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People commonly talk how things are changing ever faster and it seems the world is turning faster and faster. What was once inconceivable is now the norm. Looking at this 21st century, the stage is set for major changes, and if we don’t cause irreparable damage on our planet, for having our assumptions dwarfed or completely wrong. Still, focusing on a shorter term, the energy sector is one of the areas of our society where we are seeing significant changes, qualitative and quantitative. I’d like to focus a few topics:
Energy transition Ever since the industrial revolution in the 19th century, centralized power plants that used fossil fuels were the norm. At the time there was not a generalized awareness of the impact of burning such fuels, but they did allow for exponential growth in human civilization. Tasks that were once impossible or not feasible, became mundane and over the decades the world changed. Clothing, for example, required a craftsman’s that had little output capacity, all of the sudden a factory we could pour out thousands or millions of clothing pieces a year, lowering the costs and allowing most of society to enjoy better comforts and quality of life than humankind never witnessed. Now we know otherwise, fossil fuels have significant impact and renewables must be the norm. This change has two important aspects to consider. On one side, research is of paramount importance. On the fossil fuel industry, we had decades of investment to optimize all processes, a path renewables have to make. This is quite apparent on the price per Watt on solar panels (over 100$ in 1975 and less than 0,2 cents in 2020). Such a drastic reduction is only seen in innovative industries. Nevertheless, we have a long way to go with a lot of room for growth. On the other hand, there is a significant shift how the power plants work. On renewables we no longer have a switch to turn them on and have to follow the elements. This change in strategy brings its own challenges and will result in considerable market shifts in the future. Energy independence Another key aspect we have, which is exacerbated with conflicts such as the war in Ukraine, is energy independence. In a society more and more dependent on energy, if you don’t control your supply you’re always dependent on someone else’s whims. Eastern European countries started relying heavily on cheap Russian gas (Germany as an aftermath of Fukushima and the consequent rush to close nuclear power plants) and now we see governments in some of those countries taking “strange political positions” because they need those resources to keep their lights on. If renewables pose a challenge to produce energy when we need it, they do offer something incredible, the ability to produce your own energy. All the sudden we can have countries becoming “rich” because they can now produce their own energy without relying on other nations or suppliers. After all the sun shines everywhere, there is a lot of wind and other renewables going around. Again, in a history riddled with conflict over resources, this can be a big blessing and a pivotal point. Smart grids Following this change in an environment where we start having more and more power plants, distributed generation (where any household can now be a mini power plant) can pose additional challenges. How can you balance a grid comprised not of dozens of power plants but thousands that you don’t even own? “Companies must change their processes and adapt to a new way of producing energy, as well as understanding how to have not customers but business partners as we shift to a dimension where people are prosumers and not only consumers” Grids that have the intelligence to balance themselves with little human support must be the norm. Something that must be hand in hand with a strong investment in security. Episodes like the Colonial Pipeline ransomware attack we had in the US will continue to happen if security isn’t a top priority. Additionally, smart grids may also open new business models, and operators must be on the lookout. If you can control the fridge of your customer (after he allows it), can you prevent turning on a Peaker plant by lowering momentarily the consumption the grid is doing? Or simply empowering customers with products that enable them to be aware of how they use energy and how to optimize that usage? Storage Because of the intermittence of renewables, storage is another challenge to tackle. The sun doesn’t shine all day, so you need to have the ability of storing that excess energy during the day and then use it at night. Also, it doesn’t shine the same throughout the year, so longer term storage is needed (months or years) to guarantee that seasons aren’t an issue. And this also applies in the same fashion to other renewables. Electric vehicles Electric vehicles have a central role in this transition. They can serve as batteries for the grid, as most of the time they aren’t being used, and here we already have had trials over the last years in vehicle to grid (V2G) or vehicle to load (V2L), where your car can even “charge” your house. As we are starting to see thousands of BEV rolling of factories by the day, they can play an important role stabilizing the grid. Consuming (storing) energy in peak production times and releasing it in times of need. As a conclusion, we have interesting times ahead in the energy sector. It will require a lot of research to create the needed technologies (for example using blockchain to transparently control distributed devices) and bring the cost down (as we’ve seen in solar or wind in the last years). Companies must change their processes and adapt to a new way of producing energy, as well as understanding how to have not customers but business partners as we shift to a dimension where people are prosumers and not only consumers. All in all “may you live in interesting times” fits perfectly on what is ahead. The opinions shared are my own and do not represent the entities I work for.
