A paradoxical trend
Just like cars, electrical devices are increasingly energy-efficient and need less power to work normally. A modern fridge needs a lot less electricity than its ancestor from the 1950’s. Yet the list of domestic appliances is much longer today than it used to be 60 years ago. Fridge, oven, micro wave, television, computers, smartphones, video game console and so forth. The amount of power required by all house appliances nowadays has nothing in common with the standards that prevailed only two decades ago. This microeconomic trend is of course confirmed in developed countries. In such countries, demand follows quite a linear perspective, growing steadily by roughly 1.1% per years in the OECD. In developing countries however, demand is actually growing much quicker. Outside of the OECD, the need for electrical power is expected to triple within the next 30 years. According to the US Energy Information Administration, “non-OECD nations consumed 49 percent of the world's total electricity supply in 2010, and their share of world consumption is expected to increase over the projection period. In 2040, non-OECD nations account for 64 percent of world electricity use”. In other words, electricity production is expected to grow by 3.6% per year in Asia, including China and India.
Coal and renewables to meet the demand
Japan just shut down its last nuclear power plant for an indefinite period of time. It is the second time in 40 years that Japan has to stop using nuclear power to produce electricity. The decision might please anti-nuclear lobbies, but it is also responsible for a major oil and gas price rise. Before the Fukushima Daiichi disaster, Japan drew 30% of its electricity from nuclear power. It is far away behind France which draws 80% of its electricity from the same source of energy for instance. And yet it is enough to have a durable impact on the global markets and even stronger consequences on Japan’s energy bill and Japanese people’s everyday life.
The problem today is that the soar of global demand for energy is not followed by supply increase. Power plants goes old and are not necessarily renewed because of the uncertainty regarding fossil fuel prices. Coal is actually the only source of fossil fuel investors do not doubt about. “Coal currently supplies with more than 40 % of the world electricity consumption and it essential input of around 70 % of world steel production, representing around 30 % of the world primary energy supply. This is because coal is cheap, abundant, accessible, widely distributed and easy energy to transport, store and use. For these features, coal is projected to be intensively used in the future”, the IEA says. Unfortunately, coal is also the most CO²-emitting source of energy. As a consequence of sustainability considerations, renewables also develop at a fast pace. Their share in the energy mix is vowed to grow but renewables are still not ready to replace all other sources of energy. In addition, renewables raise some problem regarding existing facilities.
“Much renewable generation, like wind and solar, is intermittent, non-dispatchable and weather dependent”, Terry Boston explains. According to the president of GO 15 group, “That adds uncertainty to the forecast of how much generation will be available. In addition, renewable generation is not necessarily available at the time it is needed. And the location of renewable generation does not necessarily coincide with location of the population centers, which makes having an adequate, resilient transmission system even more important”. Renewables bring a new challenge on the table. How is energy going to be stored during a cloudy and windless winter for instance? Solutions have to be found to ensure power production, to provide heating when required, to allow electric cars to run.
The opportunity lies in storage
“Storing electricity will be a key ability for the power industry in the future. It will make a difference between successful firms and others throughout the energy transition”, Gilles Ramzeyer from Forsee Power Solutions says. According to the Energy Storage Division’s Director of this expert firm in battery systems, “energy storage is necessary for developing off-grid technology which includes renewables”. Beyond all technical considerations, energy storage capacity also determine a project’s economic interest. Demand for energy needs storage solution to make sure the price of energy will remain affordable. “Today, it is generally cheaper to produce power than to store it for later use because of the cost and inefficiency involved in large scale storage”, chief operating officer at UtiliPoint Bob Bellemare recalls.
Continuous technological improvement along with energy price rise might speed up the shift towards smart grids and decentralized energy production. It is actually a condition for renewable to become profitable, generalize and therefore complete the energy shift. “Our society rests on energy. And energy mix to come depends on storage solutions”, Gilles Ramzeyer says. The challenge of the century is now clear. Now it has to be taken up.