In summer 2014, crude oil prices were at well over $100 a barrel. Two years on, producers are struggling to get even half of that figure, and natural gas prices are similarly depressed, with little likelihood of recovery anytime soon. But with their profit margins slashed, big name players in the energy sector are on the look-out for new technologies to increase efficiency, and sustainable options they can fast track into production. Research and development is booming, and so too is investment.
Leading the charge in new energy technologies is Russia, which might come as some surprise given the country’s dependency on conventional fossil fuels. At last month’s Start-up Village, Russia’s largest startup conference for technology entrepreneurs, 340 of the startups exhibiting fell under the auspices of the energy cluster. They varied from RRT, whose system for production oilified gasoline requires one unit instead of the usual five, and will be available in 70 countries worldwide thanks to a partnership with American engineering firm KBR; to integrated solar power company Hevel Solar; Rotary Vane, whose blades convert mechanical energy into rotational energy, with minimal power input; and THRONE Systems, a smart solution for remotely managing lighting, temperature control, and security in the home.
Energy innovation in Russia has an impact well beyond its borders, not least because of the energy reliance of neighbouring countries on Russian pipelines. The Blue Stream gas pipeline carries 16 billion cubic metres of natural gas across the Black Sea to Turkey each year, and similar pipelines supply much of Eastern Europe. New technologies which reduce the cost of oil and gas production and delivery, and make the supply more reliable, have obvious attractions.
But so too do the technologies which enable countries without their own large fossil fuel reserves to increase their energy independence, especially when the threat of “turning off the gas” is such a powerful diplomatic weapon. Like Turkey, Russia has large areas which are not connected to the mains electricity grid, and so are reliant on expensive, dirty diesel generators. Advances in renewable energy and, as importantly, the battery technology for storing the energy produced, could put Turkey well on its way to energy self-sufficiency by 2020.
Prospects for solar power in both Turkey and Russia are particularly good, as Nickolay Grachev, Head of the Energy Efficiency Cluster at Skolkovo explains: “Renewable energy was a joke, but new regulations guarantee profitability. Countries such as ours are ideal markets for micro grids, powered by solar energy, and the energy storages systems we are testing now will be ready to market in 2017. Their application is international.”
Renewable energy technologies have been slow to gain traction in the energy sector due to the historically high prices of oil and gas (giving energy companies little reason to diversify), and the cost of development and testing: energy pilots are expensive, and there need to be a suitable testing grounds. To circumvent this problem, Skolkovo is investing in start-ups prototypes and testing phases, to the tune of $6.24 million in 2015 alone. Having helped them to leap frog these typical stumbling blocks, Grachev and his colleagues then introduce the best ideas (and the teams behind them) to the likes of EDF, Total, and Rosneft so that they get immediate technical feedback, business support, and the industry contacts they need for sales contracts and future R&D collaboration.
Today, Turkey produces just over a quarter of the energy it needs for domestic consumption, and is heavily dependent on Russia, Azerbaijan, and Iran to meet its energy needs. But the future could be very different: according to the Global Energy Network Institute (GENI), Turkey has the highest hydropower, geothermal, and wind power potential in Europe, and could feasibly produce solar power equivalent to 15,120 TWh every year. With responsibility for R&D borne elsewhere, Turkey can capitalise on new technologies as they come to market, investing in cutting-edge infrastructure to not only increase self-sufficiency in energy, but to strengthen the country’s economic and diplomatic power too.
Sophie Ibbotson (for GMT)