The remarkable political, economic and societal events of 2016 have clearly demonstrated that the rapid advance of technology continues to shape the world around us.
Nowhere is this more evident than the global energy sector which is undergoing profound disruption. Technology is changing not only the way that we think about energy but more importantly how we interact with it.
The contours that continue to shape the energy future became more sharply defined in 2016.
Three pillars of the energy future stand out.
1)It is self-evident that the energy systems of the future require an elevated level of consumer engagement.For decades, consumers had a largely static relationship with energy. Energy was there in the grid and at the flick of a switch when people needed it. Technological developments are now challenging this paradigm. For companies operating in the energy sector this necessitates directly communicating to consumers about the benefits that these new energy systems will deliver. The risk, otherwise, is that a “trust deficit” will develop where consumers view new advancements as too abstract and complicated to engage with.
Take energy storage where advancements have gained apace both at a district and domestic level. In 2016, Tesla launched the PowerWall, a rechargeable lithium-ion battery that stores energy for domestic home use. Storage technology allows consumers to store the energy that their home, for example, produces through solar panels or mini-wind turbines. Energy produced but not used charges the PowerWall giving households the opportunity to tap into this valuable energy reserve to power the (smart) home at other times of the day when renewables are not generating energy.
Similarly, the adoption of smart thermostats like Eneco’s Toon device by households throughout Europe in 2016 demands higher levels of consumer interaction by offering cost and energy savings as well as providing a gateway to the connected home. As internet-enabled devices increasingly take over our homes, primary-school age children of today will grow up interacting with energy in a way that is foreign to generations past.
As technology is integrated more thoroughly within regional, district and domestic energy systems, the “smart grid” will afford consumers the opportunity to interact collaboratively with it as the “Demand Side” is equipped to respond thereby saving energy usage, time and money. Consumer-engagement remains crucial to its ultimate success.
2)Secondly,a lot of new energy infrastructure is becoming increasingly more tangible and pervasive. The UK’s first new nuclear power plant in a generation, Hinkley Point C, is truly impressive in scale. A short-flight across the North Sea demonstrates the large-scale capacity of wind energy with turbines taller and more powerful than ever before.
Plans are underway to harness the enormous potential of tidal wave energy in Wales and other parts of the UK. And just these past weeks, the world’s first solar panel road was inaugurated in Normandy, Francewith plans underway for trials across the world. Regardless of its ultimate success, it is symptomatic of an energy transition that is exploring ever more ingenious ways to create and harvest energy.
As energy consumers, we are being co-opted as active participants along this journey.
3) 2017 will see renewables become increasingly competitive both in terms of cost and performance. While this overall trend is nothing new, 2016 was truly transformative in terms of the performance of renewables. In Europe last year Portugal ran on renewables for four consecutive days – a feat that will surely be surpassed in 2017.This does not come close to matching Costa Rica which produced 98.1% of its energy in 2016 from renewable sources including hydropower, geothermal plants, wind turbines, solar panels and biomass plants.
When put alongside the formal ratification of the Paris Agreement on Climate Change in November, whose policy framework lays the cornerstones for the decarbonisation of the global economy, it is clear that renewables are disrupting energy systems more rapidly than all but the most optimistic observer imagined. The wider public will have its say not just through the choices it makes in a year of elections across Europe but also in terms of adopting the technology itself.
Though technology often feels beyond our grasp – the developments of 2016 have delivered some of the most exciting advancements in energy for years. We are on a journey towards a new energy paradigm. Whether your current relationship with energy is passive or active, the new energy horizons that await us in 2017 will be a story worth following.
If this post resonated with your business and you have a compelling story to tell please feel free to reach out to Michael Zdanowski, who leads our Corporate Energy offering.