Last year, the IMF's World Economic Outlook report contained a detailed analysis of future energy prices. Looking at oil in particular, while production is plateauing, demand continues to grow strongly as a result of the rapid industrialisation in China, India and other developing countries. In the IMF's modeling, based on the IEA's own production forecasts, the base case scenario is for oil prices to triple in real terms over the next 20 years, with most of this appreciation occurring in the near term. Of course, there are many uncertainties, and the IMF considers other scenarios ranging from alternative energy sources effectively replacing conventional oil (in this case the long term oil price merely doubles) to more negative scenarios verging on doomsday.
One thing seems certain; the era of cheap energy is over. While there are plenty of alternative energy sources now being explored, none of them - barring some miracle breakthrough like cold fusion - is likely to be as cheap as the oil that was drilled out at a cost of just $5/barrel from below the surfaces of Texas and Saudi Arabia during the 20th century. Currently the most promising alternative to conventional oil is shale oil. But the cost of producing a barrel of shale oil is estimated to be around $70-$95. And then, of course, there are the environmental factors to consider, such as lowering the water table and acidifying it. Indeed, the only reason alternative energy sources are now even starting to look viable is because conventional oil is priced at $100/barrel. In short, the 1970s hippies were wrong when they said we would run out of oil - it just got expensive.
So while the economic growth of the 20th century was fueled by cheap energy, 21st century growth both at a national and corporate level depend on advances in energy efficiency. And this is where IT needs to play a critical role. To make more efficient use of existing energy supplies, there must be advances in metering capability. Applying smart analytics to the consumption data enables more efficient allocation of energy resources. Green IT had been the beginning of this trend, with the initial focus on managing the energy consumption within the data centre itself. Yet data centres make up only an estimated 1.3% of the world's electricity consumption. The real benefit will be the smarter allocation of energy to the other 98.7%. Metering capability is improving; the customer acceptance of CA ecoSoftware is evidence of that. Metering and the finer granularity of metering that is planned, and in some cases executed, will lead to a greater understanding of energy consumption. This is a classic potential application of big data and smart analytics. Experiments with allocation algorithms and personal energy meters are underway at the University of Cambridge, England. This has the potential to lead to departmental and staff energy consumption being metered for budgetary purposes.
For CA Technologies, there is an opportunity to continue to increase the scope of CA ecoSoftware to offer even more holistic management of an organisation's energy consumption and to tailor CA ecoSoftware solutions to verticals that are energy heavy users (e.g. food and beverage, chemical, automotive, manufacturing, mining, etc.).