In a striking keynote, Michael Liebreich President of BNEF spoke about the continued compound growth in renewables and the disconnect between GDP and electricity consumption.
In the last 5 years, Electricity consumption in Australia and California have disconnected from GDP growth and that trend is now spreading through the developed world. Rising efficiency in motor transport may dramatically effect demand for foreign oil, with an effective decline of 25% already occurring in fleet purchases. The greatest change in renewables is in the developing world where installation of renewables is now the driver of energy investment. Clean energy costs for Solar, Wind and Battery are dropping faster then expected. BNEF predicts by 2020, Battery vehicles will be cost competitive with gasoline cars and that wind and solar are already cost competitive in many countries and will be globally cost competitive by 2014. Saudi Arabia is now planning by 2030 to have over half of all energy come from renewables. Utility managers are currently spending 40% of their time thinking about renewables, in a few years they will be spending 75% of their time thinking about renewables and that by 2030, fossil fuel consumption will plateau and begin declining. Potential market disruptions in renewables as India, China and Africa begin investing hard in micro-grids and local solar as the national grids may be unable to expand production and capability of their national grids. Unconventional shale gas has provided significant new sources of gas, however the demands for water and environmental impact may limit or disrupt that production in the future. The most important discussion was his description that older utilities were trapped in “Dinosaur” thinking aimed at simple production models and capital intensive buildouts, while “Mammal” thinking would focus on demand management, smart grids and R&D.
An Uncertain Future
The most likely future for energy managers is that the rules of the past are unlikely to provide useful guidance in the future. This generation of managers will have to deal with wide swings in Unconventional oil/gas production and price, increasing scarcity of water in the developed world, continued decreasing price for wind, solar and electric vehicles, potential spikes in capital costs, smart grid and micro-grid technology and climate change. A traditional chinese curse is “May you live in interesting times”, certainly utility managers are living in interesting times.
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