Enabling the energy transition Why cable technologies are essential for more efficient and sustainable power grids.
A new energy economy is emerging 3 It’s time to act now 4 Scenario - Key challenges and opportunities 5 The role of power grids in enabling the energy transition 7 Prysmian as enabler of the energy transition 10 TABLE OF CONTENTS
Prysmian Group | Energy transition - White paper 2021 3 | Climate change is the core global challenge that human societies are presently facing. Deep decarbonization must be achieved to tackle this challenge. The collective response has been a call for the expansion and integration of renewables. This white paper illustrates the energy transition mega trends, explaining how efficient, smart and green power grids are essential to succeed in this process, and describing how Prysmian Group can be a game changer in this scenario. In fact, the transition towards renewable energy is very much linked to the capability to transmit and dispatch energy from one place to another, from where clean energy is produced, as for example the North Sea, to where it is consumed, as the urban centers in Central Europe. The development of more reliable and capable grid infrastructures for power transmission and distribution is key for the integration of renewables. Prysmian is fully committed to do its part in this collective engagement to save the climate. With almost 140 years of experience, sales of over €10 billion, about 28,000 employees in 50 countries and 104 plants, we are world leaders in the energy and telecom cable systems industry. We operate in the business of underground and submarine cables and systems for power transmission and distribution, of special cables for applications in many different industries and of medium and low voltage cables for the construction and infrastructure sectors. For the telecom industry, we manufacture cables and accessories for voice, video and data transmission, offering a comprehensive range of optical fibres, optical and copper cables and connectivity systems. As a company, we can play a crucial role in the global energy transition. A new energy economy is emerging
Prysmian Group | Energy transition - White paper 2021 4 | It’s time to act now The challenge Slowing global warming is urgent because of its devastating impact on both nature and human beings. That’s why 196 countries joined forces in 2015 with a pledge to slow global warming by cutting emissions and other steps by signing the Paris Agreement, the world’s first comprehensive climate change agreement. The goal is to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C. The goals These goals can andmust bemet through the energy transition, that is already taking place, mainly in the power sector, where renewable energy now accounts for 26%of electricity generation worldwide and is rapidly increasing. Over the past decade, it has becomemore economical to invest in newwind and solar power sources than building new fossil fuel power plants. Yet, the necessary condition for a complete transition to renewables is a strong and interconnected grid. The measures This important journey, of which Prysmian will be part in the next decades, will be successful only if governments will give priority to project financing schemes for renewable energy, as the European Union is already doing. The outlook is very positive, foreseeing a 3 times bigger market in the next 5 years if compared to the past 5 years, mainly driven by the spectacular growth rate of wind power capacity, the increase of underground transmission and distribution within each country border, and the growing interconnections leading to grid optimization and energy transportation among and beyond European borders. Prysmian Cables and their related installation and maintenance are in fact a crucial part of all the main projects supporting the energy transition, giving Prysmian a unique positioning to be among the key enablers of a decarbonized future energy system.
Prysmian Group | Energy transition - White paper 2021 5 | Scenario - Key challenges and opportunities The race tomeet ambitious energy transition goals Never in history has an energy transition been attempted so quickly and under such dramatic conditions. What is an “energy transition”? The International Renewable Energy Agency, IRENA, defines it as “a pathway toward transformation of the global energy sector from fossil-based to zero-carbon by the second half of this century”. Throughout history, societies have gradually transitioned away fromone energy source – say, fromwood to coal. Now in the space of just a few decades, countries across the world are working to replace fossil fuels with zero-carbon energy from clean sources like wind, solar and hydro to halt an unprecedented increase in temperature that major international scientific bodies have linked to carbon emissions from fossil fuels. Why is the energy transition important? In today’s changing landscape for the electricity production, players attention is focused on environmental conservation and low carbon economy pushing to the development of many renewable projects worldwide and increasing reliance on renewable energy sources, such as hydro, wind (offshore and onshore), solar (photovoltaic and concentrated solar power), biomass, geothermal and tidal. Slowing global warming is urgent because of its devastating impact on both nature and human beings. The impacts on nature are already visible and include rising sea levels, and extreme weather events like floods, droughts and brushfires. For human beings, the health consequences of higher temperatures in the future could be severe, and issues of food security and migration could have dramatic political consequences and even lead to civil unrest. The Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change, warns that global warming from pre-industrial levels must not exceed 1.5°C in order to avoid irreparable damage to the planet. That’s why 196 countries joined forces in 2015 with a pledge to slow global warming by cutting emissions and other steps by signing the Paris Agreement, the world’s first comprehensive climate change agreement. The goal is to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C. These goals cannot bemet without achieving the energy transition. According to the IPCC, 42% of C02 emissions come fromelectricity and heat production. A further 2%come fromagriculture, forestry and other land use. Industry accounts for 19%and transportation 25%. Additionally, energy security is a parallel topic, as countries fromEU and Asia are heavily dependent on imports and continuously threatened by the risk of disruptions in supply linked to geopolitical tensions, weather events, accidents, terrorist activities.
Prysmian Group | Energy transition - White paper 2021 6 | 0 20 40 60 80 100 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Electricity and heat producers Other energy industries Industry Transport Residential Commercial and public services Agriculture Fishing Final consumpation not elsewhere specified Electricity and heat producers Other energy industries Industry Transport Residential IEA. All rights reserved. Source: WindEurope based on European Commission Impact Assessment, Getting fit for 55 and set for 2050 - Electrifying Europe with wind Energy (2021) CO2 emissions by sector, World 1990-2019 Economics of the energy transition The post pandemic recovery is a good example of such disruptions. Soaring natural gas prices have roiled EU, leading to price spikes in the cost of electricity that are raising utility bills for consumers, putting pressure on energy suppliers and disrupting industries. Russia has limited pipeline exports to Europe because of high domestic demand, output disruptions and high liquified natural gas prices related to Asia’s economic recovery. Russia is also potentially limiting natural gas delivery into Europe to support its case for starting flows via Nord Stream 2. European gas reserves are low and the need to replenish these reserves means higher European LNG and gas imports during the post pandemic recovery, fostering competition between Europe and Asia for LNG supplies and thus a further increase in gas prices. A tightening of the European gas market will lead to growing volatility in energy bills, unless governments commit more clearly to renewable energy, according to the analysis of Bruegel, a European think tank. In fact, economics are becoming favorable tomany renewable technologies, opening the opportunity to reshape the energymixwithout additional social cost, even exploiting benefits frompostpandemic investments. Tomake an example, the global levelized cost of energy (LCOE) for offshore wind farms is following a strong decreasing trend, demonstrating its potential. Some specificmarkets already have a competitive LCOE: inGermany and theNetherlands there are already “zero subsidy” auctions; in France, reduced subsidy auctions; in othermarkets, such as the UK, it is already one of themost competitive technologies. The level of competitiveness is expected to increase in other worldmarkets by 2030, ensuring a lower global LCOE than fossil fuel technologies. The energy transition is already underway The energy transition is currently taking place mainly in the power sector, where renewable energy nowaccounts for 26%of electricity generation worldwide. The cost of new solar andwind projects is undercutting the cost of existing coal-fired power plants, several studies have found. But the transition in transportationwill likely be gradual and occur only in phases. %
Prysmian Group | Energy transition - White paper 2021 7 | The role of power grids in enabling the energy transition A net-zero energy system Decarbonising the energy systemmeans usingmore electricity tomeet our energy needs – including for transportation and the heating and cooling of buildings. Demand for electricity will increase as we switch away fromusing fossil fuels. For example, electrifying the transport sector alone –which nowmostly relies on oil – could double global electricity demand, according to the outlook of the International Energy Agency. Similar projections hold for electrifying heat in our buildings. Fit for 55 The EU has committed to cut greenhouse gas emission by 55%compared to 1990 by 2030, a key milestone in reaching climate neutrality in 2050. The European Commission’s analysis shows that renewables-based electrification, complemented with the indirect electrification of hard-to-abate sectors, is themost cost-effective and energy efficient way to cut energy sector emissions to net-zero by 2050. The European Commission’s scenarios show that more than three quarters of the final energy demand will be electrified. Electricity will directly cover 57%of final energy uses while providing another 18% indirectly through hydrogen and its derivatives. According to the Commission’s scenarios, this will require the electricity system to grow to 6,800 TWh from less than 3,000 TWh today. And it will require wind to be 50% of the EU’s electricity mix, with renewables representing 81%. Fortunately, over the past decade, it has become more economical to invest in newwind and solar power sources than building new, or operating existing, fossil fuel power plants. Yet, the necessary condition for a complete transition to renewables is a strong and interconnected grid. of final energy Electricity will directly cover 57% THE EUROPEAN COMMISSION’S SCENARIOS indirectly through hydrogen and its derivatives 18% H 2 of the EU’s electricitymix wind to be 50% renewables 81%
Prysmian Group | Energy transition - White paper 2021 8 | 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Annual electricity generation in TWh Wind energy = 50% Coal Gas Oil Fossil fuel with CCS Nuclear Wind onshore Wind offshore Solar Bioenergy with CCS Other RES 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Power grids as enablers for the transition Networks of millions of small and large power stations already provide electricity to our homes, workplaces and industries. However, electrifying building heating systems, the transport sector and industrial processes to a greater extent will require a considerable expansion of existing grids. TheCommissionenvisages 1000GWonshorewindby 2050 (up from165GWtoday) and 300GWoffshore wind (up from15GWtoday). It sees onshore wind generating 2,300 TWh a year by 2050 and offshore wind 1,200 TWh. Strong connections between renewablepower supply stations, especially wind farms, and areas of highenergy demand are necessary to account for weather-related variations inenergy supply. By integratingdifferent energy sourceswithdiversegeographical andweather zones, thegrid can smoothout variable electricity generation. In thisway, awell-designedpower grid network is a cost-effectiveway toharness energy surpluses in very sunny andwindy locations and fill ingaps in cloudy areas or thosewithoutwind. Source: WindEurope based on European Commission Impact Assessment, Getting fit for 55 and set for 2050 - Electrifying Europe with wind Energy(2021) Europe’s electricity mix to 2050 Power grids as agents of social transformation It is challenging, for instance, to generate electricity for an entire urban area within a city’s limits, so power grids will also need to be able to transport electricity from areas with good solar and wind resources to those with high demand for energy, like cities and industrial areas, often very far away from the resources. As renewable energy is cheaper to generate far from residential and manufacturing regions, a strong grid that can transport electricity long distances is essential. Grids also have the potential to transform socioeconomic environments: for example, a well-designed network can create jobs and income in rural areas, that are rich in resources. Communities that generate their own renewable energy may want to sell surplus power to areas where there is a high energy demand.
Prysmian Group | Energy transition - White paper 2021 9 | Backbone of a net-zero energy system The power grid will be the backbone of an energy system dominated by renewables, especially by wind. A net-zero energy system, largely running on renewable electricity, can remain reliable and resilient, but Europe’s electricity grid needs to be expanded and reinforced – onshore and offshore – as well as optimised. Europe currently invests €40bn a year on power grids. Annual investments across all voltage levels need to double over the next thirty years to €80bn a year, according to IRENA. Permitting and approval of transmission infrastructure projects, that are regularly delayed today, must be streamlined, applying among others a sea-basin approach to offshore wind grid planning. Towards a fossil-free energy infrastructure The shift towards a fossil-free energy infrastructure in Europe has already started. Eleven EU countries have recently signed a declaration calling on the EU to stop funding fossil fuels under its trans-European energy infrastructure regulation (TEN-E), which is currently under revision. The signatories – Austria, Belgium, Germany, Denmark, Estonia, Ireland, Luxembourg, Latvia, the Netherlands, Spain and Sweden – argue that the revision of the TEN-E regulation should exclude funding fossil fuel infrastructure that would lock Europe into carbon-emitting energy sources, which means that just power grids, not gas pipelines, would qualify for funding. Despite this declaration, EU energy ministers agreed to prolong EU support for some selected cross-border natural gas projects, but the revision of the TEN-E regulation updates the categories of infrastructure that are “eligible for support”, adding a “new focus” on “offshore electricity grids, hydrogen infrastructure and smart grids”. Ministers also said that until 2028, support could go to converting gas pipelines to carry hydrogen, and those projects could continue to carry natural gas blended with hydrogen until 2030. They must now negotiate the new rules with the European Parliament, who could improve the text with more emphasis on decarbonisation. A well-designed network can create jobs and income in rural areas, that are rich in resources. Communities that generate their own renewable energy may want to sell surplus power to areas where there is a high energy demand.
Prysmian Group | Energy transition - White paper 2021 10 | Prysmian as enabler of the energy transition Offshore Wind Energy Wind is themost widely used source of renewable energy in this phase of the energy transition, and that means connecting offshore wind farms, where it is produced, to urban centers, where it is consumed. To transport this clean energy, we need a few different systems. One type of system connects the wind towers themselves, and between themselves, these are called Inter-array cables. This requires cables that are tailored for specific solutions and at the same time they still need to be easily available, affordable, and resilient. We are using different designs and technologies, and we also benefit from Ethylene Propylene Rubber (EPR) insulation technology, that we have developed since many years. We are the only European cable maker able to master this technology. Wind Turbines are growing in size with greater power generation and this is also requiring higher voltages for the next generation of Inter-array cables on which Prysmian is already working for voltages up to 132 kV. Then there is the connection fromwind farms to shore, that utilize the so called Export cables. This can bemade using AC, or at times DC, when thewind farm is very far fromthe coast. InDC we are the leader of themarket, and the leader of the technology.We are the only ones that can transmit the highest power, at the highest voltage, and to the deepest depth. InDC, we havemastered a number of technologies that no one else has. Most of the cables used inOffshoreWind are ACwith a clear trend for higher voltages and innovative cost-effective applications. Prysmian is already developing next generation of 275kV export cables. The ambition of Prysmian is to act as enabler for accelerating the energy transition, while also creating business value, by supporting the development of greener and smarter power grids with innovative cable technologies to cover longer distances and sea depths, ensuring higher performances, reliability and sustainability. This ambition is translated in our everyday business activities by providing clean energy where it is needed, all over the world: 48% of our revenues are coming from low carbon enabling products.
Prysmian Group | Energy transition - White paper 2021 11 | Floating Wind Energy Now floatingwind is entering the stage, with the potential to become a relevant part of the business. Floatingwind farms remove the restriction of being installed in shallowwaters and also have a major advantage as they are assembled in the port and then towed to site by an ordinary tugboat, which also can tow themback to shore for heavy maintenance or final dismantling. Thanks to this advantage, the floating technologywill become competitivewhen the operating costs will reduce. In particular, this segment is gaining a significant boost, due to the fact that floatingwind turbines usemultiple components and similar services developed for the offshore oil&gas industry. EolMed Project Prysmian looks forward to this new technology, leveraging on dynamic knowledge capabilities and experiences, as well as R&D development tailored to suit the integrated view of this subsegment, with focus on dynamic high voltage cables. We are consolidating our position in the floating offshore wind market with the development of an export submarine power cable system for the EolMed project, located in the Mediterranean Sea, 18 kilometres off the French coast of Gruissan, that is scheduled to be up and running in 2023. This is Prysmian’s third floating wind project, following the Kincardine and Provence Grand Large wind farms. Interconnections Interconnectors between countries are another key part of the energy transition: as backbone of power grids, cables are, and will be, an essential part of this development, supporting the implementation of larger, more integrated, efficient and sustainable power transmission systems. We make a complete range of cables that allow the exchange of energy between countries, and sometimes continents. This is particularly true with HVDC cables, where we currently have four different technologies in our portfolio for this sort of energy transmission. Traditional paper cables, still very much in use, are indeed complemented with their highperformance version that use a sandwich of paper and plastic, called PPL, in place of paper. For cable with extruded insulation, our offering includes XLPE cables and our new thermoplastic solution, the already well-known P-Laser. Interconnectors between countries are another key part of the energy transition. We make a complete range of cables that allow the exchange of energy between countries, and sometimes continents.
Prysmian Group | Energy transition - White paper 2021 12 | German Corridors Prysmian’s decade-long effort to engineer a more sustainable cable for the energy transition came to fruition last year with P-Laser cable technology being selected for two out of the three awards for the German Corridors’ energy projects, consisting of three ±525 kV underground DC cables systems. These massive three-part interconnectors deliver clean electricity from the North Sea region - where clean wind energy is generated - to cities and factories hundreds of kilometers away in the south - where energy is consumed. Prysmian will supply 2,300 kilometers of energy cables, representing around 44%of the total amount. Of that, 1,200 kilometers will be the P-Laser, the first 100% recyclable, eco-sustainable and highperformance cable technology. P-Laser, a 100% recyclable cable P-Laser is the first 100% recyclable, ecosustainable, high-performance cable technology based on HPTE (High Performance Thermoplastic Elastomer). With a solid history inMV application, this is a fully qualified high-performance insulation system that has evolved over the years in a comprehensive HVDC development programof rigorous testing and extensive trials. P-Laser is suited for the highest voltage levels delivering enhanced thermal performance and high intrinsic reliability that enablemore flexible and sustainable solutions, such as optimized construction with reduced trench widths. It is fully recyclable, and with increased productivity and 30% lower CO2 emissions in production, has much higher environmental credentials compared to more conventional technologies. Cologne Hamburg Munich Nuremberg Leipzig Stuttgart
Prysmian Group | Energy transition - White paper 2021 13 | SOO Green HVDC Link Prysmian was also selected as the preferred supplier of high-voltage direct current cable systems, to be installed underground along existing railroad rights of way, for the US largest transmission infrastructure project, SOO Green HVDC Link. The 2,100-megawatt interregional project, considered the first link in a national clean energy grid, will connect two of the largest energymarkets in the US. By linking theMidwest Independent SystemOperator (MISO) serving the central US, to the eastern PJM Interconnection, SOO Green will deliver abundant, low-cost renewable energy to population centers from Chicago to themid-Atlantic region. Innovation is key to sustainability Makingall of Prysmian’s cables eco-friendlier is a key goal for Prysmian’s R&Dteam,whohas beenworking hardon the ‘LeadLess’ technology,whicheliminates theneed for lead inenergy cables. In themeanwhile, wealsoworked to replace steel armour for submarine cableswitha lighter andmore sustainable synthetic material. This effort paidoff inSeptember 2020, whenPrysmian’s highdepth submarine technology ±150kV three-core submarine cablewith synthetic armourwas successfully installedat awater depthof nearly 1000meters, connecting theGreekmainland and the islandof Crete. A solution provider rather than a cable maker Prysmian is a solutionprovider rather thana cablemaker andcable installer, and this includes not only the cable concept andnewdesigns, but alsoeverythingaround it. Thatmeans factories, cable ships andall thenecessaryon-siteactivities. LeonardodaVinci - fullyoperational sinceAugust 2021 - is themost advancedcable installationvessel in theworldandwill allowPrysmian tooffer an ever-wider andmoreversatile rangeof installation services and to strengthen its leadershipposition in the submarine cables business. Leonardo da Vinci The 171-metres ship reinforces Prysmian’s project execution capability and its one-stop-shop solution provider approach. It has 2 carousels of 7,000 and 10,000 tons, which ensure the highest carousel capacity in themarket, enabling a reduced transportation time from the factory to the site, thus improving overall project efficiency. It is equipped with two independent laying lines in order to increase its operative flexibility and a bollard pull in excess of 180 tons conferring the capability to performcomplex installation operations supporting a variety of burial systems. This new strategic asset will boost the capability of Prysmian’s submarine cable operations while lenght of 7,000 and 10,000 tons A bollard pull in excess of 180 tons 171 m 2 carousels laying lines 2 independent LEONARDO DA VINCI
Prysmian Group | Energy transition - White paper 2021 14 | reducing costs and timetables for clients due to the ship’s larger loads. The first mission assigned to the Leonardo da Vinci vessel is the installation of the Viking Link submarine cable connection between the UK and Denmark, the world’s longest power interconnection. Climate and Social Targets In line with the requirements of the Paris Agreement, Prysmian is adopting science-based targets, and endorsing the “Business Ambition for 1.5°C” campaign. Our Net Zero emission target has been brought forward to 2035 and our commitment to reduce absolute Scope 1 and 2 GHG emissions by 46%by 2030, from the 2019 baseline, has received the approval of the Science Based Targets initiative, certifying that it is in line with the 1.5°C goal. Our climate targets are complemented by our new social targets, which include a commitment to 30% of senior leadership roles to be held by women andmore than 500 new female hires with Stem backgrounds by 2030. The group has planned investments in the range of €450million by 2022 (over 50%of total investments), which are also intended to further improve the sustainability of its organisation and supply chain. Source: Prysmian Group 2019 2030 2040 2050 Carbon emissions reduction (%) -46% 2030 Scope 1&2 interim target Scope 1&2 “1.5C pathway” Scope 3 “2C pathway” -14% 2030 Scope 3 interim target Net Zero 0 100 Baseline year Scope 1&2 Net Zero by 2040 or earlier Scope 3 Net Zero by 2050
Prysmian Group | Energy transition - White paper 2021 15 | SUBMARINE POWER Sources: • https://www.prysmiangroup.com/en/insight/sustainability/the-energy-transition-is-crucial-for-our-future • https://www.prysmiangroup.com/en/insight/projects/innovation-as-the-cornerstone-of-prysmian-group-business-strategy • https://www.prysmiangroup.com/en/insight/projects/prysmian-r-and-d-effort-in-reducing-co2-emission Source: Prysmian Group Source: Prysmian Group Submarine Power D. Waimann OSS M. Tomassini A. Bhargava Submarine Telecom PROJECTS BUSINESS D. Waimann Bid Management G. Tempestini Mediterranean (incl. FR) J. Ben-Hamman UK & North Europe D. Worthington CEE* B. Bollweg Middle East S. Goddard OSEA F. Corbellini Offshore Wind Developers J. De Mello Americas a.i. D. Waimann Offshore Floating Wind O. Angoulevant
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