The Future of Energy

(Português? Clique aqui)

The first time I had an idea about the importance and the challenges of dealing with energy on the planet was in 2011 when I attended a lecture by Jeremy Rifkin at SmartCities. Since then, I have come to understand more of the subject, exchanged ideas with friends that are electrical engineers, and, years later, I read the book Abundance, by Peter Diamandis. He has an optimistic view of the advances to the world on several fronts and also speaks about energy. During my travels in several countries, this theme has instigated me more. Along the way, I read Rifkin's The Third Industrial Revolution, I've visited power companies and, in the last months, I've started talking to several people from the industry and reading a lot of references.

Today I see that making a revolution in the way we understand and consume energy is the main challenge in the world because it stands at the base and has direct impacts on all other areas. To make it clear: food production, access to drinking water, purchase of products and services, transportation, among many other things that have their prices impacted by the cost of energy. More than the environmental challenges caused by the use of fossil fuels, we must find a way to obtain abundant, cheap, renewable, accessible, and distributed energy. This is the great trump card to elevate our civilization to another level. It would create a revolution equivalent to what the Internet represents for access/production of information and communication.

My intention with the following sessions of this article is to synthesize my initial study period on the energy market: presenting a macro view of the current situation, commenting on the challenges and showing my perspective of the future on this field, as well as bringing some innovation references that I've found in this area. Furthermore, I aim to contribute to the development of this sector, disseminating knowledge, and initiating new conversations.

THE ENERGY TODAY

First, how does the energy market work? In the diagram, there is a vision of how things work:

Diagram - Electrical Grid 

We have generators that produce energy using various sources (coal, nuclear, water, etc.). This energy is taken to the transmission lines and is then managed by the transmission operators until they reach the distributors, which deliver the power to the customers - homes, businesses, rural areas, and industry. Often, the same company does all these roles (generation, transmission, and distribution). In some more liberal markets, there are also marketers, who buy and sell energy without necessarily producing it (or distributing it) and add services to the commercialization of energy, promoting competition for the sector. The whole world provides about 13,790 MTo per year (International Energy Agency, 2015), or more than 160,377 TWh. Just to get an idea, S?o Paulo for instance, the 8th most populous city in the world, consumes about 27 TWh per year. In fact, There is a lot of energy within our reach, and yet we have 1.1 billion people in the world living without electricity, most of them in Africa and Southeast Asia.

Moreover, to sum up, this energy is mostly dirty and expensive: 62% of generation is based on coal and gas (WEF / World Bank, 2016). The costs vary significantly according to the country, as it depends on its installed capacity (the type of energy source used), the distribution structure and the tariffs. Germany, for example, is one of the countries that has made considerable investments to move to a fully renewable matrix, with a high energy cost of US $ 0.33 per KWh. To compare, Brazil and the United States have a cost of around 0.13, and China reaches 0.08. Remembering that values change according to the type of customer - in general, households pay more than industries, for example. It is also worth noting that, comparatively, energy in Brazil is expensive, since purchasing power is low. Brazilians spend an average of more than 11 hours of work to pay primary consumption while the Germans spend 5.5 hours. Making a transition to a more sustainable model can be expensive, but it is the path sought by the world.

Since the Kyoto Protocol, enacted in 1999, countries have been seeking to reduce greenhouse gas emissions and combat global warming. In December 2015, during the COP21, the Paris Agreement was signed, which renewed these efforts and set more aggressive goals to limit global warming to less than 2oC, with real attempts to stay within the limit of 1.5o C. This raises several issues and challenges. Although other factors contribute to increasing the temperature in the world, such as meat production, deforestation, and natural causes, the generation of energy based on fossil fuels also has a big responsibility. So what have we done in the world, and what can we expect for the future? Today, I understand these challenges on four fronts, which I comment below:

• Generation
• Storage
• Transmission and Commercialization
• Intelligence and Efficiency

CHALLENGE 1: GENERATION

Generation may be the challenge with more variables and uncertainties about how it will look like in the future. After all, what prevents the world from changing our energy matrix from fossil fuels to renewable? First, we have to understand that it is necessary to have installed capacity that meets the energy peaks. For example, sun and wind are not constant sources, so other sources or storage models (see below) are needed to compensate when they are not generating energy. More importantly, I believe that the cost is decisive to establish the matrix for a country or region to adopt.

As already predicted years ago, solar energy has become increasingly cheaper and, along with wind power, is the promise for the future. In the chart below, you can see this, and the expectation is that it will be even cheaper than the other sources. However, unfortunately, it also presents adversities: the creation of solar farms requires a large amount of space, and in many places, this means clearing the vegetation. Also, the end way of a photovoltaic panel is not really commented.  What is the impact of the panel’s residues when it becomes obsolete?  Studies are showing that it requires 17 times more material in the form of cement, glass, steel, and create 200 times more waste than compared to manufacturing a nuclear plant with the same level of energy generated. What will we do with these panels in 20-30 years when we need to replace them?

I see that this is a problem to be solved and not an obstruction to the application of solar energy. First, because the created panels have been better, cheaper, and more durable. This is what Tesla and Solar City have done, for example, with solar roof tiles that are cheaper than conventional tiles. There are several regions in the world, such as desert areas and unused spaces that could have solar panel installations. But, above all, the main highlight for solar energy is that it enables people to have their own generation at home, thus allowing a distributed power generation network to be created in counterpoint to market concentration. Today there is a natural monopoly in distribution because it is a highly regulated market with a centralized level of planning (it would be uneconomical to have two companies building two parallel lines to transmit power, while only one is sufficient). On the other hand, generation must have competition for a more abundant and cheap energy source (however, here we have a high barrier of entry, especially from a pre-operational investment point of view, and a regulatory factor as well - a generator cannot merely stop producing energy by surprise and leave a whole region without light).

In the future, we may have energy microentrepreneurs who use their property to produce energy and sell to their community or nearby industries. Of course, this involves adjusting storage, commercialization, and regulatory challenges. For example, charging the individual a fare to use the lines - no matter how much you inject energy in the same proportion you consume, the final balance is not zero, as there are costs with the transmissions. In Brazil, when you inject energy, the residential electricity meter goes back, that is, in a way you sell energy for the same amount you buy, but you cannot make any profit - you can clear your light bill, but you will not earn money by injecting more than receiving. The Brazilian National Electric Energy Agency made it very clear that it will not allow the creation of a parallel energy market - at least in the short term. However, the path seems promising once a cheap source that can be installed in small areas is found. Solar and wind power are the most cited for this, but they are not the only sources that promise to reshape the world's energy matrix.

I do not believe that we will have a single dominant source, because there are diverse origins, and it always depends on the characteristics and opportunities of each region. Many types of research being developed may propose a disruptive alternative that is not yet foreseen to change the landscape. This would also have an economic impact, since many investments in the sector today are made with a 20-30 year long-term return, such as large hydropower plants and solar and wind projects. If in the middle of this period, a better venture arises, the previous investment could be lost, plants would be closed, and this may bring some negative consequences. However, as it might be for the emergence of a cheaper and cleaner matrix, it seems to be a natural consequence of technological innovation - the same is valid in other sectors as well.

What other sources can be disruptive or are unusual and present opportunities?

Fusion

Unlike the current model of nuclear energy that is made by fission, the fusion technique would unite two nuclei of the hydrogen atom, which would have a massive release of energy. The problem is that because the two nuclei are positive, they are challenging to unite as one repels the other. High speed is required to make them collide. Attempts have been made by heating the plasma, which would allow this to happen. But for this to occur, a large amount of spent energy is also required to prepare the reaction. In any case, the fusion is clean because it would only generate helium and neutral as waste, which is not dangerous for the environment. Scientists are building ITER, a plant in France capable of generating 500 MW. The United States, China - with the EAST (Tokamak Superconductor Experimental Advanced), and other countries are also advancing with studies on this topic, which is still in an initial stage. If feasible, we would have new plants with very high-energy production, becoming the pillars of our matrix.

The energy around us

Another concept that still needs to be explored is to use energy that is already present in its natural state, in addition to the sun and wind. It is the case of using, for example, movements of the tide or the waves as the company Ocean Power Technologies does. In this instance, the application of the technology may fit better for markets such as offshore oil exploration, offshore grid installations, etc. If there is already a natural and mechanical movement in the world that produces kinetic energy, it is worth seeking a way to explore it. Nevertheless, it is vital first to understand if the available technology will allow generating electricity cheaper than other sources. In such way, because there is no cheaper source nearby as it is in the middle of the ocean, the costs might match with the benefit.

Pavengen, based in the United Kingdom, creates solutions that transform steps into energy and apply it to small solutions like spotlights and billboards. Sound Energy, from the Netherlands, takes advantage of wasted heat, such as a boiler, a production process or the structure of a building, and using a thermo-acoustic converter creates 25 kW output, generating water or cool air. Gravity Light uses gravity to generate enough energy to keep a light on. Perfect for rural places without access to electricity, right? They are exciting initiatives that optimize our energy process and can reduce the price of energy and relieve the use of other primary sources, but they still need more time to prove themselves.

One company that I had the opportunity to visit in Barcelona was the Bound4Blue, which has a sail solution to use wind energy for shipping. But wasn't that what the boats were doing 200 years ago? Exactly! However, over time, we've replaced the wind with fossil fuels, and today, the industry has the challenge of reducing its environmental impact, or it will have sanctions under the new agreements. Sails complement the use of traditional fuel and can achieve up to 40% reduction in fuel consumption, depending on the type of the boat and the route used.

When we look at solar energy, then we can find hundreds of opportunities, from the most traditional - companies creating solar panels - to new solutions like ENDEF, that produces hybrid panels and, in addition to the solar energy generated, also take advantage of the heat to warm the water.  On the other hand, it helps to cool the panel, increasing efficiency by 15% compared to traditional models. It is also worth mentioning the company of a great entrepreneur friend, Vatio, which in Brazil seeks to deliver affordable solar energy to the market, working with the possibility of leasing and co-investment to acquire the panels. Also, it is interesting to take a look at Tecnosol, another company that I've visited during my trip to Nicaragua and today is the largest solar energy company in the country. In this video (only in Portuguese) I talk more about this experience.

Organic transformation

Other solutions that caught my attention were the companies that use the byproduct of some productive process that, instead of becoming waste, can be transformed into energy. It is the case of the Endeavor Entrepreneurs of Geo Energética who, in a simple method of bio-digestion developed by the company, can turn sugar cane residues, which would be discarded and cause environmental damage, into an energy source. The biogas produced can be converted into electricity or biomethane, which is a more economical and sustainable alternative than the diesel used at the plants today, and fertilizer, that can be returned to the sugar cane fields and thus closes its cycle of nutrients. Bio Bean does something similar but using the coffee residues. Antecy and Opus12 recycle CO2 and make derivatives as fuel. There is a wide range of possibilities and reuse of what we once thought was just rubbish.

Thorium

The first time I heard of Thorium was when I read Abundance. After that, I did not hear any news that the much-vaunted nuclear power source became true. Thorium is a similar element to uranium that generates nuclear energy, but with more energy per ton and less radioactive waste. Also, it is more abundant in the world than uranium (500x), and the most prominent sources are in India, Brazil, Australia, and the United States. So why are the researches not focused on it? One answer is that uranium can be turned into plutonium, which has a high military value. Thorium investigations are conducted by national groups, and there is almost no publicity or companies looking at it. To this date, few plants have been created based on this mineral, and they are primarily located in India and China. Is it still too soon to talk about Thorium?

---

There are other sources and even new companies and solutions in addition to the "traditional" sources such as solar and wind. As I said earlier, I do not think we will have a single source as a monopoly on solar energy production, but if an abundant, extraordinarily cheap and non-polluting disruptive technology comes up, then we could have a rupture in the current matrix. For the time being, I still see that the best thing to do is to take advantage of this set of energy sources by reusing each part of the economic chain and creating cheaper solutions that work in a distributed way so that we can have a positive impact on the environment.

CHALLENGE 2: STORAGE

How to store the energy to be used when there are peaks of demand or low production is a fundamental issue for the evolution of the world's clean energy matrix. Today, the most common speech is the mixture of batteries with solar and wind energy, that is, the power is stored in a cell when there is an excess of production and then used when there is no wind or sun. However, historically, the cost of the battery has been one of the significant barriers in this case, although the tendency is for the price to decrease.

Today the most applicable batteries for the market are Lithium-ion batteries. The price is also expected to fall as much as $ 70 / kWh. Tesla has one of the highest density batteries in the industry and recently opened its patents for others to also research with their battery and electric car solutions. Its Powerwall has a capacity of 13.5 kWh and expects to last more than ten years maintaining a "round-trip efficiency" of 90% (every 10 kWh of energy that enters, you can use 9). As the theme becomes popular, other companies have also come up with initiatives - automobile competitors, solar/storage companies such as Sonnen. However, is Tesla the best battery for the future of storage? Are lithium batteries the solution of the future?

In the end, we can have different storage solutions depending on the context and opportunities of the region. It will depend on the storage capacity, the power of the solution (how much energy can be consumed per hour), durability, and costs (cost per kWh stored and throughout life). Of course, as new technologies and techniques emerge, these solutions will be cheaper and more efficient. Aside from the lithium batteries, I've seen other solutions that may also be present on our future grid.

Other types of batteries

Batteries based on saline water may be cheaper than lithium, although they take more space. The research is still recent, and the company that has led this initiative is Aquioenergy, which, after suffering financial problems, was acquired by BlueSky. Another similar solution was developed by three senior high school students who created the Blue battery using membranes composed of water and hydroxide bonds to maintain energy. It is a sustainable path, which may be cheaper in the future, although it requires a bigger space.

At the IESE Energy Summit, I've met the founder of Carbon Clean, which is starting to market a solution capable of generating 100 MWh with a power of 10 MW. Their technology allows them to store energy in a solid material that heats up and maintains heat and then turns this surplus back into electricity. The product requires a significant investment, but it seems a good solution for large companies or generators of renewable energy that also want to complement its offer. Besides, it may be a request from the government to want a storage system inside the grid to improve system performance and defer investment in generation. At first, this solution comes out cheaper than the use of lithium batteries.

Valhalla and Energy Vault

A great Chilean friend, who is doing an MBA with me at the University of Barcelona and worked in the energy sector, commented on the Valhalla project in Chile. The idea is to use surplus energy (from solar plants installed in the desert) and pump the seawater to a higher region. The stored water would be the future energy obtained through a hydroelectric system. The proposal seemed awesome to me, but when I read more about it, I realized that the project stopped because of investment: the energy price was expected to be close to 100 dollars per MWh, but the Chilean government opened bids for new renewable energy projects and many companies signed up promising a lower price. Therefore, getting the resources to go on with Valhalla's initiative became difficult. If these projects materialize as promised, Chile will have taken a significant step towards a more sustainable and cheaper energy matrix.

On the other hand, if the project's goals are not met, the short-term energy price will become more expensive, and neither the Valhalla project will be active. Projects similar to this are found in the Nordic countries. They are called reversible hydroelectric plants, and although they are expensive, they often end up being the best option for the region.

We can apply the logic of storing energy in another way to several other initiatives. One of them that seemed different to me, though notable, is the Energy Vault. They developed huge cranes with suspended concrete blocks forming a tower. The cranes form the structure to store the energy. Then to consume it, they lower the concrete and, using gravity, create kinetic energy, which is transformed into electricity. It is worth entering their website to check the demonstration video and reading more about the technology, that promises to store 35 MWh with a power of 5 MW.

Other forms of storage that I found

In these months of studying, I have seen other initiatives that can be used to store energy as well. It reinforces the idea that we will probably have more than one solution on the market and will always depend on the local context of use and price. Rifkin is a great advocate of creating hydrogen from water or air as a mean to store the fuel and then have a clean burning. There are security and cost challenges, and it seems the market is not so excited to go on this route. On the other hand, there are works in this area, such as the automobile industry making prototypes with h2 fuel or, as published in 2018, the use of nanogold particles to be used as semiconductors to produce hydrogen from water, being 4x more efficient than other methods. I do not think hydrogen is abandoned at all.

A British startup has tried using angular motion to spin a heavy object very fast and keep it isolated in such a way that it would serve as a form of storage, also known as "flywheel energy storage." Moreover, researchers at Harvard have even sought a way to contain energy by using bacteria. It would apply the principle of photosynthesis, transforming solar energy into fuel through a process involving the capture of CO2 and hydrogen. The storage possibilities are numerous, and I look forward to seeing how these technologies will be improved, and how the cost of storage will decrease, enabling the creation of new applications and solutions for our network.

CHALLENGE 3: TRANSMISSION AND COMMERCIALIZATION

What is the best way to make the energy go from one end to the other? Today we have a vast network of transmission lines (high, medium and low voltage) responsible for this. The longer the distance traveled, the less efficient it is. It depends significantly on the infrastructure available in each country and the amount of transformation from one voltage to another. In many places, redundant lines are created to prevent loss and ensure energy delivery, but there are still many losses. The table below is from an ETSAP study that shows the losses of some regions. Although efficiency has improved, they still represent a significant volume that impacts our energy costs.

The way to improve power distribution involves smart grid solutions that generate intelligence and efficiency in the network. There are already some innovative initiatives in this regard:

Aggregators

Aggregators are like a central station connected to the grid that integrates all generation and demand and manages the allocation of energy. This has been possible by the use of digital meters, which allow us to understand consumer behavior. According to an IRENA study, 20% of daily demand in Australia can be met by the use of this solution. So, Tesla and the Australian government have developed a project to connect 50,000 homes with solar panels to the aggregators.

Blockchain and marketplaces

With the evolution of blockchain technology, we see initiatives to connect the generation end with the client, without the need for intermediaries. Still, a customer can determine precisely what source he wants to buy. In practice, it is not possible to know, in fact, whether the energy you are receiving at a particular time came specifically from where you purchased it, since when the power of a specific source enters the grid, it mixes with the others. However, it is increasingly possible to make this exact reconciliation from where it was generated and where it was delivered. As this solution grows, people will be able to decide which energy sources they want to use.

Another possibility is that, with distributed generation, it will also be feasible to create real marketplaces where a residence can sell its surplus energy to a neighboring establishment. This type of solution tends to create more market competition, but, as stated earlier, there are still major regulatory barriers. An exciting initiative along the way is the Australian PowerLedger, which is a trading platform focused on buying and selling renewable energy, using blockchain as the basis for such transactions.

Wireless Transmission

Stanford has followed the invention of Nikola Tesla, who was able to create a wireless transmission for medium distance in 1891. It means that you no longer need distribution and transmission cables to receive energy. Also, you could still charge all your gadgets through the air or even recharge your electric car while you're riding. Of course, this presents enormous efficiency challenges, since the loss of energy by wireless is even higher than by the networks, but it is still a possibility in the future.

Another development of wireless being studied by the Chinese government is the use of satellites to transmit energy. The idea is to have a space station that captures solar power out of orbit and sends it to earth in the form of microwave or laser. The efficiency and costs of this are still uncertain, and for attractive as this transmission mechanism may seem, it still looks a little like science fiction.

Commercialization

Here in Spain, trading companies like Hola Luz and Lucera focused on selling energy directly to the consumer have become very popular. That is, they buy energy (including all generation, transmission, and distribution expenses) and sell it to homes and businesses. Their value propositions are 100% renewable energy sources and also the tariff modality where the consumer pays a fixed monthly rate, regardless of consumption.

They are still startups that have received investments in Series A and Seed, but they have grown considerably in the country. I believe it happened, mainly, because of the proposal of a single tariff, which ends up giving total predictability of expenses to the consumer. It is expected that the balance on their side should be positive, that is, they can negotiate with the generators better prices to buy in volume, and they need to have a structure more efficient than the traditional marketers and probably to work with smaller margins to be competitive. One challenge I see for them is that by selling a commodity, the competition stands on price and support service, which is more challenging to generate a competitive advantage but helps them to get distance from a commodity sale. For example, in addition to the single tariff, they can provide a consumption management system, sell energy specifically in an hour or a type of source, among other differentials that they are probably thinking of.

——

We may have innovations in the way we distribute and buy energy, but the main point still is how to make this path cheaper - and this goes on how we have less loss and more intelligence in resource allocation. Thus, we arrive at the last challenge of this market:

CHALLENGE 4: INTELLIGENCE AND EFFICIENCY

This challenge implies better allocation of available resources: better use of networks, knowing when to consume energy and in what way, etc. Numerous initiatives contribute to different fronts of efficiency and intelligence within this market. For example, construction companies have created solutions for the use of light and heat retention to reduce the need for energy. It is also possible to find software solutions such as the promising Dexma that has developed a platform capable of monitoring and controlling the use of energy in buildings. Besides, I met the founders of HeatVentors recently, and I was impressed by the fact that their solution was able to reduce by 54% of electricity costs to cooling data centers.

Another path with great potential is the use of IoT (Internet of Things) to generate more intelligence and automation. For example, connect your home appliances to know the best time to turn them on, consuming energy at a time when the price is lower. However, the most exciting initiative I saw is the one of a Spanish startup that I've started working in these last months. Energiot has developed a piezoelectric solution of energy harvesting that allows creating autonomous applications, that is, to manufacture devices that do not need battery or maintenance, because the device itself captures the residual energy of the environment.

Nobody really seems to face the ecological problem that we will have in the future because of the number of batteries that we use. As much as they become cheaper and have better functionality, they will still turn into garbage in dozens of years. Indeed, it is very important to find a way of extending their life cycle or finding cheaper, efficient, and non-wasteful storage alternatives. Energiot fulfills this challenge by enabling a more economical solution that eliminates the need for a battery.

So what is the focus we are giving to the company now? We understand that this solution enables the creation of autonomous sensors capable of capturing information about transmission and distribution assets (lines, towers, substations) and thus contribute to the implementation of a smart grid. Today, these companies do not have exact information on their entire structure, precisely because it is difficult and expensive to implement these sensors. However, if they had this information, they could make smarter decision-making and have a predictive maintenance service. Thus, distribution and transmission companies would use their networks with maximum capacity (increasing efficiency), know when to change equipment, and send a maintenance team; they would also detect the exact location of an electrical fault, and would even find the areas of fraud or accidents on the network.

Today we are making the first pilots, and from the references we have, using this information within an intelligent system can help companies reduce about 15% of their operating and maintenance costs. There is still much to do, but the path is promising. Moreover, once successful in this market, it is also possible to apply the same solution to monitor water and gas transmission, as well as other markets. It is a clear example of how innovation can be valuable in the efficient and intelligent use of power grids.

FUTURE

The revolution in the energy market will come from many different places: putting together multiple innovations in generation, storage, distribution, and intelligence will enable us to reduce energy costs and make it more and more abundant. Further, it will allow us to exchange our energy matrix for renewable and more efficient models.

It is impressive how many investigations and new companies have come up to solve these challenges. A great incentive for this in the world is InnoEnergy, created by the European Institute of Innovation and Technology (EIT) and that operates very similar to Endeavor, where I had worked before. It has been running several energy-focused business acceleration programs, as well as stimulating education and research in the area. Even the world's biggest energy companies have also attempted to do corporate venture to pursue these changes in the industry.

The energy industry model has been the same for over a century, and apparently, the changes are happening much faster now. Some of the things I mentioned in this article are going to happen soon, others may take more time, and some might not progress. Disruptive technology can be a game changer and ends with the industry as we know it today. In any case, the prognosis is optimistic as Rifkin and Diamandis say. It has been delightful to see all these innovations happening and to be part, in some way, of this revolution. I hope all these ideas and mentions inspire you and may contribute to future initiatives. Also, of course, if someone wants to deepen some point or bring new references, please write to me or comment here in the article! 

--------

TO KNOW MORE

Did you like this article? You can see more on:

Medium to read more articles: https://medium.com/@pablosnr

Instagram to see awesome photos: https://www.instagram.com/pablosnr/

Youtube to watch videos about stories of the worldtrip: https://www.youtube.com/user/pablosnr