Three minute insights:
Investment in renewables, hydrogen and energy storage has surged. Renewable energy is outcompeting fossil fuels on price and is largely beyond the influence of geopolitics and resulting economic turbulence.
Ian Clarke, global lead for energy
What were the hot issues in 2022?
In 2022 energy accessibility, security and affordability became hot issues worldwide. European governments have responded by pushing back the retirement dates for existing coal, gas and nuclear power stations; coal mining has increased and there has been a drive to find new sources of oil and gas. Russian oil and gas are being sold at historic low prices to other countries, enabling increased consumption.
However, investment in renewable electricity generation, hydrogen projects and energy storage has also surged, globally. Renewable energy is now outcompeting fossil fuels on price almost everywhere and has the attraction of being largely beyond the influence of geopolitics and resulting global economic turbulence – wind farms, solar arrays and hydropower are all locally sited, rather than being shipped between or piped across continents and national borders, although supply chains have been affected. Combined with the need to halt carbon emissions and stabilise our climate, these factors mean coal, oil and gas are set to be transitioned out of the energy mix in the medium to long term. The challenge is to make that transition smoothly, to maintain value for energy companies and their investors, and provide energy security and affordability for society – alongside the health and environmental benefits of clean energy.
Why are these issues keeping us awake at night?
The current dash for supply diversification and security, along with the desire to extract maximum return on investment from existing coal, gas and oil fields and power stations will encourage many owners and operators to keep current assets in operation longer than planned. But if they leave building green energy infrastructure too late, there is a risk that investors will withhold or withdraw capital, leaving them with stranded assets – and potentially turning some energy companies into stranded businesses. Recognising this risk, the US government has committed nearly $100bn worth of direct and indirect support for a national clean energy transformation, under the Inflation Reduction Act.
In 2022 we advised the Science-Based Targets Initiative, an international body that audits organisations’ progress towards net-zero, on preparing guidelines for the oil and gas industry. The resulting guidelines will help companies to plan the rapid emissions reductions required, while sustaining fair revenues and profits.
We continue to work with energy companies on projects to pilot and scale-up green technologies, including renewable electricity-to-hydrogen for industry and transport, production of green fuels, and pumped hydro energy storage – you can read about some of them in the projects section of this review.
How are client groups differently affected?
All consumers are grappling with record-high energy costs. Large industrial users are looking to cut their bills by reducing energy-intensive activities or implementing efficiencies. Some are investing in their own renewable electricity generating capacity, with on-site wind or solar photovoltaic installations.
In 2022 we formed a partnership with Envision Digital, a company specialising in instrumentation, data acquisition and data processing, to help clients adopt integrated solutions for net zero infrastructure transformations. With our combined engineering and digital knowhow we identify options for investment in efficiency, electricity generation and storage and how they can be achieved.
We invested in Piclo, a platform that uses digital technology to link renewable electricity generators, network operators and energy providers – enabling the grid to perform more efficiently, with greater resilience, and at lower cost.
Renewables continue to present generators and network operators with the challenges of managing intermittency in response to changing weather, and tailoring output to fluctuating user demand. Where topography makes it practical, pumped hydropower storage provides substantially greater capacity and responsiveness than any current alternative green technology. We are helping clients progress pumped hydropower storage in North America, Europe, New Zealand and Australia – where the Kidston project is now under construction.
How can we as a business help?
We are applying energy engineering skills to enable import and export of energy from new sources and via new routes, to mitigate security, price and climate pressures. In the USA we are now applying our pipelines and facilities skills to hydrogen transmission and carbon capture and storage. Our renewables teams unlock investment for new projects and refinancing of existing ones. We design new sources of energy generation and provide the technical support to owners and investors for performance optimisation, as well as upgrades, as generating technologies advance. We’re also working to convert renewable electricity into green fuels.
Our suite of Moata Smart Energy ‘apps’, launched in 2021/22 is enabling clients to achieve better return on investment. The solutions enable renewable energy investors, owners and operators to assess how different parts of their portfolios are performing in real time, and where to focus investment in repair, maintenance or modernisation. They also improve owners’ ability to forecast production and sell electricity for the best price.
Increasingly it is clear that energy sector transformation relies on significantly changing use too. We’re working across sectors – in buildings, transport and water, for example – to advance efficiencies that translate into reduced overall demand for energy. With all our services, digital solutions play a major role in identifying the opportunities for efficiency and informing decisions that unlock it.
Explore our annual review