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Confusion or Diffusion in Energy Transition?

Paul Hobcraft , Agility Innovation Specialists
30 Sep, 2019
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Following on from my recent post, “Managing Energy Transition through Innovation,” let me build out the innovation argument further. Innovation needs to be talked up within Energy. It is the catalyst to all within the current energy transition underway.

There is this compelling and urgent need to accelerate low-carbon technology innovation if the world can achieve decarbonization of the energy sector between now and 2050, to significantly contribute to meet international climate goals set out in the 2015 Paris Agreement.

The twin combination of energy efficiency and renewable energy seems to be the only plausible way to achieve 90% of the emissions reductions needed by 2050 with renewables accounting for two-thirds of the primary energy supply by this date (IRENA analysis).  The essential requirement for energy efficiencies and renewable energy needs is to come from significant technology innovation and systemic innovation, so as o achieve these ambitious numbers. Will it?

To undertake such a radical redesign of the energy system, to pilot and rapidly scale critical renewable energy technologies requires a dramatic set of shifts in such an energy transformation. Can we?

Can you imagine the different sectors of the energy system that takes you from power generation through to the end-user segments of energy demand and all the changes each needs to make? Each part will need to undergo a massive improvement with deployment rates that enable the shift from fossil fuel to renewables. Mapping it is one thing, ensuring it happens is another. Translating theory into an actual (hard-nosed) sustaining return that has financial and societal benefit is one huge leap of faith, or is it? What will deliver the compelling case to make such a change? Are we making as strong a case as we could do?

IRENA, in their research, argues that to deliver on the goals for renewables the share of the total energy consumption needs from these has to rise seven-fold per year. Is this possible? Is there such an investment appetite? Are the technology solutions capable to be scaled at this rate?

Is the complexity of the energy transition to big?

How are we going to navigate such a complex shift away from fossil fuels to renewables to achieve this decarbonization energy sector? A full-scale energy transition takes decades to change as the ability to ‘enact’ the different technical steps, the lifespan of existing capital assets and the embedded role of fossil fuels competing on a price make for such a difficult transition.

The primary arguments of economic benefit are not enough. Although we can achieve a different lifestyle change from combustion-engine cars to electric ones, does this change so much of our lifestyle?

At present, we are focusing on convincing those within the energy system to contemplate change, and that is not a real imperative unless the climate concerns become compelling and force change. No amount of new technology breakthroughs in smart grids, different storage methods that can accommodate variable renewable energy power are enough to displace fossil fuel consumption at the rates required.

We can push harder to replace internal combustion cars, but we are not yet able to point at real scale in implementing such a shift to electric vehicles as we lack infrastructure, the relevant scale of production or the incentives to shift the consumer at such a level to make changes in the short-term.

Realistically we are in trouble.

The momentum behind such an energy transition is getting diffused and occurring in fragmented ways. We lack any clear roadmaps or commitments from industry sectors, governments, or institutional framework. In any significant change from one system to another, in this case, the global energy system needs not just a compelling reason but a massive injection of fiscal and policy frameworks and incentives to “push,” “nurture,” “facilitate” and catalyze the “pull” we need; of one where the party undergoing the need for change “wants” the solutions as a “must-have”.

We need a significant concerted effort for a robust international collaboration from all solution providers, and that is not easy to obtain when individual participants have “vested” interests in both maintaining the existing (fossil fuel solutions) and the new, emerging renewables (wind, solar). Is it a conflict, or can it be balanced?

My concern and for many others is the sheer complexity of this challenge is way beyond one specialized agency, one government or one corporation, it cuts across industries and infrastructure established and proven solutions. How can we create a robust, viable, and determined sustainable transition pathway, where all involved undertake their part?

Achieving a 2015 Paris Agreement on climate targets was an achievement that is still in some level of being undermined at Government level. To change “agreement” into a sustainable set of policies needs to be determined. Enabling policy to drive the energy transition, in the shift away from existing subsidized policies supporting fossil fuels, of allowing fossil fuel designs still to come on stream, to continue to actively support the extraction of our resources and many, many more existing supporting policies need to be switched into supporting and funding renewables. We need to have policies and financial incentives to scale up renewable deployment. For this, we need to accelerate innovative technology solutions.

Although we look towards Governments to be in the crucial enabling role in the past, we operate in a very different globally connected world. One government cannot influence the level of change in such a globally connected world. We need to form a new global order that has as its mission to resolve the world’s most pressing problems, something beyond the existing United Nations that galvanizes the world into a change.  Will that happen? Who can offer the leadership to catalyze this?

To navigate the energy transition

As we up the pace of economic change being undertaken in renewables, in electrification, in new forms of energy systems, we still have not crossed that magic “tipping point.”  We are today caught up in innovators, early adopters in changing their operations. We are seeing an early majority of adopters in different industries, as the solution providers beginning to have an influence or take opinion leadership positions, yet we need the most demanding push yet, to achieve the vast majority within the energy system considering adoption, to make the energy transition.

This push to achieve majority adoption needs to come within the next few years. The current skepticism, doubt, sense of being a laggard does need changing dramatically, certainly in these next few years. Otherwise, we lose momentum. Who takes the lead role in this influencing? Governments, Solution Providers or (the power of) Society demanding change?

Innovation is at the core of the energy transition

The power of innovation can serve a growing and significant part of this transition. Innovation becomes the tool, instruments, and the solutions that can galvanize change. Innovation is far broader than just technology; it needs to be emphasized that the solutions offered are part of the complete system design, in radically different operating systems and in what it can provide in new business models.

Innovation drives competition; it delivers the changed environment where those investing “steal a march” and take winning positions that alter the dynamics of industries, of energy solutions themselves.

I hear the constant beat of the drum of “we need more and faster innovation-.” Yes, this is true, but it is the higher call we all need to hear, the one that innovation provides the compelling system design to make the change. Innovation offers the potential for new competitive positioning, and give economic advantages when it is the core in any integrated business cases, one that will make a more significant difference that offers both commercial and societal benefits.

Innovation within energy is focused on solutions for electrification to decarbonize the planet. Innovation is providing solutions to digitalize all parts of the energy supply chain.  Innovation can offer reduced costs through its new solutions.  It can be designed to deliver flexibility to address many of today’s capability restrictions. Innovation can galvanize change in all the end-use sectors of transport, buildings, home use, and industry, it can provide solutions to turn “dirty fossil fuel” into “clean fuel” in the heart of energy generation and within solutions can capture greenhouse omissions,  to deliver more efficient systems than we have today

We need to talk up innovation, not for the sake of it but for its ability to bring about change, to be recognized as the catalyst of change that will bring about the significant shift we need. Innovation can unite all the parties involved in energy transition as they see the social, business, and policy values of innovation uptake. Innovation can decarbonize, digitalize, decentralize and above all democratize all that is locked up in the existing energy system

We do need to emphasis the value translation of innovation in its contribution to this energy translation.

**Disclosure: Part of my work in research and advising in the energy transition is due to being involved in the Siemens #SiemensInfluencer community or #SIEx. I want to emphasis the opinions and views expressed here are my own.

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