Co-published with Energy Transition Ventures
The Energy Transition is the term of art that arose out of the climate and cleantech sector in common use in corporate board rooms and policy circles around 2015 to 2020 to describe the shift, and the secondary effects and impacts, from changing the source of the majority of the global fossil fuel based energy system to non-fossil energy or low carbon sources and systems, in the face of pressure on corporate, national and local responses to address climate change post financial crisis and the failure to replace the Kyoto Protocol with a global climate framework.
Today’s energy transition is a success dividend and natural evolution of the cleantech explosion of the last two decades which saw the dramatic improvement in, and lowered costs of, cleantech, and development a of dozen world class industries in Renewables, EVs, Sharing Economy, Agtech, Biofuels, Smart Grid, Consumer Energy, et al, accelerating as cleantech began to penetrate through early adopter markets, and reach and exceed cost parity with conventional sources and technologies.
We are in the early stages of a global shift in how the world produces and uses energy, driven by:
- Substantial cost reductions in new energy technologies, including solar, wind, and storage
- Decarbonization efforts by countries, corporations, and consumers
- The consumerization of energy and the rise of the engaged consumer
- Network, computing, and intelligence technologies impacting and enabling the energy sector
This disrupts incumbents across large segments of the economy and presents a unique opportunity for new entrants.
Not only is the energy transition very real, it is now. It will have much more imminent business disruption impacts than corporate strategists believe, it has much more potential for the private sector and technology to solve climate problems more rapidly than climate solution advocates believe, has broader origins and drivers than just climate as we seek to innovate and make a better energy base for the economy for the next 100 years well beyond simply solving global CO2 emissions, and given that almost every major sector of the economy and aspect of life rests on energy, will have close to ubiquitous, asymmetric, exciting and unpredictable first order and secondary impacts across massive swaths of our economy and lives on every country on the planet.
Some of the areas likely to see business impacts include Distributed Energy, Electrification, Mobility, Resource Efficiency, and Enabling Technologies.
Our energy system has been robust and worked amazingly well for power for 100 years, enabling the broad rise of industrial economy, and in many cases dictating economic comparative advantage for industries. In the energy transition, that will change in unique and interesting ways.
We expect the continued rise of Distributed Energy in a range of forms, both true distributed generation, and growth of Smart Buildings and Smart Cities, as well flexibility in consumer demand and consumerization and decentralization of choice and power in virtual power networks, and eventually leading to a rewriting of the gird and energy supply networks that will change how, and where energy is created, supplied, and consumed and impact all aspects of the economy and people’s lives.
We expect a general trend towards increased Electrification throughout the economy, benefiting Renewables, Smart Grid, Energy Storage, changing Transportation and driving Building Electrification. Electricity is the ultimate “flex fuel” fairly easy to decarbonize, generally solid state, no moving parts, simpler, safer, and cleaner than combustion and liquid or gas fuels, as it reaches improved efficiencies, costs and addresses storage and fuel source.
We expect a complete rewriting of mobility as technologies continue to emerge and come down in cost, all well in the works from EVs, ridesharing, and urbanization. We see this benefiting sectors like Electric Vehicles, EV Infrastructure, Hydrogen, Fleet Management, Autonomous Vehicles, and Shared-Use Mobility, as well as creating whole new categories.
We see tremendous and unrelenting growth in Resource Efficiency, including Carbon Capture and Utilization, particularly carbon to products, Waste-to-Energy, Energy Efficiency in general, sustained growth in Agricultural Technology and Sharing/Circular Economy products and services.
And across and underlying all of this includes growth and opportunities in enabling technologies like Artificial Intelligence, Machine Learning, Advanced Sensors, Internet of Things (IoT), Virtual Reality and Augmented Reality, and Blockchain.
In short, as the energy transition occurs, everything is fair game.