The device that you are using to read this blog has more computing power than NASA had when they put a man on the moon. Since that time, there has been an exponential growth in the power and an exponential reduction in the size and cost of computing. Solar power, battery storage and electric vehicles are on a similar curve. Throw driverless vehicles into the mix and you have a clash of four inherently disruptive technologies that will transform the energy sector much faster than most people think is possible.
Since the dawn of the industrial revolution, the cost of energy has been driven by the cost of fuel. But an historic shift has taken place. Energy is no longer derived from fuel. It is derived from technology. Over time, fuel costs will tend to go up as lower cost reserves are exploited first. Over time, technology costs come down due to innovation and the learning curve.
As Tony Seba explains so clearly in his book “Clean Disruption of Energy and Transportation”, the solar industry has doubled in size every two years for the past twenty years, coupled with a relentless march down the cost curve. This is an exponential growth rate which, if it continues, could see 100% of the world’s energy needs met by solar in just 14 years’ time. Of course, it isn’t just going to happen like that, but it indicates the trajectory of the technological revolution that has been unleashed in the energy sector.
According to Bloomberg New Energy Finance, the levelised cost of onshore wind has fallen 50% since 2009. Solar PV module costs have fallen a staggering 80% since 2008. In May 2016 a new record was set for unsubsidised solar with a project in Dubai setting the cost at 2.99 cents per kWh.
But the energy disruption isn’t just about the cost of energy generation. It is also about quality of service, about business models, finance and the de-coupling of energy and mobility services from fossil fuel use. Uber has disrupted the taxi industry. They’re now betting big on electric autonomous vehicles – as are google and apple. Indeed, Apple is spending more on research and development into driverless electric vehicles than they spent on the apple watch, ipad and iphone combined. Staggeringly, Apple’s R&D spending on cars outstrips that of the average big auto maker by 20:1.
Kodak didn’t see digital cameras coming (despite inventing them) just like Peabody seemed to think that the coal industry would keep growing for ever. Both companies have joined a long list of bankrupt companies that failed to adapt to a rapidly changing world. Tony Seba makes the point that it is the incumbent industry experts that are often the last to see the disruptive change coming.
It is clear that we’re entering an era of profound energy disruption. But we’re in a race against time to cut greenhouse pollution before we trigger climatic disruption of an even more profound nature.