Challenges
A complex world economy has grown up on the back of a stable energy industry; there is the need and expectation that our entire way of life depends on energy of the right sort and the right quality on a 24-hour, seven days-per-week basis to ensure people have sufficient power when they need it. Energy systems are not only critical for powering factories and industries but also for transportation, communication and virtually every aspect of modern life. Changing energy sources or infrastructure requires a myriad of interconnected systems.
Not only do we rely on this, but we also expect it to keep increasing too, nowhere more so than the electrical power grid. We need more generation to meet an expected huge rise in demand, as more electric vehicles hit the road, the large-scale rollout of heat pumps into homes continues, and the use of data centres to store vast quantities of information and facilitate AI innovation demands large amounts of power. Even conservative estimates of electricity use in the UK have peak demand rising from around 60GW now to over 100GW in 2050.
Making this switch and keeping up with rising demand would be hard enough, but this is not just a case of taking out the old technologies and replacing them with the new. Coal power was dirty and polluting and has been almost entirely eradicated from the UK energy mix, but it was stable, easy to turn up and down, and was perfect for keeping the electricity grid running smoothly. By contrast, the major new power source of offshore wind is intermittent, hard to control and unstable. This one major technology change is only facilitated by a whole range of other changes to store energy and stabilise the grid, ensuring we can still guarantee that when you flip the switch day or night you will have power of voltage, frequency and quality exactly as you need.
The global nature of the energy industry generally adds another layer of complexity in the modern energy transition. The energy landscape is deeply influenced by global trade, geopolitics and international agreements. Unlike the industrial revolution, where developments were more localised (at least initially), the energy revolution requires coordinated efforts and cooperation among nations to address thorny issues such as climate change, energy security and access to energy resources. As ongoing conflicts in Ukraine and the Middle East suggest, this is not an easy task.
There are vast differences in social and cultural norms across the world so gaining consensus on big ticket issues, such as energy consumption and production, is unsurprisingly fraught with difficulties. Transitioning to new energy sources or technologies requires not only technological advancements but also changes in behaviour, lifestyle and societal structures.
Complexity
All this complexity can be daunting and a reason to shy away from the problem, to pretend it doesn’t exist or that it is not as complicated as it really is. There is a desire to properly understand it, by reducing it to simplicity that can be dealt with and a clear solution that we can all agree on so we can just get on with the business of rolling it out. With any new advance or suggestion there are a range of commentaries championing the advantages, countered by others giving a damning indictment of the flaws.
The truth, however, is that there are some broad trends, but very few silver bullets and a wide range of effective but niche applications. Far from being a problem, this complexity provides opportunities to interact with the energy market to find innovative ways that industries, companies and individuals can make best use of.
Opportunities
The complexity of the energy transition has uncovered new ways for individuals and organisations to interact with the energy industry and make the opportunities.
This is happening across all areas and at a range of scale from the large, such as the creation of whole new industries centred around hydrogen, down to the small changes in homes, offices and local businesses such as solar panels on roofs, home batteries, smart connected Internet of Things (IOT) devices saving energy, demand-side response and combined heat and power (CHP) plants.
While the number of ways that changes are happening are varied, there are some broad categories.
There are new opportunities to be found in optimising the interactions of power, heat and cooling. In the industrial revolution the limitations of generating power from heat was discovered, but now we are exploring ways to use this understanding to maximise energy use such as CHP systems in hotels, offices and factories, and using waste heat from data centres to heat swimming pools.
New pressures on energy use have made investing in energy efficiency an important opportunity. By putting an end to wastage, improving insulation, upgrading to low-efficiency equipment, and just having equipment that turns off when not required, especially when supported by data technology, we can find new opportunities.
Finally, when it comes to energy use, time has become a key factor in a way that it hasn’t been previously. As our new system is less controllable, there is an incentive to change demand to match supply rather than the other way round. This provides opportunities in demand-side response which involves persuading organisations and people to move their energy use away from peak times such as charging their EV overnight, doing the laundry on a Sunday or preheating homes before the 7am peak. Those that move their time of energy use are compensated with cheap and sometimes even free energy.
None of these opportunities could in any way be considered the definitive solution to the energy transition, but they are all part of a solution and there are many more waiting to be found. These will come together to continue to make the energy transition happen, not as a single revolution, but as a million small revolutions all happening together.
Conclusion
Overall, while the industrial revolution brought about profound changes to human society, the global energy transition presents even greater complexities and challenges due to the interconnectedness of modern systems, technological diversity, globalisation, environmental concerns, social and cultural considerations, resource constraints, and the need for effective policy and regulatory frameworks. Addressing these complexities will require concerted efforts from various stakeholders across the world if we are to have a cleaner, well-functioning energy system by 2050, but will also release many new opportunities to benefit those who use them.
Editor’s notes:
Encora Energy was created in November 2015 by energy professionals looking to help clients exploit opportunities related to the changing needs of the energy market.