What Will Happen in the Energy Transition?

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.

The Deeper Meaning of Sandy

Watching the video feeds from the New York and New Jersey areas in the wake of Sandy reminded me of the images seven years ago from New Orleans being decimated by Katrina.

Other than perhaps providing a warning not to call a particular geographic area “New” anything, what do these storms tell us?

Like Katrina did, Sandy reminds us most poignantly how little most Americans think about the reliability and importance of energy – until it’s not there.  And then, they think about it – a lot.

The sight of people lining up for gasoline, and fighting about who gets to the pump first, is evidence of the dependence of our society on commodities over which individuals ultimately have minimal control.

The sight of people screaming at civic leaders about the slow pace of power restoration says volumes about the resentment about our subservience to technology – and the necessary prerequisites that enable technology to actually work.

The sight of people desperately tapping into scattered energized cell phone charging sites, so that they can maintain connectivity to others that they depend on or that depend on them, confirms the observation that our species is no longer able to be truly self-sufficient, much as some may like to think otherwise.

Sandy thus reminds us that our vehicles and our buildings and our communications need constant access to energy, whether electricity, gasoline, diesel or natural gas.  Without energy, these artifacts of modernity quickly become irrelevant.  Without energy, 21st Century humans can barely survive at all.

In turn, the supply line of energy provision is an immense enterprise that can nevertheless be easily disrupted.  The short-term consequences can be acutely tragic, with damaging economic effects that can linger for a long, long time.

One consequence of Sandy is that, like Katrina, it has elevated the topic of climate change in the national discourse.

Many advocates had been complaining about “climate silence” during the 2012 Presidential campaign, but New York Mayor Michael Bloomberg threw the issue into the spotlight in the wake of Sandy by endorsing Obama over Romney.  The endorsement came in large part because Bloomberg believed that Sandy was amplified by climate change, and that candidate Obama was more committed to taking action to combat climate change, thereby reducing the risks to low-lying places such as New York in the future.

The hand-wringing conversations occurring now are similar to those immediately post-Katrina, and I expect that the U.S. will similarly act on climate change now as it has consistently since then – with no action.

Alas, that’s because the political climate in Washington is probably in worse shape than the atmospheric climate covering the planet.

Although we can’t say for sure that Sandy (or Katrina, or any of the other mega-storms of recent years) were caused or even worsened by anthropogenic climate change, most experts agree that the frequency and magnitude of extreme weather events is likely to increase as the energetic content of the atmosphere and oceans has risen with decades of carbon dioxide emissions – from consuming the energy upon which we so utterly rely.

Moreover, experts also agree that the emissions of the past decades have still yet to exert their full impact on the climate, so some additional worsening is likely baked in, even if the world (especially the U.S.) finally decides to do something to control emissions on a going-forward basis.

So:  Expect more Sandies and Katrinas.  Expect more heat waves.  Expect more droughts.

In fact, expect more blizzards too.  The average temperature of the planet may be increasing, but the probability distribution of temperatures is widening, which means cold events will still happen on occasion.  And, when they do, they may well be accompanied by more moisture – hence, blizzards.

All of this illuminates a central thrust of how the cleantech sector can best help mankind in the decades to come, in the face of what is likely to be increasing climate chaos:  adaptation.

Adaptation has many forms.  For instance, adaptation should force a re-think about the wisdom of civil construction right along ocean shorelines.  Adaption might involve people relocating to live within reasonable walking distance of their workplace, not reliant on vehicles or public transportation.

Adaptation also suggests that, given an increasing exposure to storms like Sandy (and other threats such as terror attacks), the energy system should be designed and built with greater redundancy and dispersion of assets, to be more robust in the face of overwhelming events – of which Sandy is just the latest.

Sandy should provide an impetus for increased installation of uninterruptible power systems and backup/standby generators – especially at gasoline stations, many of which in the Northeast were put out of commission due to lack of electricity – as well as an awareness NOT to situate these devices in places where they will be flooded and hence unusable exactly when they’re most needed.

More broadly, becoming more resilient in a more turbulent world implies a move away from a centralized energy topology based on large-scale refineries and powerplants, and the huge corporations that own and operate them.

Making that transition would not only be expensive, as it implies a massive change-out in the nation’s energy infrastructure, but it would be highly uncomfortable.

Although they like to think that the nation has been built largely from the bottom-up via individual initiative, Americans are stuck in an outdated “top-down” mentality when it comes to the energy sector.

Americans are complacent about their reliance on the power grid and on petroleum-fueled vehicles.  They want continuous access to any form of energy at virtually no cost.  While they prefer minimal environmental impact and detest the strategic reliance on the Middle East for oil, they heartily trade off higher emissions or ongoing geopolitical subjugation for a just few cents cheaper.

Americans may not much like Big Oil, or utility monopolies, or the dirtiness of the coal sector, but they don’t want to sully themselves by doing much to disrupt them from their current dominance.  They certainly have limited appetite for taking energy matters into their own hands by supporting novel smaller-scale distributed energy approaches being pursued by cleantech innovators that may entail a little more cost (at least currently).

In many ways, the American willingness to go along with the energy status quo mirrors the American dependence on large institutions – governments and corporations alike – that are nevertheless widely-hated and even antithetical to the idealized notion of American self-reliance.

Sandy thus has highlighted the deeply-seated fear and loathing of the United States, circa 2012, in a way that would do Hunter S. Thompson proud.  The physical damage wrought by Sandy upon New York and New Jersey is a metaphor for the salt that Sandy has thrown in the open wounds of the collective American psyche.

There is a joke that asks “How many psychiatrists does it take to change a lightbulb?”  The answer is “Just one, but the light bulb really has to want to change.”

Whether Americans in the wake of Sandy will want to undertake the effort to change, in order to not only heal themselves but inoculate themselves against challenges posed by future storms like Sandy, is a major question.  The evidence, post-Katrina, indicates a high willingness to moan and groan, but a limited appetite for making the necessary commitments and sacrifices to effect meaningful long-term improvement.

Meanwhile, the cleantech community continues to press forward, under the forecast that opportunities for positive impact will only increase in the years to come.

Peter Huber: Low-Confidence in Low-Carbon

by Richard T. Stuebi

A few weeks ago, I wrote here that it is often a good thing to read and reflect upon intelligently-crafted opinions that differ from those you hold.

A good example is offered by the essay “Bound to Burn” by Peter Huber, a Senior Fellow at the Manhattan Institute. In this thought-provoking piece, Huber makes the following interesting statements about the challenges to be faced in moving to a lower-carbon economy:

· “We rich people can’t stop the world’s 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach….We don’t control the global supply of carbon.”

· “We no longer control the demand for carbon, either. The 5 billion poor – the other 80 percent – are already the main problem, no us. Collectively, they emit 20 percent more greenhouse gas than we do. We burn a lot more carbon individually, but they have a lot more children. Their fecundity has eclipsed our gluttony, and the gap is now widening fast.”

· “Might we instead manage to give the world something cheaper than carbon?….For the very poorest, this would mean beating the price of the free rain forest that they burn down to clear land to plant a subsistence crop. For the slightly less poor, it would mean beating the price of coal used to generate electricity at under 3 cents per kilowatt-hour.”

· “Fossil fuels are extremely cheap because geological forces happen to have created large deposits of these dense forms of energy in accessible places. Find a mountain of coal, and you can just shovel gargantuan amounts of energy into the boxcars. Shoveling wind and sun is much, much harder.”

· “Another argument commonly advanced is that getting over carbon will, nevertheless, be comparatively cheap, because it will get us over oil, too….But uranium aside, the most economical substitute for oil is, in fact, electricity generated with coal….By sharply boosting the cost of coal electricity, the war on carbon will make us more dependent on oil, not less.”

· “By pouring money into anything-but-carbon fuels, we will lower demand for carbon, making it even cheaper for the rest of the world to buy and burn. The rest will use cheaper energy to accelerate their own economic growth. Jobs will go where energy is cheap, just as they go where labor is cheap.”

· “If we’re truly worried about carbon, we must instead approach it as if the emissions originated in an annual eruption of Mount Krakatoa. Don’t try to persuade the volcano to sign a treaty promising to stop. Focus instead on what might be done to protect and promote the planet’s carbon sinks.”

· “Carbon zealots despise carbon-sinking schemes because, they insist, nobody can be sure that the sunk carbon will stay sunk. Yet everything they propose hinges on the assumption that carbon already sunk by nature in what are now hugely valuable deposits of oil and coal can be kept sunk by treaty and imaginary cheaper-than-carbon alternatives.”

By no means is Huber’s writing perfect: the essay is too long by half, runs a too-circuitous path with considerable redundancies, and doesn’t lead to a very satisfying or forceful conclusion.

Along the way, some of Huber’s snide asides are too pessimistic. As an example, he claims “there is no serious prospect of costs plummeting and performance soaring” for solar and wind energy, but there is ample evidence (and lots of activity funded by prominent venture capitalists) to dispute this assertion.

And, Huber’s clearly got some facts wrong. For instance, he talks of $500/ton carbon offsets and 15 cent/kwh wind energy. If you believe these far-too-high numbers, no wonder you reach conclusions that aren’t very favorable to low-carbon energy sources.

Huber has been wrong before. About ten years ago, he and Mark Mills launched the Digital Power Report, which was touting the emergence of advanced technologies in distributed generation and energy storage to revolutionize electricity supply. Although quite compelling and seemingly well-supported, the perspectives they put forth in their periodical were at best far premature – and less charitably, inaccurate or incorrect. After a run of a few years, Huber and Mills wound down the Digital Power Report, presumably because the world wasn’t turning out the way they were predicting.

But, I still think this latest work by Huber is a worthy contribution to the discussion. Most notably, Huber’s concluding call for much more focus on carbon sinks as a no-regrets approach is hard to dispute.

Huber is no dummy. Many of the points he makes along the way are logically sound, and ought to be factored into any strategy for moving towards a lower-carbon economy. As unpleasant as some of the concerns raised by Huber may be, they are nevertheless important to hear to develop a more compelling story that overcomes the objections to thereby mobilize more real movement (rather than just talk) towards a low-carbon world.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become Managing Director of Early Stage Partners.

Blackout + 5

by Richard T. Stuebi

Over the weekend, an article in The Plain-Dealer reminded me that it has been five years ago since the infamous blackout that sent much of the Northeast U.S. and Ontario into the dark for a day or two.

Once the power was restored to everyone, U.S. and Canadian authorities quickly commissioned a Power System Outage Task Force, whose April 2004 report conclusively identified the root causes of the outage: a sequence of generation and transmission outages on a hot summer day at facilities owned and operated by First Energy (NYSE: FE) in Northeast Ohio.

At the time, pundits decried that the electric utility industry must make major changes — technologically and institutionally — to bring it from an early 20th Century analog design to the requirements of the 21st Century digital economy. Installed in an era without computers and before demands for inter-regional shipments of large quantities of power, the grid had not kept pace and was showing signs of inadequacy.

Calls became increasingly vocal for the adoption of a “smart grid” that would both improve power quality and increase the economic efficiency of the grid, by facilitating the widespread adoption of faster electric transmission and distribution switching and control systems, distributed generation devices (such as fuel cells and solar photovoltaics) and demand-reduction approaches (such as demand-response programs).

Calls also escalated for greater real-time coordination between the organizations operating neighboring power grids. The Federal Energy Regulatory Commission (FERC), which has jurisdiction over high-voltage transmission in the U.S., accelerated their efforts (albeit with limited powers to do so) to encourage utilities to adopt regional transmission organizations (RTOs).

Five years on, there has been some progress — but not nearly enough. RTOs now pretty much cover the country, but by and large they remain untested under crisis conditions, so it is unclear how effective they will operate in a crunch. Distributed generation remains a rarity, as the vast majority of power supplied to the grid still comes from central-station powerplants. Smart-grid technologies have not moved far off of the drawing-board — though Xcel Energy (NYSE: XEL) has recently announced a major pilot program for Boulder, Colorado.

Will we see another major power outage in the U.S. in the next decade? I’d bet on it. Bear in mind that the North American Electric Reliability Council (NERC) projects declining “reserve margins” — the amount of generating capacity over and above peak demands — in most parts of the country in the coming years.

Why? Due to uncertainties about future fuel prices, powerplant construction costs, regulatory rules for recovering generation investments, and new environmental requirements (especially carbon legislation), suppliers are reluctant to add new generating capacity, as they doubt their ability to earn attractive returns on major capital outlays. Meanwhile, economic growth (with only weak emphasis on energy efficiency and conservation) is driving ever-rising demand levels.

From this, I derive a simple formula: shrinking generation reserve margins + a slow move to the smart grid = future outages.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

Blogroll Review: Grid, Bubbles, and Lead

by Frank Ling

Going off the grid
180,000 American household must be onto something if they can live without the grid. Despite the costs of setting up your own distributed generation, Richard Perez, publisher of Home Power magazine, says that this number increases by one-third each year.

On this this week’s Energy Blog, Jim Fraser says:

“180,000 homes is a very small number when compared to the total population of the U.S., but by increasing by a third each year this could turn into a more significant number. Although expensive there are millions of people who could afford it. The significance to me is that we have the technology to do it and prices are going down. The trend should really accelerate after 2010 when solar power prices start to drop significantly.”

With cleantech hot right now, there is bound to be some irrational exuberance. Some analysts now believe that there will be not one, but two clean tech bubbles.

Martin LaMonica at says:

“The surge in clean technology investment has two areas–solar photovoltaics and biofuels–where there is over-investment on the part of venture capitalists, what many people would consider a bubble.”

In addition, Maurice Gunderson, co-founder of energy investment firm Nth Power, suggests that the best bets are on transformational technologies, most of which involve new materials. He is looking at more efficient photovoltaics for solar and technologies that will make ethanol plants obsolete for biofuels.

Green Processing
Not ony is Intel committed to lower the power requirements for their processing, they are now planning to remove all lead from their chips. Nevertheless, some observers believe there is a ways to go in making the PC manufacturing process environmentally friendly.

On this week’s EcoGeek website, Philip Proefrock says:

“Unfortunately, lead is not the most egregious of these chemicals, and the CPU chip is not the greatest source of contamination inside a PC case. Brominated fire retardants among other chemicals inside the case are more worrying to us than lead is.”

Unleaded chips are cool. Now how about high octane?

Frank Ling is a postdoctoral fellow at the Renewable and Appropriate Energy Laboratory (RAEL) at UC Berkeley. He is also a producer of the Berkeley Groks Science Show.

Biopower Systems Interview

Nick Bruse runs StrikeConsulting, a cleantech venture consultancy; hosts the cleantech show on the podcast network; and advises Clean Technology AustralAsia Pty Ltd, the organiser of the AustralAsian Cleantech Forums, and the leading advocate of Cleantech in Australia.

Around 5 months ago I blogged on Biopower Systems an Australian company developing innovative ocean power technologies designed using the principle of bio-mimicry.

In a recent podcast interview with the CEO Tim Finnigan on The Cleantech Show we discussed the technology in more detail as the company continues with its laboratory tests. Scaled up Ocean based prototypes are planned to be tested in 2008.

Tim talks about one of the key aspects of the technology being compliance. That is these devices are designed to be compliant in the ocean, extracting energy at normal wave and current conditions, but yielding compliantly when conditions become excessive. Such as in storm or freak wave conditions.

The result of this that in these designing systems they don’t require the cost, time and testing requried cope with these scenarios. Thus the installed unit cost is lower than more traditional ocean structures, and I suspect testing times for unit resilience in the ocean to be lower also.

Corrosion and maintenance of dynamic components are obvious sensitivities, but for the most part the devices will be made from composite materials with anti-fouling surfaces.

The company has a while to go yet before the scaled ocean prototypes can demonstrate the real potential of the technology, but the company is proceeding according to its milestone projections so far. You can listen to the interview here.