Five trends for the future of energy

Five trends for the future of energy

Five trends for the future of energy

Tonight I’m at Nabarro [now CMS] in London, launching the Future of Energy report. It’s a great example of how the Intersections process can give you rapid insight into the future of a market.

Here are the five conclusions we’ve reached about the future shape of the UK energy market:

  • The future is electric
  • Energy is local, not national
  • Access, not supply
  • Disruptive business models explode
  • Economy and ecology align

The future is electric

Sometimes you reach a conclusion that sounds blindingly obvious, and you have to check with people that it is even worth saying. I checked, and apparently, this remains a conclusion that will surprise many: tomorrow’s world is powered by limitless, cheap, clean, energy.

If that sounds like the wishful thinking of some dope-addled, eco-hippy, it’s quite the opposite. Green energy — particularly solar — wins not because it is in some way the ‘right’ option, but because it is by some margin both the cheapest and most secure form of energy.

The cost per kilowatt hour of solar energy is falling dramatically based solely on the incredible volumes of solar cells being produced and deployed. Factor in advances in the cells’ efficiency, new manufacturing techniques, and new formats (not just big square panels), and it’s easy to see that fall accelerating rather than slowing.

At the same time, gas supplies are starting to look at serious risk from declining production and growing political instability. Factor in the rapid advances coming in battery technology — overcoming the inherently intermittent nature of solar — and it’s clear: the future is electric.

Local, not national

The problems of securing new national generating capacity to replace Britain’s ageing coal and nuclear stations are well-documented. Building large new plants requires huge investments. If those investments are going to come from private sources then they want a guarantee on their returns, going as we are into an increasingly uncertain environment. The result is that the tax payer ends up paying well over the odds for security of supply.

Centralised generation and a largely one-way system of distribution just doesn’t make sense any more, when generation and storage technology is increasingly commoditised and even consumerised. The future grid is not big plants pumping power over long distances to the cities where it is consumed. It’s a hugely diverse picture of small scale generation and storage in close proximity to where the energy is consumed.

This does not mean that every home and business will provide its own power. Neither the economics nor the demographics stack up for this. Setting up generation and storage behind the meter requires capital a lot of people and businesses lack. Renting is on the rise and many landlords won’t take the risk of entering into the energy business for a long time — despite the potential returns. Many homes and businesses alike will lack the space for the relevant equipment. There will be a behind-the-meter market but also a sizeable opportunity for more small-scale local generation and storage.

Access, not supply

Even years after the advent of more small-scale generation, the overwhelming picture of the national electricity network is of a one-way, supplier/consumer relationship. This concept will be destroyed by the fundamental shift to more distributed generation: no longer is the grid about getting energy to us, it’s about balancing supply and demand across micro and macro regions.

Instead of a network of networks, as the national grid is now, it will become a network of networks of networks of networks: diverse and complex with fast-changing and multi-directional flows of energy.

Disruptive business models explode

As the flow of energy changes, so too will the flow of information through the network. Intelligence about availability and demand will feed into much more dynamic shifts in pricing and create entirely new billing models.

New businesses will spring up to capitalise on the complex flows and increased availability of information. The comparison sites are only the beginning of what is to come as smart homes, meters, grids, factories and vehicles come online.

Economy and ecology align

Look at any chart of global temperatures and it’s pretty clear that we have so far singularly failed to address climate change. Given the political winds across the Atlantic, it seems unlikely we’ll see renewed impetus any time soon from the biggest polluters.

The continued existence of our species has failed to motivate us into change. But the opportunity to save a few quid might succeed. Clean, green energy is cheap. Bringing supply closer to the consumer makes more transparent the economics of efficiency: it’s an awful lot cheaper to consume the energy you generate than it is to buy it in. For the first time the middle-class masses may be compelled to consume within their means.

Even if they don’t, our consumption is contracting, not climbing. Appliances of all kinds are increasingly efficient — so much so that their increasingly prevalence can’t offset the gains. One desktop PC consumes as much energy as 40 tablet chargers.

Perhaps technology will save us after all…

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This article is by Tom Cheesewright. This post forms part of the Future of Cities series. For more posts on this subject, visit the Future of Cities page.

Tom Cheesewright

Futurist speaker Tom Cheesewright is one of the UK's leading commentators on technology and tomorrow. Tom has worked with a huge range of organisations across a variety of markets, to help them to see a clear vision of tomorrow, share that vision and respond with agility. Tom draws on his experience to create original, compelling talks that are keyed to the experience of the audience but which surprise and shock with unexpected facts and examples.

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