Global energy transition: a challenge for the economy

Advisian global director new energy Paul Ebert
Advisian global director new energy Paul Ebert

Australia is showing tangible evidence of becoming a global energy powerhouse. But in the new energy future, not all players will have a place at the table.

The transition to a new energy economy is already underway. In a country like Australia – a hot pot of under and above ground generation, transmission and distribution – this transition will be rapid and profound.

Global advisory firm Advisian has examined the opportunities and threats posed by the convergence of maturing technologies into international energy networks. Global director new energy Paul Ebert co-authored the recently released The New Energy Future: The Global Transition, and says there’s a lot to lose for those who can’t keep up with the pace.

The report suggests the key to unlocking the converged value of solar, energy storage and electric vehicles will be the “energy internet” – a vast network of devices that generate, store and consume energy – which parallel the feted “internet of things”.

Electric vehicles – which the report predicts will reach purchase price parity with traditional vehicles around 2019 – could be among the devices controlled.

“EVs could also be used as significant arbitrage assets… If you have 50,000 aggregated EVs to source and sink from, you have a significant player in the electricity market that could outperform traditional generation and grid-control technologies, in both cost and performance,” the report states.

“If you think about the current electricity system, there are all these devices that are generating electricity, and there are also devices that are transmitting, distributing and using the energy. The energy internet is about connecting these things together digitally so they can be optimised for the delivery to the end load,” Paul says.

“Data communications could allow an energy supplier to follow vehicles, providing energy at times that suit those vehicles’ owners. Imagine, for example, a driver receiving a message on their mobile device that power is currently cheap, prompting them to charge their vehicle while energy demand is at its lowest, or enabling this on an app to occur automatically.

“Energy could even be provided to the vehicle through induction coils built into the road.”

To make beneficial use of this network, entrepreneurs will need to be able to collect and transmit the data that devices capture about energy use on an open platform. Allowing this is likely to require significant regulatory reform and the evolution of new business models, some of which have already begun in Australia. But given such capability, the energy businesses of the future could deliver unprecedented efficiency in terms of both energy consumption and infrastructure utilisation.

As this is a future with energy flowing to and from the gird, in a much more decentralised manner, it’s no surprise Paul says keeping the whole thing together is going to require discrimination.

This is where the grid becomes important. Rather than spelling the death of the electricity industry as we know it, the report says the grid will actually flourish in an environment of off-grid consumers, integrated renewable generation, and disruptive technologies.

“The grid will still be there, it’s just the use of the grid that will have to change,” Paul says.

“It will become the important backbone to enabling the full optimisation of the delivery of energy services to customers, and the to and fro of their energy from their own systems.

“So we absolutely believe the grid has a very good future.”

This future is not without its challenges, however, particularly as the traditional generation portfolio changes. Industry is already seeing the impacts, particularly in renewable energy portfolio rollout, on incumbent generators. The thing to remember though, according to Paul, is those generators are keeping the entire industry together.

“It’s the coal-fired power stations that provide the majority of grid stability. As that portfolio diminishes, there are significant technical issues that arise,” he says.

“We’re already seeing that in parts of the NEM, particularly in South Australia, that has one of the highest renewable energy penetrations in the world.

“That’s actually an opportunity for us; because as penetration of renewables, particularly intermittent renewables, increases, we’re going to face these problems in a world sense first, because our energy systems aren’t that large. And that means we have got to deal with the situation first, but it also means if we can resolve those problems, we can take that intellectual property to the world.

The new energy future has shifted from ideology to reality and, as Paul says, it’s an important shift to recognise.

“The energy landscape is changing in front of us – more quickly than many people think,” Paul says.

“I work all over the world, and I wouldn’t make this sort of claim without evidence, and we’re seeing evidence play out in a number of markets.”

“Past investment in renewable technologies means that around 50 per cent of photovoltaics manufactured around the globe contain Australian technology. But unless business and government think about how we can be a part of the new energy future, Australia will quickly fall behind.”

“As a business we try to protect the interest of our clients, and we’re saying, ‘you need to look at this’ and we’re starting to make some decisions about how you strategise for your business to align with this potential future.”

Of course, it’s difficult to scenario plan and more so, to put plans into action, when the sector is changing so rapidly. And, while Paul has a lot of sympathy for companies trying to make decisions in this space, he’s confident key decision makers will show great resilience.

‘Resilience’ is a word Paul uses a lot when describing Australia’s new energy future. In times of change, he says resilience involves being aware of trends and movements within the sector, while also having the flexibility to change as business models evolve.

To strengthen this point, Paul reflects on smart phone developments, and how businesses that have embraced mobile, application-based environments have thrived.

“There’s no way, 10 years ago, we could have forecast exactly how mobile devices would have revolutionised business transactions. It’s exactly like this in the electricity industry, so it’s essential to remain open to change, and be ready to jump onto new technologies and new consumer trends when they happen,” he said.

“While not all firms will be winners in the new energy future, there will certainly be opportunities for enterprising businesses – be they new entrants or long-standing incumbents – to flourish by embracing the evolution now underway,” he says.

“This will take resolve, foresight, and good strategic and technical thinking.”

 

Key points from The New Energy Future: the global transition

  • Grid infrastructure holds a key role to realising the full potential of new energy.
  • The move away from fossil fuels will pose an existential threat to traditional energy companies.
  • Australia’s abundance of renewable energy sources (including solar and wind) present an advantage in developing technology that can be adopted globally.
  • Data will hold the key to unlocking the value of the ‘energy internet’ for consumers, requiring new technology to acquire, analyse and profit from it.
  • New business models will be required to align the technologies.
  • Regulatory reform will be required to manage the usage of data without compromising individual privacy.