Of course, the main trend we are all observing is the transition away from fossil fuels towards renewable energies. Although disbelievers of these technologies still linger, renewables continue to grow and spread. The two most prolific renewable technologies of recent years have been wind and solar, which in 2016 produced 5.21% of the world’s electricity. This number may seem tiny or insignificant – but it is the growth that is most important here. In 2006, this number was only 0.73% – so the rate of growth is incredible.
However, how soon we will reach our 100% renewable energy goal will ultimately depend on two things.
- The growth of electricity demand – over the last 15 years or so there has been a general trend within the EU of falling energy demand, which is not shown in other areas of the world. Which raises a question, will the example of doing more with less electricity (Europe) be replicated in other parts of the world?
- Can the current exponential growth of solar and wind continue?
As ridiculous as it may sound, continuous exponential growth is not quite as daft as it may seem. There is still a lingering reputation of renewables being expensive, with many European economies handing out vast subsidies for wind and solar power projects (Germany, Italy, Span, Belgium etc.) In the aforementioned countries, end consumers will see expensive renewable energy contributions for the privilege of being supplied with renewable energy.
Strong believers in economic theory suggest that these subsidies are absolutely necessary to jump-start wind and solar energy industries. Essentially artificially creating the huge demand and production that developed the economies of scale that allowed solar panels to be produced at low costs. So far, the believers have been shown to be mostly right, with the cost of renewable energy sources generally decreasing.
This decline in price does seem to be levelling out a little in recent times. But one interesting observation to be made is that for many countries, these technologies have reached ‘grid-parity’. For consumers, this means that producing their own energy with a personal windmill or solar panel is now less expensive than consuming electricity from the grid. For households, this is of key interest as they pay a huge amount more for grid energy due to higher prices for grid usage and taxes.
This opens up the potential for easily installed rooftop solar panels to be used, or even larger scale projects like windmills or solar farms if governments could adopt PPA concepts as Brazil has. This is where individual consumers can purchase electricity directly from renewable energy projects at a discounted cost as they bypass grid fees and taxes.
As grid parity has already been achieved, the renewable energy revolution is now a juggernaut that cannot be stopped. It is too early to say whether we will end at a situation with 100% renewable energy production, but it would be hard to find anyone that doesn’t believe renewable energy will continue to grow.
This opens up a conversation regarding several potential economic and social considerations:
- In open energy markets, low marginal costs of renewable energy cause the commodity price of electricity to fall – undermining the profitability of power production. In a 100% renewable energy world, would the price for the commodity drop to zero? Many believe this to be unlikely as due to intermittency issues, marginal MWhs will likely be filled by fossil-fuel generated energy or batteries. The marginal cost of operating these will be a much more likely price-setter. For countries with higher hydro-electric capabilities, the availability of water will certainly act as a driver of price.
- Reduction of electricity consumption from the grid in favour of locally produced power increases the cost usage of the grid – which are fixed cost assets. For countries where consumers are switching/switched to using their own solar power, the cost of using the grid for others increased. This issue decrees a rethinking of the grid tariff systems and potentially the introduction of capacity metering and payments for households.
- There is an important social benefit of solar and wind power in developing countries as they make access to electricity much easier for populations in remote areas not connected to a grid. However, in countries where there is a grid in place, the renewable energy revolution could cause discrimination. Solar panels are still more accessible for the rich in society that can access the capital needed for installation than for the poor that will have no other option than to buy more expensive grid power. Increasing grid fees will only worsen this issue.
Battery development maybe isn’t quite as fast-paced and glamorous as the tech that it powers. The first iPhone was released in 2007, which was seen at the time as the absolute pinnacle of human achievement. The technology in smartphones now (in a space of 14 years or so) would be simply unthinkable back then – three back cameras? Foldable screens? Fingerprint and facial recognition?
But at the end of the day (quite literally) we will all still have to plug our smartphones into the wall to charge the depleted battery. Energy technology seems quite medieval in comparison.
What would be the potential benefits for consumers for better battery development?
- Mobile lives become much more comfortable as smartphones and laptops become more powerful
- It will ease and encourage the transition to electric cars
- It will power robots working in factories and other areas
- Likely offer a solution to the intermittency problem of renewable energy
If and when cheap batteries with a high energy density becomes a reality, individuals will all start acting like power storage banks. With the addition of information technology into grids (as well as the devices we connect to it), there will be a near continuous exchange of electricity between car batteries, mobile phones, laptops, fridges, solar panels on our roofs, offices we work at and the grid.
The world around us is already much ‘smarter’ than many perceive, with smartphones holding the capability to even tell us when to leave our homes to make it to work on time, hybrid cars are able to look at the destination entered into the GPS and calculate exactly when the most optimum moments to run the electric engine will be. So, in a similar fashion – is it unthinkable to believe devices will be able to calculate reserve levels and then buy and sell accordingly, without user intervention?
During hours of high production and low consumption, individuals will be buying electricity from the grid to charge batteries. Conversely, when production is low and consumption is high, individuals will sell. Batteries will have a marginal cost based on their efficiency, energy lost during charging and loading back to the grid – this marginal cost will drive energy prices. Hours when electricity is cheap and hours, when it is expensive, will change drastically from current day patterns.
The organisation and exchange of electricity also represent a huge sum of economic value, which creates a necessity to develop intelligence. Grids will not only transport capacities but also information on those capacities – with contracts being further adapted to this information technology.
Such grids will be a far cry away from current first efforts, with appliances requiring too much manual input. It is more than likely that future smart grids will incorporate algorithms that calculate cycles of loading and unloading batteries from different information streams.
- Personal consumption pattern information will come from all devices that we use, telling how long we spend in doors, at work, travel distance etc. This information can then be used to tell your heating system when to begin heating up (on your way home from work), the fridge how much food is in there and how much energy is needed to cool it, electric toothbrushes how often and how long you brush your teeth and the energy required to charge it.
- External factor information collected that may influence consumption pattern, like traffic density on work commute.
- Price information.
As such, future smart grids hold the potential to act as in-home energy consultants by making decisions for consumers on when to buy and sell electricity, when to load or unload batteries, and approving decisions that positively effect energy efficiency.
Niccolo Gas – For all your gas products
Many businesses are (astonishingly) still in the dark as to how hiring a business gas specialist could benefit their company. Further to this, many still believe that flexible contracts are inherently ‘risky’.
Well, those businesses who had partnered with a reliable energy supplier like Niccolo Gas on flexible energy contracts will have been left much less exposed to current events than others.
How’s that for risky?
By partnering with Niccolo Gas as your commercial gas customer, you instantly gain extensive industry knowledge and reliable service, access to a range of business gas products that are suited to businesses of all types, dedicated services from one of our local teams.
All of this on top of a huge reduction in your business costs.
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