When leaders from 193 countries created a plan labeled the Sustainable Development Goals (SDGs) in 2015, it was the beginning of a new era of hope and possibilities. The ambitious goals promised equitable, sustainable growth for today’s and tomorrow’s generations by 2030.
Fast forward to 2018.
Unbelievable population growth, increasing urbanization and demands for power, water, and space, food insecurity, and anthropogenic climate change are majorly impeding the implementation of SDGs. While statistics suggest that there is some improvement in the global efforts, we are still a long way off from pioneering a new future.
As technologies and consumer behaviors continue to evolve, new service opportunities and business models will also emerge.
The challenge lies in meeting the needs of the present without compromising the needs of the future. How might people find solutions that are truly adapted to the context and needs? How can we address environmental concerns that aren’t antagonistic to economic growth? Through innovative solutions that spawn from a broad spectrum of expertise and collaboration…
Overview of the sector
An integral component of our everyday lives, energy powers almost everything at home, at work, and elsewhere and has a direct impact on the standard of living. With people using over a million terajoules of energy a day (Source: BBC Future), burning of coal, oil and gas has reached record levels. However, a fifth of the world’s population now relies on renewable energy (solar, hydro, wind, geothermal) sources, and the sector is expected to grow about 2.6% every year till we hit 2040.
The energy sector has undergone significant transformation from the 1970s due to amazing economic growth, population growth, increased productivity, new technologies, and environmental goals. The following image from a 2016 World Energy Council report wonderfully summarizes factors that have shaped energy scenarios.
According to the comprehensive report, these are the key findings:
- The world’s primary energy demand growth will slow, and per capita energy demand will peak before 2030 due to unprecedented efficiencies created by new technologies and more stringent energy policies.
- Demand for electricity will double to 2060. Meeting this demand with cleaner energy sources will require substantial infrastructure investments and systems integration to deliver benefits to all consumers.
- The phenomenal rise of solar and wind energy will continue at an unprecedented rate and create both new opportunities and challenges for energy systems.
- Demand peaks for coal and oil have the potential to take the world from “stranded assets” to “stranded resources.”
- Transitioning global transport forms one of the hardest obstacles to overcome in an effort to decarbonize future energy systems.
- Limiting global warming to no more than a 2°c increase will require an exceptional and enduring effort, far beyond already pledged commitments, and with very high carbon prices.
- Global cooperation, sustainable economic growth, and technology innovation are needed to balance the energy trilemma.
The need to innovate in the energy sector grows stronger
The energy sector is quite under siege today — with people clamoring for clean energy sources, cheap renewables, minimal pollution, efficient infrastructures, and safety from cyberattacks; this obviously opens doors to unprecedented innovation. Policy experts, scientists, governments, and companies have been struggling for decades to make sure the lights stay on while trying to meet the needs of an ever-growing population and industrialization.
According to Consumer Energy Alliance (CEA), 2018 is expected to be an exciting year of innovation for the energy sector in several areas — building smart cities, modernizing grids, making the infrastructure such as pipelines cost- and energy-efficient, achieving energy independence, and prioritizing sustainability.
When speaking about the Campaign for America’s Energy, David Holt, president of CEA, said,
It has never been more important to marry technological innovation with environmental solutions to help build a stronger, more resilient energy future for our country. It is important that our policymakers work together to find policies that help to ensure that energy is affordable for all citizens, including low-income families and small businesses, by offering a roadmap for a brighter future for generations to come.
In the Economist Thriving Through Disruption Report, 60% of executives said their senior management view disruption as a threat, not an opportunity. That won’t wash when innovation for energy generation and distribution are important to meet climate goals (carbon reduction targets) and people’s needs.
Additionally, according to Accenture’s Disruptability Index, the energy sector occupies a top spot high in the volatility quadrant,
Where the sources of strength have become weaknesses and large disruptors unlock new value; utilities falls in the vulnerability quadrant, where structural weaknesses expose the sector to significant risk.
Take, for example, the case of the German industry. “Ever since renewables became a part of the German mass market, investment has been dominated by private households and farmers who owned 46% of the 73GW renewable electricity supply in Germany in 2012, while all incumbent utilities (such as Vattenfall, EnBW, E.on, and RWE) owned only 12%.” (Enerquire.com) The big companies had to finally change their business model to combat competition from third parties and stay relevant.
How are energy companies innovating?
A PwC survey of Canadian power and utility companies showed that 89% of executives agree that “technology, customer engagement, policy, and innovation” driving energy transformation is forcing them to change their business models.
Oil companies across the globe are trying to restructure their portfolio to move into more acceptable ways to do business. Unfortunately, research shows that innovation investment in the energy sector continues to lag behind others. The following table shows how people attach risk to innovations (energy supply technologies here) in the energy sector. Research shows that focusing innovation efforts on end-use technologies is more likely to “provide higher social returns on investment” while significantly reducing emissions.
However, along with governments, some companies such as Shell (aiming to reduce the net carbon footprint of its energy business by 50 pc in 2050) and Statoil (changing its name to Equinor to get new talent) are trying to make change happen. Utility companies are trying to win tomorrow’s market via different breakthrough or sustaining innovative strategies, such as customer energy management, asset deployment, and performance execution.
Over the years, the energy sector has transformed with a variety of innovations: unconventional sources of natural gas (fracking), electric vehicles, advanced ICE, solar photovoltaics, LED lighting, grid scale storage, digital transformers, electrochromic windows, compressor-less AC, biofuels, and clean coal technologies. Companies are moving away from traditional electrical grids to microgrids, an amazing decentralizing technology. UK and Denmark are installing smart meters in every home.
Over 100 countries have signed up for RE100, a global initiative from The Climate Group in association with CDP, which requires them to move to 100% renewable energy. The EU has its Strategic Energy Technology Plan, the U.K has its Clean Growth Strategy, the U.S. has Advanced Research Projects Agency-Energy, and 23 nations along with EU has the Mission Innovation project—initiatives to hasten clean energy generation, target technologies for affordable energy storage, enable technology transfer, improve reliability and efficiency of infrastructure, create jobs, and identify commercial opportunities.
In 2016, OECD invested USD16.6 billion on energy RD&D. The World Bank Group has set up climate-innovation centers in developing countries (e.g. Kenya) to “provide seed financing, policy guidance, networking, and technical training.” Several collaborations between academia, governments, and private organizations are also springing up to provide actionable intelligence. For example, through a three-year collaborative initiative called the Grid Innovation Hub, Monash University will leverage the uni’s energy capabilities and industry expertise (AusNet Services, Advisian, Indra, redT energy, Senvion Australia, GE, and Energy Exemplar) to ensure Australia has access to clean, affordable energy.
Every sector has its share of exciting companies and innovations:
Touted as one of the most innovative companies, French startup Ciel & Terre provides floating photovoltaic power plants (Hydrelio®). This is especially useful in places which lack electricity and farmlands but have enough water bodies, such as Karnataka (India) which has 24+ acres of 36,000irrigation lakes. Taiwanese solar cell manufacturer Motech Industries contributes greatly to grid-connected solar photovoltaics. Swiss Airlight Energy, in partnership with UBM, aims to solve the energy crisis one “sunflower” at a time. Azuri Technologies in Africa ensures that the rural residents get affordable PayGo solar services.
A certified B-Corp, Vermont-based Green Mountain Power provides solar, wind, and hydro energy and products to reduce the carbon footprint. Sonnen GmBH makes batteries (intelligent lithium-based) which stores energy from solar panels installed on the rooftops. The excess energy goes into a virtual energy pool shared by a community of users. There are several spin outs of Carnegie Mellon that are making huge strides in the sector.
It is no surprise to find GE on any topic about innovation. GE builds windfarms all over the world. GE Renewable Energy, which acquired Alstom Wind and LM Wind Power, has supplied over 35000 wind turbines, both onshore and offshore. It also offers customizable wind services and tech to upgrade, maintain, and operate. GE began testing Haliade-X, the world’s largest wind turbine in Blyth, England, as of April 2018. WePower aims to “tokenize renewable energy and put it onto a blockchain.” The company works to democratize wind, solar, and hydro energy. (Read: Six amazing wind innovations) In 2017, world’s first floating wind farm was installed off the Aberdeenshire coast in Scotland by Norwegian company Statoil. In India, Suzlon is innovative company that produces wind energy in excess of 23,000 MW. There are several other innovators such as Siemens Gamesa, Vestas, Enercon, Unite Power, and Senvion.
Siemens has tidal power plants off the Irish Coast to generate sufficient power for over 1,500 homes. EOMAP GmbH & Co. KG (Munich) provides state-of-the-art satellite-derived bathymetry and high-resolution water quality monitoring services which help hydroelectric power stations, such as Xiaowan Dam in China, function better. French Development Enterprises has patented precast modular construction and retrofit technology “to advance the manufacturing and installation of hydro facilities with low environmental impact.” Enel Green Power in Italy is using an award-winning acoustic monitoring system (deep learning based) from 3DSignals to monitor hydroelectric generators. Pacific Hydro in Chile uses Uptime Analytics, a cloud-based asset management system, to create an optimal maintenance plan. Rickly offers an efficient energy recovery technology called the nCONDUIT-Hydro System. One of Alphabet’s Moonshot Factory spinoffs, Dandelion provides innovative heat and air conditioning systems for homes that reduces utility costs, and pollution from heating-oil tanks, considerably.(Read: Top 10 hydropower companies)
The world is in thrall to exciting energy-focused startups coming up with valuable innovations across the world. Here are a few:
- Sylfen (French) builds a fully-integrated solution (smart energy hub) for energy production and energy storage.
- Ecoisme is a home energy monitor, which prevents energy overuse and saves money for its users.
- CHAINErgy (German) let people “manage their own energy supply consumption, production, or trading and perform transactions via a dedicated digital currency wallet.”
- Oxford PV has pioneered a perovskite-based solar technology.
- Icewind (Iceland) designs and makes small-scale vertical axis wind turbines that can output 100% clean energy in extreme weather conditions and low wind areas.
- Origami Energy (Cambridge) uses tech solutions to make buying, selling, and trading better for energy suppliers and traders.
- KPS Energy (Scotland) aims to use 85% less material and provide energy at a fraction of the cost of wind turbine energy.
- Orb Energy (India) provides solar energy solutions across the country.
- M-KOPA (Kenya) provides affordable, high quality solar accessible to anyone.
Innovation is expected to help the world combat all issues that will come with resource crunch in the future. Technological innovation (IoT, AI, analytics, robotics) coupled with changing consumer behavior will design tomorrow’s energy landscape. This will lead to increased productivity and demand will decrease. Services and products will certainly become more energy efficient.
McKinsey doesn’t believe that there will be any major disruptions in energy use or generation. Their research shows that
- Although global energy demand will grow, it won’t be as expected: an average of about 0.7 percent a year through 2050
- Energy intensity in 2050 will be half that of what it was in 2013
- Electricity demand will make up 25% of all energy demand by 2050
- 77% of the additional power required will come from solar, wind, natural gas, hydro, and nuclear sources
- Coal, oil, and, gas will make up 74% of primary energy demand (it is 82% now) by 2050
- By about 2035, greenhouse emissions will “flatten” and then decline (owing to electric vehicles, cleaner tech)
Thanks to better efficiency, slower growth, increased digitization, and more demand for services that require less energy, energy demand will be slower. These are only estimates.
How much can one predict the future?
Both the public and private sectors are doing everything to enable change. From technology to culture, they are thinking out of the box like never before. For example, Baltimore Gas & Electric CFO Dave Vahos says in an interview with Jeff Thomson,
BGE is also committed to innovation and actively encourages its employees to share their ideas for improving the customer experience. As an example, BGE has created an innovation site on its intranet for employees to share their ideas and created an awards program to incentivize innovation. Under the awards program, employees can share in the benefits of successfully implemented ideas.
No innovation initiative is found difficult and left untried it seems in this sector.
Companies and academia are even choosing hackathons and competitions to glean ideas to make everything better. For example, Shell Eco-marathon “challenges young engineers from around the world to design, build and drive energy-efficient vehicles.” The MIT Energy Club conducts hackathons sponsored by the likes of General Motors, General Electric, The Energy Authority, and Cimetrics Analytica. Students from all over compete to win cash awards, find startup partners, and solve real-world challenges. The Smart Energy Hackathon in Bangkok, Thailand, was another event to use advanced software solutions to build a cleaner, smarter energy future. Held in late 2016, Netherlands Hack Energy Hackathon – Blockchain, AI and IoT – Hyperledger, Watson and Bluemix was a successful Dutch hackathon. HackerEarth is hosting Enzen’s first global program focused on energy conservation and the environment this year, Innovation for Sustainable Development. There are several such events across the world where a few committed people are working relentlessly to create positive impact on the society and environment.
Whatever the innovation, it has to be accessible to more people. This will require more public investment in R&D, cutting subsidies on fossil fuels, encouraging grassroot innovations, realizing the power of crowdsourced innovation, and enabling widespread adoption of winning innovations. If that’s not happening, then perhaps some interested angel investors could support promising incubators. People have to believe that making things happen is not to be just left to politicians, scientists, and engineers. Unless we try, we will never know what is possible. There’s a bit of risk in everything after all.
Game Changers in the Energy System (World Economic Forum & McKinsey)
Six principles for energy innovation (Nature)
World Energy Scenarios Composing energy futures to 2050 (World Energy Council)