There is an energy revolution happening, but no, it is not being televised.
Around the world people in many countries are working to deploy renewable energy technologies at a scale and pace that is transforming the way energy is used and generated. It is starting to disrupt the existing markets for energy.
There are so many stories out there that illustrate the speed of change in the deployment of clean energy technology. Yet amazingly, many times when I stand up in front of a group and say that there is a renewable revolution happening, people find it hard to believe. It seems the common misconception that has been put out is that renewables will never take the place of fossil fuel energy when quite the opposite is starting to happen. Renewable energy, and particularly solar energy, is rapidly becoming the cheapest form of energy in many parts of the world and deployment rates are rocketing. But looking at the traditional media that is often the last impression you would get.
The energy revolution is truly the next great transition, the fourth revolution of human development. First there was the agricultural revolution, second the industrial revolution, third the information revolution ... and now the energy revolution is underway. It is essential that this happens, and I believe it is also inevitable. The price of fossil fuels has become extremely volatile, and extraction of new sources gets more complex and expensive. At the same time the effects of pollution and climate change are becoming more acute and clear for us all to see. It is time for energy generation and use to catch up with human development and to be brought back into sync with natural cycles. Most of the energy systems we use now were essentially invented in the industrial revolution and stemmed from the burning of coal as the engine of progress. It is time for the wholesale transformation of that system, – as Amory Lovins so aptly puts it in his book of the same name – it is time for ‘reinventing fire’. It seems that this transformation will not be led solely by governments or industry, but must also be led by people in their local communities.
Many of us have lived through huge changes in the last two decades as the information revolution has transformed the way we communicate, shop, do business, are entertained, and work. Twenty years ago when people were buying the first personal computers, many people questioned why anyone would actually want a computer in their home. This seems hard to believe considering how deeply intertwined this technology has become in people’s lives. The mobile telephone revolution has had an even greater impact and it has grown at a staggering pace. In 1990 there were hardly any mobile phones and yet today, just over 20 years on, there are over four billion of them in use worldwide. Now many of us take it for granted that the device in our pocket will be able to make a call, surf the net, play music and film as well as access social media platforms for the rapid sharing of ideas and information. This is a huge development in a short space of time.
This communications revolution has been disruptive in developed economies where there were landline infrastructures and established working systems, but it has been totally transformative in Africa. It was estimated that there would be one billion mobile users on the continent by 2015, and the use of mobile phones has had some surprising positive effects. Social networks using mobile phones have increased the reporting of crises and in turn the response to them. They have increased the involvement in, and safety of, elections. Mobile phones are revolutionising financial services in Africa. In Kenya the company M-PESA is a true global success story in the field of mobile payments with over 18 million active users. People who had no access to banking can suddenly access it through this platform. This transforms what is possible for people who are often still living without electricity and running water. It transforms their ability to purchase things that would otherwise be unattainable, and it opens many new avenues. Ebooks are now accessible to millions of Africans and there are also mobile based services offering healthcare tips, maternity advice, tips for farmers and up to date weather reports. When so many of the population are smallholders dependent on what they can grow for their livelihoods, this can be essential information. The mobile and information revolution is enabling people around the world to do things differently for the first time.
The energy revolution has the promise to be as far reaching as the previous revolutions and without a doubt needs to be as transformative. There are still 1.5 billion people on the planet with no access to electricity and three billion who still cook on smoky and dangerous wood, dung and charcoal fires. Those of us in the developed nations have tapped into a wealth of energy in the form of fossil fuels that have transformed our societies and lives. Access to energy that is a daily struggle for many has become an instant and careless process for many others. In developed nations we are running bloated and inefficient systems where in many cases huge percentages of the energy resource are simply wasted – straight up the chim-ney. So this energy revolution has two distinct paths to walk: A powering down or ‘repowering’ path for the wasteful and heavily energy dependent countries, and a powering up path for those for whom access to energy is still a daily struggle.1
There are many inspiring stories of where both these paths are already being walked in many communities around the world. There are many inspirational people forging the new paths for our communities, and making the change in their own town.
The energy revolution will require a change not only in the way we capture, use and store energy, but also a shift in how we finance its construction and who owns the systems. It will inevitably move from a centrally owned and controlled system to one that is distributed and networked. We have already shifted to a distributed system when it comes to information – the World Wide Web has created a networked system of information storage. This system is dynamic and amazingly adaptable, with critical functions operating from multiple locations, so if there is a server failure in one place, there are others that will keep the system working. Our new energy system needs to be similar, encompassing a mix of technologies, optimised for local conditions, and delivering energy from a range of sources to provide a stable supply.
Decentralised Energy System
Once before, we sourced all of the energy we needed for our lives from the land directly around us. Our primary sources for energy were wood, wind and water. For many people around the world this is still the case. In developed nations we have built up huge infrastructures to source the energy we need from all over the world, sucking up and squandering resources for our needlessly wasteful lifestyles. Now it is time to wind the clock back and once again source all of our energy needs from the natural resources directly around us rather than from limited resources shipped around the world. It is also time to use those resources with care so that we make the most of the energy we have available to us. Renewable energy technologies and energy efficiency techniques make this possible. What many people see as a pipe dream has already been achieved in some places – with technologies and systems that are readily available today.
Your roof can become a power station, your town could turn its waste food into biogas, its sewage waste could become a source of energy, your local river or tidal stream could generate power. We have a range of technologies, many already technically proven and commercially available, that could enable this transition to a local energy production. There are many examples of communities which have embraced these ideas and made the transition, with many positive side effects. There are already towns that generate more energy than they need, and have created businesses and jobs in the process. There are countries that in moments have generated more energy than they need from renewable energy alone. The decentralised energy system is already under construction.
The decentralised energy system cuts out many of the losses associated with the current centralised system, transmitting power over vast distances from remote power stations or transporting fossil fuels by tanker from faraway places. It also offers a model for developing nations to adopt directly, without the need to build big, inefficient and expensive centralised infrastructure. As has happened with mobile phone technology – why would people do anything else?
Energy for Good
Access to energy is fundamental to life. From cooking to reading and washing, so many essential acts in life require energy. Yet so many people do not have access to the energy they need, and not just in developing nations.
Amazingly, in developed nations where we all use massive amounts of energy every day, there are still huge numbers of people who do not have access to the basic levels of energy they need to stay warm and run their lives. Fuel poverty is rife in the developed world. Here in England, in one of the richest countries on Earth, it is estimated that there are currently 2.2 million children living in fuel poverty – where parents have to choose between heating and eating. So not only are we running massively wasteful and fossil fuel hungry systems, we are also not providing the basic services to many people in our societies, a situation that surely cannot continue.
The energy revolution is a huge opportunity for people across the world to take control of the energy they need for their lives, for the first time ever. It is an opportunity for energy to be a force for good rather than just a source of profit for large corporations. For that to become a reality, ownership of the energy generation and distribution assets needs to transfer from the corporations back to local communities. It is time we had a democratically owned energy system that meets needs locally, and renewable energy gives us this opportunity.
One of the potential great side effects of mass deployment of renewable energy schemes is the shift in ownership that can occur in the energy system, and this has been widely reported in Germany. The nature of renewable energy developments is that they are built at a whole range of scales, from individual home systems and business sized, to community sized and very large systems. Traditional power stations generally only come in one size – very large. This range of sizes that renewable schemes are built in means that investment is opened up to a much wider audience. It is now not just larger multinational corporations that can afford to build, own and operate a power station. You can, I can, your business can, your local council can, your local farm and community can. In many ways the small-scale modular nature of the technology makes it even harder for large corporations to get involved.
The analysis of ownership of all the renewable energy systems deployed in Germany by 2010 is amazing: 62% was owned by individuals and farmers. Only 6.5% was owned by the large energy corporations. The large energy corporations rely on you and me being at the end of the wire, and the moment that you are not, the moment that you become a generator yourself, there is one less customer for them to rely on. This perhaps doesn’t sound like a big deal, but when you look at the speed with which these changes occur you can understand the huge implications. In the UK between 2010 and 2013, we went from a having a few thousand solar PV powered homes to having over half a million of them. That’s half a million people who have an insignificant or massively reduced electricity bill. There are around 25 million homes in the UK so these people taking control of their energy will make a significant impact on the traditional energy businesses. In Germany, of course, the numbers are much higher. Couple these solar homes with the energy storage technology that is on its way and the utility that provides your energy right now becomes a small player in your energy landscape.
This mass transference of ownership redesigns the system entirely. As we have seen earlier, it fundamentally undermines the business models of the big energy corporations because you won’t only be at the end of the pipe any more, you will be interacting with the grid – essentially using it as a storage and transfer mechanism. When you are no longer solely a consumer, the economics of the entire system shifts, and perhaps it only takes a shift of a few percentage points for things to change forever. Suddenly, we need a new word to define your role in this new system – and the one I have heard in relation to this is ‘prosumer’. You become a producer as much as a consumer – trading electricity or energy as you do with many other things in your life.
The End of the Utility?
With consumers becoming ‘prosumers’ and an influx of renewable energy sources coming onto traditional networks, the business models of the utilities that dominate European and US energy supply are starting to look outdated. In fact it seems that they are starting to be threatened by them, as the system changes from centralised fossil fuel and nuclear power to a distributed renewable one. There have been numerous write-ups of the phenomenon and the early effects in some countries. As summed up by Duke Energy CEO, Jim Rogers, “If the cost of solar panels keeps coming down, installation costs come down and if they combine solar with battery techno-logy and a power management system, then we have someone just using [the grid] for backup.”2
On some days in Germany, for instance, the grid is awash with effectively free solar and wind energy, so that the wholesale price for electricity falls to levels that are no longer profitable; in fact on some days the wholesale price has effectively gone negative. The middle of the day, when solar output and consumer energy demand is at its highest, was normally the time when utilities made the most money. Now however, those peaks in power are often being provided by the 30GW of solar that has priority access to the grid. This has led to a reduced output from fossil fuelled power plants and a corresponding reduction in revenues as a consequence. The German electric utility E.ON forecasted a dive of 43% in revenues in 2013 compared to the previous year, according to Thomson Reuters. Rival utility RWE’s Chief Executive Peter Terium, said in November 2013 that his operating model was ‘collapsing’.3 This reflects on the value of these companies as well; both E.ON and rival RWE have lost about 70% of their market value since 2008.4
Whilst the penetration of solar and renewable energy is not so high in many other countries in the world, it is having similar effects in other areas where high levels of deployment are being achieved. In the US’ sunniest states, California and Arizona, the threat is already on the horizon. In response to the rise of solar in Arizona a tax has been introduced on customers with leased solar panels to try and slow the market down, it would seem.5
The end game here is that utilities that have invested in expensive fossil fuel and nuclear power station ‘assets’ will end up with two hits on their business models – a reduction in revenues, and a set of expensive assets that are no longer needed. The more expensive the assets – and the more costly to run – the worse it will hurt. Nuclear operators with high fixed costs stand to lose the most. It is likely that to compensate for the loss in revenues, the utilities will put up their prices and yet more of their customers will start to generate their own power from renewables as a result, compounding the situation.
In the US, utilities are faced with competition from new solar start-ups like Solarcity, which provides solar energy systems to homeowners and businesses. CEO Lyndon Rive says of the company: “We install solar systems for free, and we sell the electricity at a lower rate than you can buy it from the utility. So given the option of paying more for dirty power or paying less for clean power, what would you take?”6
Theories are marvellous things, but personally I have always gained more from hearing about actual examples of where the theories have been shown to work. There are already many amazing headlines that illustrate the success of renewable energy across the world. For instance, wind power was the largest single source of electricity production in Spain in 2013. Renewable energy accounted for 42.4% of the total electricity demand in Spain during 2013, 10.5% higher than in 2012. It was estimated by Portugal’s electricity network operator that renewable energy supplied 70% of total consumption of energy in the first quarter of 2013. In 2012, the percentage of gross final consumption of energy that came from renewable sources in Sweden was 51%, in Latvia was 35.8%, in Finland was 34.3% and in Austria was 32.1%.
According to the International Renewable Energy Agency, “Worldwide, renewable power capacity has grown 85% over the past 10 years, reaching 1,700GW in 2013, and renewables today constitute 30% of all installed power capacity. The challenge has moved on from whether renewable energy can power modern lifestyles at a reasonable cost – which we now know it can – to how best to finance and accelerate its deployment.”
So let’s look around the world and hear the stories of change that are unfolding. Let’s look at the big picture of change in various countries, and also hear from a few of the pioneers who have made change happen and caused shifts in their own communities.
There are two themes at work – one of communities ‘repowering’ or redesigning their energy supply in developed nations, and the other of ‘powering up’ – providing access to energy for people that currently have none.
Get ready for the fun bit.
Extracted from Energy Revolution – Your Guide to Repowering the Energy System by Howard Johns, published by Permanent Publications (our publishing arm), available for £17.95, from our online shop here: www.green-shopping.co.uk/energy-revolution.html
Howard Johns, author of Energy Revolution, is an energy engineer, entrepreneur, business leader and activist. After completing a degree in energy technology and environment, Howard became a protestor about energy and climate change. Moving on from saying no to the problems, Howard set about building solutions, eventually founding Southern Solar, a national solar energy company, and Ovesco, a locally owned renewable energy cooperative. At the same time he chaired the trade body representing the UK solar industry, finding himself once again a campaigner around energy policy in the process.
1 ‘How Africa’s Mobile Revolution is Disrupting the Continent’, http://tiny.cc/davos-africa
2 ‘Solar Panels Could Destroy U.S. Utilities, According to U.S. Utilities’, http://tiny.cc/solar_us_util
3 ‘RWE to Cut Jobs as Green Energy Expansion Hits Wholesale Prices’, http://tiny.cc/RWE-cuts
4 ‘US Utilities Face German Style Solar Burn’, http://tiny.cc/solar-burn-us
5 ‘Solar Companies Sue Over New Rooftop Solar Tax In Arizona’, http://tiny.cc/sue-arizona-tax
6 ‘SolarCity CEO Talks the Future of Solar Power’, http://tiny.cc/future_solar