The least wrong – rapid change in the energy station difficult to predict

While much has been made of the ‘trilemma’ facing the Australia electricity network, Ray Wills from Future Smart Strategies argues that rapid change of energy technology, business models and social changes is resulting in rapid and difficult-to-predict changes.

October 1, 2018 Professor Ray Wills, Managing Director, Future Smart Strategies

"The rate of change in the renewables and clean tech space has, in no forecast to date, been overstated nor overplayed," Wills notes.

Image: Future Smart Strategies

Innovation and technological change is getting faster – as predicted – but not anticipated by much of the traditional energy sector. Almost all models for future energy demand have been linear, whereas we contend the power and impact of non-linear, exponential growth in technology has always been the most probable outcome, yet following a predictable model of ‘strategic drift’ will always have the appearance of taking people by surprise.

A key reason to anticipate this change as faster and more aggressive than others previously witnessed in the energy market is the additionality being rendered by complementary rapid technological and social changes as well as newly evolving business models which have the potential to significantly change how energy is generated, traded, transported and used.

Due to the complexity of these factors modellers forecasting future energy scenarios almost never address these issues and thus all models have increasing uncertainty the further into the future they try to predict. Furthermore, unanticipated changes in the underlying economy (e.g. political changes such as OPEC production and price wars, financial market disruptions, such as the GFC, have also had significant short and long-term impacts on these predictions.

The number of announcements of intent to change energy policy by multiple nations, jurisdictions, businesses and communities accelerates as rapidly as the growth of the technologies themselves.

But, prediction is indeed difficult, especially about the future! And note, projection is not prophesy.

Projections dealing with imagined and prototyped, but yet to be created tech are fraught, and while anticipating the arrival of yet imagined tech is a necessary exercise, it can be of course completely unreliable and misleading. Yet, failing to anticipate change is more dangerous – as experienced by Kodak and Nokia.

The rate of change in the renewables and clean tech space has, in no forecast to date, been overstated nor overplayed. But the opposite is true for almost all projections – most forecasts have dramatically understated and underestimated the potential for change, and in so doing, poorly guided decision makers through ill-informed policy.

What is more surprising to almost everyone is that the rate of change is being matched, and indeed by some metrics, outstripped by lithium-ion batteries. The arrival of large volumes of ever cheaper electrical storage is game changing – not only for delivery of energy security for otherwise intermittent renewables, but also for electric vehicles, and power tools, and many other categories of devices that will benefit from cheaper portable energy.

A substantive shift in demand for lithium for batteries began in the middle of the last decade based on performance advantages for mobile electronics, tools and devices. In a short timeframe, the demand for lithium-ion based batteries has shown dramatic increase, so much so that forecasts vary widely as they appear to often come from a sector-specific interests. There is no doubt new drivers for storage come from both the transition to renewable energy and, and enhanced by a further desire to electrify transport as a means to combat air pollution in cities and nations.

The 21st Century global economy is ever-increasingly built around mobility – mobility not just for personal devices but also personal transport. Whether that’s a gopher, a scooter, a car, the future is electric. All of these solutions require lithium-ion batteries for power.

Beyond personal use, commerce and industry will also go electric – buses, trains, planes and ships – and these too will be powered by lithium batteries.

To even further grow this huge demand, the use renewable energy requires the management of intermittent production, and this will be done by the use of batteries for electricity delivery.

We are now at a point were further exponential growth is forecast in production of lithium and other energy storage related resources in concert with a reduction in the price of batteries.

The key goal of good futurism is to be the least wrong.

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