DAVOS — As the world’s population grows and economies expand, the demand for energy rises. In an exclusive interview on the sidelines of the World Economic Forum (WEF) 2024, Marco Arcelli, CEO of ACWA Power in Saudi Arabia, provided TRENDS with invaluable insights into the evolving energy sector and the critical role of artificial intelligence (AI) in its transformation.
Arcelli delved into the complex dynamics shaping the energy industry in 2024 and beyond. He offered a varied outlook on future demand and growth patterns, as well as concerns about combating climate change. With unwavering commitment, he outlined innovative approaches and actionable strategies for reducing emissions, emphasizing AI’s crucial role in driving transformative change.
Q: Everybody here is talking about AI. For a utility company like yours, what exactly does AI mean? Do you use it?
A: We use AI today for something we’ve had for 40 to 50 years since we had computers. In the end, it’s an algorithm, so we should focus on how to accelerate its adoption because there are many areas where it hasn’t been utilized to its full potential. For example, we’re using AI in water desalination plants to optimize the use of chemicals in real-time. This makes it cheaper to produce the water you use, and it’s also cleaner and more sustainable for the environment. So, you get both advantages.
In my sector, we are moving in an irreversible direction, meaning renewables are here to stay… They are the cheapest and fastest to deploy.
Marco Arcelli, CEO of ACWA Power
It’s about looking at the data you’re generating, which you may not even be aware of right now, to improve your processes. Plants are relatively simple; processes, on the other hand, can be more challenging because that’s where the human element comes into play. Take CRM, for instance; you’d like to have a database to keep all the information about everyone and all your interactions. There’s a human element to the data you enter in the power plant; it can be extracted automatically. So, AI covers data that can be extracted automatically, and you must think smartly about how to do that. We are accelerating the adoption of AI today, which is more about elements with a human element in the middle. We still need to educate the human, and the human element will remain very important in the entire process.
Q: What impressions do you have here in Davos about the business outlook for 2024 for your sector, company, and the global economy?
A: In my sector, we are moving in an irreversible direction, meaning renewables are here to stay. They are the cheapest and fastest to deploy. So, renewables are being installed wherever possible. The transition will take time, and the world continues to have enormous energy needs. That means we must satisfy these needs, and I believe that today, there is a more pragmatic approach to this in which we must support this transition.
Today, we need to focus on green molecules, green hydrogen, and green ammonia… cheaper to produce in areas with better natural resources.
Marco Arcelli, CEO of ACWA Power
Today, we need to focus on green molecules, green hydrogen, and green ammonia because they will be cheaper to produce in areas with better natural resources, more land, and availability of water, whether natural or desalinated. Then, we can export to high-demand centers, or we will need to locate the activities that produce the final product in these countries. So, that will be a major focus this year.
For the entire economy, there are some cautionary elements but also some optimism about the future. So, it’s about hard work, delivering, doing your best, and ensuring your customers are always satisfied.
Q: Is energy demand expected to grow significantly this year, or do you see some country-by-country, global trend?
A: I believe there is a general trend toward alignment with GDP. If you look at the global average, there are countries that are more advanced, where you may see demand that is stable or slightly decreasing. This is due to factors like offshoring, and perhaps better demographics, and they are growing rapidly. We can hope for an increase in energy demand as it indicates economic growth.
In China, we’ve had a 15-year close relationship… In Central Asia… we’re likely one of the largest contributors to the country’s decarbonization and growth.
Marco Arcelli, CEO of ACWA Power
Q: In your core markets, how do you see the year 2024 playing out?”
A: We are headquartered in Saudi Arabia, and that’s very solid to me. Vision 2030 means waking up every morning and saying, ‘I’m in Riyadh, and I can contribute to this growth and this change.’ I feel extremely fortunate, privileged, and grateful. So, this is undoubtedly fantastic. The Minister of Energy recently announced his stepped-up ambition to decarbonize the economy, which is very good.
I believe the other countries are equally solid, and we will continue to invest and be asked by the local government to support them because clean energy and water are essential to their growth.
Q: Can you talk about China and Central Asia, where you have a significant stake?”
A: In China, we’ve had a 15-year close relationship with local suppliers, contractors, and investors, with Chinese investors investing in our plants. We’re always looking for investment opportunities there, and we have a good pipeline that we’re developing. I’m confident that we will have a successful year there.
In Central Asia, particularly in Uzbekistan, we’ve reached a mature stage, where we’re likely one of the largest contributors to the country’s decarbonization and growth. I really admire the local government for its speed, decision-making, and ability to create an investment-friendly environment. These regions are key for us today. Then, we look at Africa and Southeast Asia, which are extremely important. We see potential there, and we’re also considering consolidation opportunities, rather than just organic development, because this market is ripe for consolidation.
I wouldn’t say there are laggards today. Everyone is doing their best… Countries are progressing at different speeds, but all are moving in the right direction.
Marco Arcelli, CEO of ACWA Power
Q: Despite the growth of renewable energies, carbon emissions reached a new high in 2023. Why do you think this is happening, and how can we slow the growth?
A: Renewables are being adopted wherever possible, but we need to focus on promoting and accelerating the adoption of green hydrogen, green ammonia, and other green molecules. The challenge lies in the trade of these commodities across countries and requires policy alignment. We’re working closely with policymakers and off-takers to ensure that the projects we’re developing, from Morocco to China and across the Middle East, can be completed in the next few years.
Q: Within the energy sector, are there leaders and laggards?
A: I wouldn’t say there are laggards today. Everyone is doing their best. For instance, Saudi Arabia has an ambitious decarbonization program. Europe is more advanced in power generation; they’re addressing different sectors that were difficult to mitigate. Countries are progressing at different speeds, but all are moving in the right direction, and I believe everyone is trying to do so as quickly as possible.