Cross-post from Tobias Engelmeier
At the “Energy for Tomorrow” conference in Paris, last week, one of the core discussions in the energy industry was: is a low-carbon world a challenge of deployment or one of innovation?
In other words: do we already have the technologies we need (e.g. solar, wind, grid management) and now just need to focus on deploying them? This could be called the evolutionary approach. There will, of course, be innovation and cost reduction through ongoing deployment and scale. However, we would essentially work with what we already have. This approach would recognise the fundamentally conservative nature of energy and infrastructure markets that rely on upfront financing of long-term cashflows.
Take solar as an example: despite innovations such as thin film and, more recently, perovskites solar cells (organic cells), 85% of the solar power installed this year is crystalline PV — a technology that is over 60 years old and has been brought to competitiveness through thousands of little improvements. If you think about new energy (e.g. solar) and new markets (e.g. India), you might expect an entrepreneurial, disruptive boom market. Instead, what you find is very conservative infrastructure business, with an eye on minimising risks.
A counter-example is electric cars. For a long time, global car manufacturers focused their efforts on increasing the efficiency of the combustion engine, following the existing technology path. Electric mobility was sidelined. Now we seem to see a sea change. Electric mobility has become central to the research and product development strategies of almost all big car companies. In part, this is thanks to the pioneering efforts in technology and marketing of Tesla (and Toyota’s Prius before that). Another aspect is that the combustion engine might have reached the end of the road. The Volkswagen emissions scandal also came about because the car manufacturer could not improve diesel engines fast enough to keep track with much needed, ever stricter regulations. In mobility, we need a new innovation path. In electricity, we have perhaps already shifted to the right one.