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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
The urgently needed green transition is often regarded as an insurmountable challenge, both technologically and financially. But Greg Jackson FEI, Vice President of the Energy Institute and CEO of Octopus Energy, argues that on the contrary, it is well on the way to saving businesses and consumers money.
It’s a long-propagated myth that moving to a green system and saving the planet will cost consumers and businesses a fortune.
The reality is that we are within grasp of a new era in which energy is clean and cheap, and fossil fuels remain in the ground where they belong without harming the planet. And instead of costing us, getting there will actually save us money.
Informed energy experts already know that costs of solar and wind energy have dropped dramatically over the past 10 years. Today, renewables are increasingly the cheapest form of energy, coming down further year after year.
Of course, it’s not always windy and sunny – but the key to understanding the transition is that it’s not a like-for-like replacement.
‘Daddy – how did you used to make phone calls in the street?’ asked my son, aged seven, when he heard that we hadn’t always had wireless phones. ‘Did they used to have very, very, very long wires?’
Technology change is complex. Mobile phones lack the resilience of landlines – they sometimes can’t get a signal (often in the exact place we used to have our home phones), they need charging every night, and good luck using one to dial 999 using touch alone. But they are so much better at other stuff that we don’t even notice these differences.
Similarly, unlike cars, horses could cope pretty well off-road. But they didn’t last long once cars got going.
Benefits and progress
We’ll see the same with the energy transition. The massive benefits of electrification, and of renewables, will far outweigh the stuff about fossil fuels we’ll soon forget.
That goes for everything from challenging the need for firm power to the nature of the grid.
If we can relentlessly make electricity cheaper at times when renewables are abundant, major uses of electricity will shift to match. Electric vehicles will automatically charge at the best times, heat pumps will avoid consumption peaks and industrial users will move processes to the cheapest hours. Whole new industries will pop up, such as vertical farms with crops whose diurnal cycles are optimised against green energy.
Interconnectors from Europe to Africa, tapping into Saharan solar and wind, will power Europe through winter and unleash cheap power the rest of the year – for Africa as well as Europe.
It won’t be long until we’ve moved to a decentralised energy world in which millions of electric cars, rooftop solar panels and home batteries are connected – generating and selling green electrons every millisecond of every day.
Considering the current set up of our power grid, a decentralised energy system like this may seem light years away. In reality we are already on our way, getting closer day by day.
In 2010, a Tesla Roadster had a price tag of more than £100,000. Today, we can choose from more than 65 electric car models in the UK, with the cheapest one costing less than £25,000.
We will see the same cost reductions with heat pumps as we keep innovating and scale production, moving from niche to mass market.
But electric cars and heat pumps will not only reach cost parity with their fossil fuel counterparts. Filled up with cheap green electrons, they will be much cheaper to run too.
It’s the same story across all areas of this system transformation – wherever we look, green energy and clean products are offering savings, flexibility and benefits for everybody. And innovative businesses are the ones that are making it happen.
Building the future, one wind turbine at a time
In the first stage of the energy transition in the UK, we saw a vocal minority put a stop to most new onshore wind farms – because what were consumers getting besides extra charges on their bills?
But why should energy be any different to other products? If you want people to like your product, you need to make it work for them.
This is what we are doing with the Octopus ‘Fan Club’, the UK’s first electricity tariff that gives people cheaper energy when their local wind turbine is spinning. Since its launch, more than 7,000 communities have got in touch, asking us to bring the Fan Club to their areas too. And they are not the only ones – independent research shows that nine out of 10 people would support a wind turbine in their community if they received cheaper energy in return.
The message is clear – if we want to drive system change at pace, people must see and feel the benefits directly, whether that is energy or any other industry.
Businesses should stop talking the talk and start walking the walk
Most industries and businesses have understood that they need to step up and help speed up the transition to a sustainable energy future.
But instead of desperately clinging to their old business models whilst paying lip service and announcing long-term decarbonisation targets, they should understand that doing the right thing – creating products that are good for people and for the planet – will also fill up their investors’ pockets.
Building a sustainable future is not a necessary evil, it’s a business opportunity. As John Kay brilliantly explained in his book Obliquity, the ones that focus on long-term goals and delivering the best possible products and services for their customers will win the race.
Many businesses are still obsessed with short-term profits, thinking that investing in this transformation will lessen their share of the pie. In reality the opposite is true – putting customers at the heart of this transition means everyone is winning.
Few realised how the iPhone would change the world when it was unveiled in 2007, from the way we order food to the places we stay at when we’re on holiday. When Tesla brought its first electric car to market, barely anyone thought about the role car batteries would someday play in energy, balancing the grid and storing green electrons when they are abundant.
Green energy will do the same, if not more. And it’s the private sector, and the unique relationship it has with the consumer, that has the ability to drive the much-needed change at pace, creating a cleaner, cheaper world and greater returns for investors at the same time.
Those who understand this fastest have a colossal opportunity – instead of getting swept away by the tide, they will surf the waves.
Sustainable markets initiative
HRH Prince Charles created the Sustainable Markets Initiative last year to bring together a coalition of businesses across a wide range of sectors to create more sustainable industries and achieve his Terra Carta objectives.
As part of this, Octopus Energy, the Energy Institute, Scottish Power, Wipro and ReNew Power are collaborating with others to promote a customer-focused energy transition – one where customers (businesses large and small, domestic on and off grid) both benefit from and contribute to the transition to a greener energy system. Their new report and related video, including case studies and steps that energy companies, large businesses and finance institutions can take, can be found here.
The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.