The unprecedented Covid-19 crisis is sending shock waves through economies and societies, it has also severely affected the energy sector. The lockdowns have caused delays in power projects due to supply chain disruptions, unavailability of manpower, and issues in project financing. But, given supportive government policies, growth is expected to resume next year as most of the delayed projects come online.
In a report, the International Energy Agency (IEA) said the outbreak of Covid-19 has the potential to wipe out demand for fossil fuels and cause a reduction in energy demand seven times greater than the previous record reductions caused by the global financial crisis. IEA postulates that this most severe plunge in energy demand since World War II could trigger multi-decade lows for the world’s consumption of oil, gas, and coal while renewable energy would continue to grow. The benefits are already visible, the reduced demand this year only met by clean electricity supply will help erase a decade’s growth of global carbon emissions. It is still too early to determine the longer-term impacts of the pandemic, but the energy industry that comes out from this crisis will be very different from the one that came before. Governments will play a key role in the post-COVID-19 economic and social recovery. By making investments in renewables key part of stimulus packages designed to reinvigorate global economies they can support the development of a better, decarbonized world.
Green energy drivers
Last year the primary drivers of the global energy transition were, firstly, political - goals set by the Pairs Agreement and, secondly, the growing pressure from citizens and consumers demanding greater accountability from corporations and governments.
The long-term temperature goal set by the Paris Agreement, which aims to hold the global average temperature increase to “well below 2°C above preindustrial levels” was one of the biggest drivers of change. This goal is closely linked to a requirement that every nation works together ‘to bring greenhouse gas emissions to global net-zero by mid-century’. This has already resulted in a number of nations setting their own targets, or planning to do so, for achieving net-zero emissions. The EU has decided to reduce its greenhouse gas emissions by 2030 by at least 40% compared to 1990 and has agreed to continue the path towards climate neutrality by 2050. The present and seemingly inevitable recession following the Covid-19 crisis is drastically reducing energy consumption and greenhouse gas emissions. The extent to which this will help towards achieving the 2030 target depends on how long and how deep the recession will be. It is possible that the definition of carbon targets will be redefined and new carbon taxes set in the new world of low oil prices.
The second driver of change that is becoming more influential as the destructive effects of global warming become severe, is the growing pressure from citizens and consumers demanding greater accountability from corporations and governments. This was one of the last year’s defining features and in the post-COVID-19 times with the new social approach to ecology, it will continue to play an important role in driving the energy industry transition. It is clear that this pandemic will increase ecological awareness, and this is undeniably positive news for renewable energy sources. With consumers now becoming increasingly savvy in how they select their energy suppliers, the market’s "invisible hand" has the potential to become the main driver for change in the upcoming decade.
No-one could have known how 2020 would turn out and there is still a lot of uncertainty about the future. But the uncertainty about the future cannot be an excuse for inaction today; if the world is to limit global temperature increases to well below 2°C, we must act immediately. There is plenty of room for innovation in the energy sector. A large amount of low-carbon grid technologies are currently maturing and reaching the scale they require to properly compete with fossil-fuel generation. To enable further progress radical breakthroughs are required in the grid decarbonization technologies, as well as in the way we are managing the energy system intermittency issue. Seven clean energy trends to look out for over the next decade based on where we are now are discussed below.
- Grid - energy storage
Batteries are the key to moving away from our dependence on fossil fuel and will play a bigger role in the next decade. Wind and solar power, which are the most popular renewable energy sources, lack reliability. If we cannot develop effective energy storage techniques, then we will continue our damaging dependence on fossil fuel. Large storage is thus vital for zero-carbon transition. A lot of work has been carried out to develop improved, longer-lasting batteries. Currently, the most common are lithium-ion batteries, suitable for everything from small portable devices to electric vehicles. However, Li-ion batteries can only store energy for a few hours and suffer from rapid heat generation, which is far from ideal. So far the only option for storing wind and solar energy in bulk over long periods of time is pumped hydro. New types of economical bulk energy storage which last for ten hours or more have not been invented yet. The vanadium redox battery, also called the vanadium-flow battery, is the latest technology to emerge. It is able to provide an almost unlimited energy capacity, which it achieves by using bigger electrolyte storage tanks. However, the commercialization of vanadium (V) flow battery systems has suffered a setback due to the V being expensive.
A new type of utility-scale chemical battery storage that is not only commercially viable but can also deal with rapid intermittency in generation (renewables) and demand has still to be invented. Both governments and the private sector are pumping millions into supporting this new storage technology and there were expectations that an avalanche of investment will flow in. UBS has estimated that energy storage costs will drop by 66%-80% over the next decade, and the market will expand to $426 billion worldwide. With so many energy industry leaders to promote better energy management and storage, we should see greater development in this sector in the upcoming years and improved, longer-lasting batteries coming to the market.
2. Static Compensators
With renewable power generation continuing to expand worldwide, energy storage and reactive power compensation will both be necessary. The renewable energy output is intermittent and fluctuates during the day, which results in a large number of power networks that run on wind or solar energy to frequently struggle to provide electricity to meet the fluctuating load demand. This is an issue that fossil-fueled energy sources do not face. Using storage and reactive power compensation can minimize power imbalances. Devices called compensators can help to maintain a voltage that is consistent across the network, stopping power losses. They facilitate effective grids that are provided with a steady flow of electricity even when they are connected to variable energy sources. There are some businesses still hesitating about switching to green power because of this instability, but static compensators can reduce their worries. General Electric has already developed a patented Static Var Compensator (SVC) technology, which helps consumers to integrate renewable energy into established new networks. Although static compensators remain a niche technology, businesses such as GE and ABB will bring them to the forefront in 2020 and beyond.
3. Renewable generators
In April 2019, renewable energy outpaced coal for the first time ever in the US by providing 23% of America’s power generation, compared to coal’s 20% share. In the first six months of last year, wind and solar together made up approximately 50% of total renewable electricity generation in the US, displacing the dominance of hydroelectric power. In the UK, low electricity demand and the abundance of wind and sun in April and May this year led to an unprecedented level of use of renewable power reaching 30 percent of power generation. This month, the UK grid set yet another record by completing its first full month without any input from the country's coal-fired power stations making it the longest period the grid has ever operated without coal.
A combination of decreasing costs and the rising capacity factors of renewable energy sources, along with the increased competitiveness of battery storage, led to a rise in renewable energy growth last year. 11 of the EU’s 27 states successfully reached their 2020 renewable energy targets to get 20% of their energy from renewable sources and now aim to increase this to 32% by 2030, with other EU nations managing to reach far more ambitious targets. This trend promises increased growth in the renewable energy sector in the next decade.
Likewise, thanks to ongoing innovation and increased collaboration among multiple stakeholders further growth of clean-energy technology is anticipated. Prior to the Covid-19 crisis, it was estimated that between 2020 and 2024, the worldwide market for distributed solar energy generation will achieve 21% growth per annum, and market revenue was poised to rise by $51.07 billion by 2024. As much as 71% of this growth was expected to come from the Asia Pacific region. Given ongoing uncertainty, the forecasts for 2020 and beyond will require review based on the market growth and policy developments. However, it is likely that distributed renewable generators will continue to move into the driver’s seat in the electricity markets, as utilities and regulators will choose them to save costs and tackle concerns about climate change, steadily ending the days of carbon-based energy.
4. Zero-carbon cities
The priority for the public and private sectors over the next ten years will be decarbonizing cities and buildings. More than 70 cities worldwide have already pledged to become "carbon neutral" by 2050, which means they will not produce any more climate-changing emissions than they can offset. Cities are the foundation of global decarbonization as they account for 70% of worldwide emissions. Buildings alone account for about 40%.
To meet the Paris Agreement’s goals, all buildings must be net zero-carbon by 2050. However, less than 1% of properties have so far achieved this. To optimize the performance of new and existing constructions developers and owners have various technologies at their disposal. First, buildings energy efficiency can be improved using SMART technology, such as sensor networks that monitor both power and water consumption, control temperature, and track sustainability performance in real-time. More activity in the area of SMART buildings' technology expected in the years to come. Second, all fossil fuel-based building systems, like boilers and furnaces, can be replaced by clean, renewable energy sources. Hence, the development of new electric heating and cooling solutions will be of major focus in the years ahead. In parallel with another major trend that will underpin the upcoming decade - decarbonization of the heating sector. Heat accounts for 50% of energy use and constitutes a big share of emissions. High-density areas like city centers have the potential to use low-grade heat from sewers and tube tunnels in the future fifth-generation heating networks. It is highly likely that by 2030 the majority of cities will upgrade their district heating networks or at least have plans in place for this.
Cities energy systems will also need to be prepared to rely on the local (renewable) generation and work with flexible residential-owned energy sources that are connected to modern digitalized grids to increase overall system resiliency. Both distributed renewable plants and small independent power generators near houses, business parks, college campuses, hospitals, and other critical municipal services will become increasingly important components in energy systems. Local micro-grids will be used to incorporate those distributed resources into zero-carbon cities. The need to improve the performance of micro-grids, optimize the consumption and demand and enable customers to easily and effectively trade excess energy has the potential to fuel another trend of incorporating blockchain technology aided by IoT as an effective way to handle the increasingly complex and decentralized transactions between users, retailers, traders, and utilities. Blockchain investment in the energy sector was expected to reach above $5.8 billion by 2025.
5. Green mobility
2019 was a vital year for mobility. There were many important disruptions, such as autonomous driving, electrification, and shared mobility. Electric vehicles (EVs) sales set further records as public awareness of this technology increased greatly. Cities have supported the transition in line with their promise of the emergence of a greener environment. Stuttgart recently turned its urban area into an environmental zone, banning around 300,000 diesel vehicles in urban traffic. Meanwhile, the UK’s ban on purchasing new petrol, diesel or hybrid cars and vans will be brought forward to 2035. There’s no doubt that the transition to EVs is occurring globally. Bloomberg predicts they will make up 57% of all passenger car sales globally by 2040.
Another extremely exciting trend is the development of autonomous, self-driving cars. Some industry players in 2019 demonstrated truly driverless cars without any backup drivers. Although progress in autonomous vehicles (AV) technology has not been as fast as previously anticipated, shared AVs (aka: robo-taxis) may play a key role in addressing mobility’s pain points in cities while making urban mobility increasingly efficient, affordable, environmentally-friendly and available to all. The popularity of the robo-taxis and the shared economy model will lead to a significant drop in car ownership. If AVs are integrated seamlessly into the public transport system, it will be an important enabler in reducing today’s share of private-car traffic. Connected cars can link in real-time with each other and objects in their environment. The AVs can, while driving autonomously, join to create a convoy and act like one single vehicle, simultaneously accelerating and decelerating to optimize the flow of traffic, possibly leading to a lower number of accidents and improving urban mobility.
A more radical step forward could take motorists into the air. Regulators have started granting approvals to a number of drone delivery and electric vertical takeoff and landing crafts, with the vehicles flying for the first time. With city centers being so congested, the move to using our airspace makes sense. Drone taxis are about to start trial operations in Los Angeles, Dallas, Dubai, and Singapore, and commercial use is scheduled from 2023. Pilots will still be responsible for the steering at first, but autonomous flying drone taxis are the aim.
6. Circular economy
An increasing amount of industries, government entities, and consumers are embracing a circular economy, where products are developed to be reused indefinitely, rather than going to landfills. This has had a huge impact on corporates and investors who have begun betting on its growth. Just recently, Blackrock partnered with Ellen MacArthur to launch the BGF Circular Economy Fund, which aims to drive investment towards businesses that work on circular economy initiatives. Startups like Loop are partnering with major brands (Haagen-Dazs, Tide, and Tropicana) to deliver products using reusable containers that are picked up after use. The B2B packaging solutions company, WestRock, recently generated $6 billion for its innovative, sustainable packaging approach. Applying circular economy principles could unlock up to EUR 1.8 trillion of value for Europe’s economy. The goal of the circular economy trend is to do more with less, and the financial benefits of this are increasing, setting the stage for a big upswing in circularity.
Another major trend worth mentioning is the recycling and treatment of plastic waste. Despite our recycling efforts and attempts to reduce its use, plastic pollution is still growing, affecting wildlife, their habitat, and humans. Large amounts of plastic aren’t recycled and end up in landfills or unregulated dumpsites in the developing world. Plastic production is constantly growing: it now stands at more than 300 million tonnes per year worldwide (5 million in the UK). Innovations, such as deep-learning machines that sort disposables with growing efficiency, can help sort the waste better, ensuring a cleaner and safer process. This kind of developments mean that robots will carry on enhancing current waste identification methods in the upcoming decade. Teaching AI machines how to touch, see, and learn could lead to major changes in the waste disposal industry. On the other hand, new eco-friendly materials will become increasingly important in the future. With single-use plastics bans coming into force around the globe, new plastic alternatives to traditional packaging materials will be needed. Big players on the market such as, Colgate-Palmolive is already working on a recyclable toothpaste tube that will be rolled out by 2025, and a London-based start-up, Notpla, has pioneered an edible, home-compostable film made from seaweed that can be used to package sauces and drinks.
Not only is hydrogen one of the most versatile energy carriers, but it can also be produced from a wide range of sources and is used in lots of different ways. This industry could, in theory, reach the scale of oil and gas. However, widespread adoption of green hydrogen faces many challenges, including a lack of infrastructure for a hydrogen-based economy and, just as importantly, cost competitiveness.
Hydrogen is a clean fuel that, when consumed in a fuel cell, produces only water. Hydrogen fuel can be produced in a couple of ways, through natural gas reforming (a thermal process) or electrolysis. “Green” hydrogen is derived from solar or wind power through electrolysis and “blue” and “grey” hydrogen is made from natural gas. Blue and grey hydrogen are the same, but the blue hydrogen production process also uses Carbon Capture and Storage (CCS) technology. Many see hydrogen technology as the next big thing and a vital option to fill the energy gap left by the closing of nuclear stations and phasing out of coal-fired power. However, although green hydrogen is clean, is still too costly to be deployed widely and prices might not drop until the 2030s. The scale-up of electrolysis has to drive down the cost, and mass production will require huge volumes of cheap electricity from renewable sources. To this end, the possibility of mass deployment of green hydrogen could be achieved if aligned with the projected scale-up in offshore wind production in Northwest Europe. Companies like the Danish Orsted are inventing new business models to accommodate green hydrogen production. Orsted has secured GBP 7.5 million funding for the next phase of Gigastack – a project that aims to demonstrate how renewable hydrogen derived from offshore wind could support the UK's 2050 net-zero greenhouse gas emission target. It will deploy electricity from the firm’s offshore UK wind farms to power the electrolysis process.
Green hydrogen is also getting industry support from the utilities, oil and gas, and automotive industries, including Shell, Toyota, and Mitsubishi. Public and private institutions are also focused on driving the transition to clean hydrogen, with large government funding being provided to clean hydrogen production demonstration projects in countries such as Japan, Australia, Germany, Scotland, and China. Technology is advancing quickly and the improvements that are required to make clean hydrogen more cost-competitive and efficient now appear to be close to fruition. It is likely that the uncertainty surrounding hydrogen’s future will mean that demand between now and 2030 will gradually grow. Once the costs come down after 2030, demand could take-off over the next two decades and reach 275 million metric tons of renewable hydrogen per year within 30 years.
About the author:
I am, Karolina, the founder of SHE Leads Company, THE place for women in blockchain, clean-energy tech and fin-tech. It matters to me that there aren’t enough women in cleantech. Help me close the gender gap in tech and stimulate the growth of female-led startups. Join our community, become a mentor, or sponsor the community and marketplace. Find out more by visiting: https://sheleadscompany.com