The transition to clean energy sources and reducing CO2 emissions is more important now than ever. Renewables are expanding globally, and more people are getting their energy from clean energy sources. We are steadily striving to achieve the COP21 goals: limiting temperature growth to 2°C and cut the CO2 emissions with 2,9% each year from 2015 to 2050. But how are we actually doing?
In 2018 the energy demand grew with 2,1% and energy related CO2 emissions grew with 1.7% (Enerdata.net). These numbers account for the G20-countries which stands for about 80% of the global energy consumption. Since the efforts to reduce the CO2 emissions have been insufficient since 2015, CO2 emissions must decrease with 3,3% each year in order for us to reach the COP21 targets in year 2050.
The good news is that renewables continues to grow, but at a slower pace, +13% in 2018. The prices for renewables are continuously decreasing which will result in an increased share of renewables as they become even more affordable. By investing in energy innovations renewable energy will continue to grow even faster in the years to come. Renewable sources account for 33% of the energy mix in Europe, 25% in China and 16% in the United States, India and Japan (Enerdata.net).
There is no simple solution for the World to succeed with the COP21 goals and to have a clean energy transition. But in my opinion, there are three critical steps:
1. Improved Energy Storage Technologies
The first challenge may not come as a surprise. Within the last couple of years, the energy storage industry has exploded as the production and consumption of intermittent (that varies in output over time) renewable energy sources has increased. Since green energy sources, mostly wind and solar power, have an uneven production, energy storage is required in order to match the production with the consumption. The production of green electricity does not always match the consumption during the day. The demand is greater in the afternoon/evening and therefore energy storage is important so that you don't have to fill the gaps with energy from fossil fuels. With this as a starting point, which storage alternatives are there, and which can be counted on in the near future?
Pumped Hydro: the technology for pumped hydro is a mature and established technology that accounts for over 94 percent of installed global energy storage capacity (Hydropower.org). The technology uses "water batteries" to store energy. Water is pumped from a lower reservoir to an upper reservoir when the renewable energies have an oversupply and between an upper and a lower reservoir when electricity is needed. However, construction of new plants using traditional dams can have a major impact on the environment. The possibility to use dams is also restricted to areas with altitude differences. These are available in countries like Sweden, Norway, Austria, Switzerland etc but in most parts of the world the establishment of hydropower using dams is not possible. This is why an expansion of pumped hydro power plants no longer is a sustainable option to scale up for large scale storage in the future. A new developed method is to store energy underground, the same application but below ground. The main application is to use mines no longer in use. There are several ongoing projects across the world under construction. It is the cheapest technology for energy storage and the environmental impact is minimal.
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Underground Pumped Hydro Storage pumping water up to the ground or to upper tunnels in a used mine when there is a surplus of electricity from solar and wind and dropping it through turbines back down again when electricity is needed.
Batteries: Lithium-ion (Li-Ion), Vanadium Flow batteries (VFB) and thermal storage using salt are three battery driven technologies used to store energy. Li-Ion and VFB batteries have been used for a longer time but thermal storage is a newcomer in energy storage. Li-Ion and VFB batteries uses metals to store energy. In comparison, thermal energy uses saltwater that easily can be recycled. However, the technologies are in a relatively early phase still.
Hydrogen: energy storage with hydrogen is also a relatively new technology. Hydrogen is a clean fuel when consumed in a fuel cell. When hydrogen reacts with oxygen, water is produced as a residue and large amounts of energy is released. Therefore, hydrogen is considered to be a good option for storing and supplying energy. 94% of all hydrogen comes from the formation of natural gas and the remaining amounts can be produced from households, biomass and surplus electricity produced from renewable energy, such as sun and wind. The primary energy source for producing hydrogen is electricity, one strives to produce the electricity from surplus energy. The future is in electricity produced hydrogen, not from the extraction of natural gas.
Compressed air: energy storage using compressed air (CAES) is almost equivalent to pumped hydro power plants regarding capacity, application and effect. But instead of pumping water between two different altitudes, air is compressed in a CAES plant and stored under pressure in an underground cave. Preferred places are artificially constructed salt caves as they have high flexibility, no pressure losses and reaction with oxygen is avoided. When electricity is needed, the air is released and expanded in a turbine that drives a generator (Energystorage.org).
An increasing amount of electricity produced by renewables allows us to gradually phase out fossil fuels and eventually also nuclear power when the transition has come far enough. There are many unsolved issues around nuclear power which limits the expansion. Without solving these issues, nuclear power is not a suitable option in the future energy mix. Long installation times (many years), high costs, several meltdowns through history and the issue concerning the waste are some issues to name a few. What many people don’t know is that nuclear power is pretty expensive compared to other energy sources. Levelized Cost of Electricity is a way to benchmark different energy solutions against each other. It calculates the lifetime cost of electricity which results is an average price per unit of energy. Nuclear power differs between 112-183 US dollar per MWh which is very expensive compared to wind power for example that ranges between approximately 30-60 US dollar per MWh even when factoring in for example storage like underground pumped hydro (80-100 dollars per MWh).
Lazard LCOE-analysis version 12
Source: Lazard LCOE-analysis version 12.
2. Breakthrough of Innovations
Change takes time. Mankind has gone from primary using wood to coal to oil and now to renewable energy sources. An energy transition can take hundreds of years but during the 21st century, the energy and environmental innovations has drastically increased. In order to achieve a clean energy transition, a mix of innovative technologies is needed so that we can gradually phase out the production from fossil fuels and nuclear power. Technology innovations are key components to reduce climate change. Creating new products and processes that are more energy efficient and with less environmental impact is an important step to find a solution for the current climate crisis.
Innovations like Carbon Capture and Storage (CCS), regulates the existing problems by extracting carbon dioxide from the air and either storing it underground, for a foreseeable time without damaging the environment, or for methanol production. By adding energy, you can reverse the process from CO2 to carbon and oxygen, since carbon dioxide has a lower internal energy.
Another impressive innovation is heat power, where water exists at 80 degrees heat power will be the dominating source of energy thanks to a low price, being a baseload / always on and being green. The market for heat power will be huge, but due to limitations in geography the technology has certain constraints. The technology is applicable where the ground temperature has the right conditions, e.g. in Japan, Iceland, in the western part of North America, Philippines and parts of Eastern Europe to name a few.
Long-term innovations, like modifying the process of steel production, using hydrogen instead of coal and so forth, will result in a huge reduction of emissions on a global scale. Some solutions already exist but we can do even more which is necessary to phase out the “dirty” sources of energy. We need to invest in the future and in innovations that contributes to change.
3. A stronger and more flexible electrical grid
The forthcoming challenges in the electrical grid is the capacity shortage on a local level. This local capacity shortage is in turn complicating the power shortage on a global scale when both the consumption and production of energy will be more unpredictable. First, what is capacity and power shortage? Our metropolitan regions are growing and at the same time is the use of electricity increasing. This often causes a shortage of electricity since the electrical grids aren’t strong enough – this is a capacity shortage and it always occurs on a local level. Power shortage is simply when the demand for electricity is higher than the electricity available at that place and that specific point in time. For Sweden for example a seasonal issue is common when the outside temperature is very low, nuclear power is not running on full efficiency or when there are limitations of importing electricity, to name a few. Both for local shortages and for seasonal shortages, energy storage is the solution for a clean energy transition based on 100% renewable energy sources. The electrical grid needs to be expanded with increased capacity and more flexibility to cope with more intermittent production from renewables.
Wind turbines and sun panels are often located far away from cities and inhabitants were the electricity is needed. The infrastructure needs to be expanded to take advantage of the electricity from renewables and making the transportation as effective as possible. High-Voltage direct current (HVDC) transmission lines is a technology used for transferring electricity over long distances with less losses compared to conventional AC voltage technology (Sciencedirect.com). HVDC links are good for a robust and stable electrical grid, especially when dealing with import and export of electricity between countries. The electrical grids are often interconnected between countries/regions to enable a stronger grid
Source: ABB website
In order to manage the increasing amount of electricity produced by renewables, the electrical grid needs increased stability, better safety and higher efficiency. When the electrical grid was constructed, the electricity supply looked very different from today. New technology and new energy sources have been more common, in which the electrical grid must adapt to. Bottlenecks already occur in the grid when electricity from solar and wind power are to be integrated into the network. To meet the increasing trend of electric cars and renewable energy, the grid needs to be stabilised in order to secure the delivery capacity, while the excess energy needs to be stored in order to withstand the variations occurring from renewable energy.
In conclusion, improved energy storage technologies, a breakthrough of innovation and a stronger and more flexible electrical grid are the three most critical steps towards a clean energy transition. Geothermal heat power is the dominating source of energy where the technology can be applicable. Closer to the equator, solar power combined with energy storage is the winning concept and closer to the poles, wind power combined with storage is the best alternative. Maximizing the potential of storage is reached by combining a mix of a strong grid (this is an indirect solution), and energy storage in form of underground pumped hydro, lithium ion and hydrogen.
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Christopher Engman, Lead investor and CRO/CMO at Proof Analytics – The world leader in Automated Marketing Mix Modeling, Clean energy writer and speaker, investor in 12 companies (blend of green energy and marketing technologies) and author of the book Megadeals – How multibillion dollar deals are done and what the rest of us can learn from it
