microturbines Reciprocating engines Industrial Imperative 4 : Large Scale Engineering systems thinking….Vision of NextGen Distributed Power Infrastructure • The Virtual Power Plant • Aggregates the output of thousands of micropower technologies • Peak shaving becomes power trading on the wholesale market • Coordination and control through a new communications infrastructure

18. Engineering Systems Advanced Solid Modeling Capability • Engineering Tools Include Autocad, Solidworks, Thermal Analysis System, Fortran, C++

19. Imperative 5 : New Accounting for Depletion and Ecology Comparison of Average Electricity Generation Cost* ($cents/KWh)1,2,3 Capital Cost* ($/KW)1,2,3 5,544 4,053 3,390 910 1,363 Different methods of generating electricity from coal 1,842 1,345 1,511 2,118 Note : *These are only indicative figures. Actually, electricity generation cost varies across different territories as per the environmental and technological scenario. Boston Analytics Research 1. “The Cost of Generating Electricity”, Royal Academy of Engineering, March 2004 (213.130.42.236/wna_pdfs/rae-summary.pdf) 2. “Powering the Nation”, Parsons Brinckerhoff Ltd, March 2006 (http://www.pbpower.net/inprint/pbpubs/powerthenation/powerthenation.htm) 3. “Solar Energy in SGM, Renewable Energy Modeling Series”, Allen Fawcett, December 2004 (http://www.epa.gov/cleanrgy/pdf/fawcett-dec6.pdf)

20. Electricity generation dynamics Comparison of Average Electricity Generation Cost ($cents/KWh)1 Capital Cost ($/KW)2,3,4,5,6,7 1,000 3.7 At US $34 per barrel 3,500 4.9 1,900 6.1 At US $100 per barrel 910 6.2 18.4 12.2 2,500 7.3 7.9 5,300 51.9 15,000

21. Imperative 6: Not Either Or, Unification A D H2 H2 Electrolizer Reformer CH4 O2 B E H2 Methanol Sun’sRays Electrolizer Biomass Direct Methanol Fuel Cell O2 Photovoltaic Cells Ethanol C F H2 Cylinder Metal Hydride H2 O2 Cylinder Nuclear Specialized Applications H2 Tanker / Pipeline

22. Imperative 7 : Collaborative Problem Solving & Synthetic Approach Competing Technologies and Barriers to Commercialization Uncertain Market Opportunities DMFC PEMFC SOFC Automotive Oil & Gas Utility Consumer Electronics Specialty Chemical Plastics Raw Material Mining Nanotechnology “Pure Play” Fuel Cell Portable Devices Size Cost Military Applications Heat MCFC PAFC Transportation Reliability Efficiency Stationary Power Fuel Storage Fuel Type

23. Shape of things to come… 100% Solids Hydrogen Wood Coal Gases 75% Increasingly sustainable economic growth less capital-intensive technologies Non-sustainable economic growth capital-intensive technologies 50% Natural Gas 25% Petroleum oil Oil and natural gas liquids Liquids Whale oil Natural gas Town gas 0% 1850 1000 1050 2000 2050 2050 2100 2150 …beyond carbon?

24. Risk Management Capacity Will Need to Be Fundamentally Reviewed Business System (Simplified) Discover Deploy Delivery Degree of Uncertainty With increasing focus on discovery of new reserves With increasing global reach Globalization of Capacity Current/Past Business System Components

25. Leadership Capacity ? Across Nations & Across the Lines of Enquiry Complex Multiple Views /Objectives Debates Decision Making Building Leadership Capacity to deal with more complex decisions and risk levels Coherent /Homogenous Team Simple Low High Risk Level

26. A Reminder: Navigating through Paradigm shift = Harnessing the Energy of a Tornado Economic Impact Paradigm Shift “Conservation driven Growth Extraction & Automation Strategic Window Resource Commitment

27. The Journey forward . . . Toward a New Integrated Vision for Intelligent Holistic Energy Plays

28. Three layers of Energy Development Optimize the Base • Develop cooperative negotiation power? • Redefine and carve-out niche roles to build global assets • Optimize peoples infrastructure without loosing low energy intensive habits Optimize the Base Grow & Extend the Base • Grow existing paradigms in conservation and emission control mode Grow & Extend the Base Increasing Risk Diversify Beyond the Base Diversify Beyond the Base • Leverage existing capabilities and strategic assets to diversify into related businesses e.g Multi-channel energy network

29. .. To Rekindle the Sprit of Enquiry High “The Spirit of Enquiry?” “Renewability” intensity “Reconfigure” Socialization processes Low Low High Conservation intensity