Politics or Technology

Which will drive the energy market?

Maybe, just maybe, we are witnessing a fundamental shift in the dominant forces at play in determining the future of energy.

To date the politics of climate change have been the dominant driver. Those who see climate change as a threat to mankind, and see its cause being human activity, have manifested their concern through the enactment of policies focused on reducing carbon emissions. The EU commission has led the charge with renewables targets and the energy efficiency directive. Many governments followed with subsidies for renewables and policies to improve energy efficiency. Support for loft and cavity wall insulation is an example of the latter, and Feed in Tariffs an example of the former.

That said there are noticeable divisions in support for these initiatives. In the UK we are seeing the removal of renewables subsidies and the collapse of the Green Deal energy efficiency programme, support for further hydrocarbon production in the North Sea and a positive attitude from government on fracking. In the US we are seeing carbon reduction but only due to a switch from coal to gas as fracking changed the economics of hydrocarbon production in gas's favour. In China we are seeing major investments in nuclear and renewables - but also a continued high rate of coal burn.

When world leaders meet in Paris in December will there be a consensus on measures to combat the threat of climate change?  - The jury is out at the moment.

That said with the cost of batteries dropping 10-15% per year, and interconnected systems becoming the norm we could find ourselves in a world where technology rather than politics is the driving force for change. Low cost electricity storage and the ability to extract maximum value from that storage through inter-connectivity may well lead to decentralised renewable generation becoming the norm. Are we near the tipping point?

Whatever your view a world in which low cost decentralised energy storage combined with low cost interconnectivity and control (i.e. big data) is one which could realistically come to fruition over the next 10-15 years - perhaps sooner. 

Would you bet your organisation on the continued hydrocarbon status quo or should you be developing an alternative, technology driven, scenario to enable you to think through what you need to do today to be able to flourish in that world?

Published by: Enstra Consulting

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