The countries and businesses set to dominate energy

The new era in energy is likely to see different sorts of companies atop the electricity sector tree – as well as some surprising countries, too.

It’s easy to get bogged down in the short-term battles for success in both climate change policy and our rapidly changing, cut-throat energy markets. But it is interesting to take a broader view. 

We need to remember that energy is a ‘derived need’. That is, what we actually want are services, rather than energy. Receiving those services may involve consumption of more or less energy of different forms at different times, depending on technologies and behaviour. So the amount of energy we actually need can be very different from, and much less than, what we now use.

Businesses than help avoid the need for energy

Businesses that sell high-efficiency, smart, flexible ways to provide services linked to energy will be winners. That’s appliance and equipment manufacturers, retailers and installers, builders, building product suppliers, financiers, internet-based businesses and specialist advisers who can market attractive packages. This could include smart systems that manage energy use to match availability, minimise costs and work with storage and on-site renewable energy. Integrating their energy-related offerings with other non-energy services will amplify opportunities. Finance schemes, home performance monitoring, maintenance contracts and optimised insurance packages are just a few possibilities.

Solution providers

Businesses that combine distributed energy, energy storage, energy efficiency and smart management are also looking good, especially in developing countries and at fringe-of-grid in developed countries. 

Many niche markets are actually quite big. For example, many developing country electricity grids suffer frequent blackouts that impact on business productivity and quality of life. Many now use small petrol and diesel generators to cope, but this is expensive, dangerous, noisy and polluting. Energy-efficient equipment combined with storage, on-site low-emission electricity generation and grid-interactive capabilities can solve these problems. 

Even larger markets will become available as our electricity industry shifts to time-of-use pricing or other pricing options, and all consumers, not just those with solar, see stronger signals to manage the amount and timing of energy use. For example, in NSW, afternoon to evening time-of-use prices are now over 50 cents per kilowatt-hour – a strong incentive to reduce usage from the grid at those times. And, if adopted, ‘capacity charges’ (which involve charging consumers for the peak supply capacity they use instead of the amount of electricity they consume) will drive more rapid adoption of storage and smarts to limit peak demand at a consumer level and avoid high costs. 

Energy suppliers to energy-intensive industries

At the other end of the scale we have energy-intensive industries  that are global in scale: miners, mineral processors, metal processors, chemical companies and large-scale manufacturers and their like. Traditionally, they have sought large amounts of cheap and reliable energy. 

But their world is changing. ‘Ores’ from landfill sites, wastes and replacement of existing building and equipment stock provide an increasing resource that can be more concentrated than that from traditional mining. For example, one tonne of old mobile phones contains 400g of gold, 80 times as much as is present in a tonne of typical gold ore (www.ict-footprint.com/whats-new).

3-D printing, biomimicry, green chemistry, dematerialisation, material switching and other changes are also transforming the fundamentals of energy-intensive industries.

3-D printing supports decentralised manufacturing and involves building up a product, instead of wasteful machining; green chemistry allows new materials to be created that are stronger, lighter, more effective or improve process efficiency; and dematerialisation uses less (or no) material to deliver a given service.

So it’s not at all clear how much energy these industries will actually need in the future, but it will be a lot less than conventional analysts predict.

Nevertheless, the bulk energy supply sector will still have a big market. But what forms of energy will it supply?

There are synergies between the oil industry’s drilling expertise and countries with large geothermal energy resources: sophisticated drilling capabilities are critical.

The Pacific ‘ring of fire’ countries and others near boundaries of tectonic plates seem well positioned to access enormous amounts of reliable energy. The Philippines has been developing geothermal technologies since the 1970s, while Iceland has already attracted energy-intensive industries to use its geothermal and hydro energy resources.

Graph for The countries and businesses set to dominate energy

Companies that can mobilise and adapt existing expertise and large amounts of capital are well positioned, as they can leverage these to gain market share in emerging markets. Countries with large renewable energy and mineral resources (both recovered and virgin) and whose governments support their development could also benefit – if they can capture a fair share of the returns from their exploitation. Australia’s solar resources offer opportunities: as Ross Garnaut has suggested, we could become a sustainable energy powerhouse by utilising our enormous renewable energy resources. 

Countries and businesses that can produce forms of renewable energy suited to export and storage, and businesses that can link these to existing and new energy-consuming equipment that delivers valued services, will be well positioned.

Supply chains that can deliver sustainable transport solutions, in particular, will grow. 

Electric vehicles (including public transport and low-speed vehicles) will benefit from improving battery technologies and expanded renewable electricity generation. Technologies that use heat or electricity to produce renewable liquid or gaseous fuels for export and that are usable by existing vehicles will be of increasing interest. Oil-producing countries may be able to use their existing cashflow to fund such developments to maintain their market position in a zero-emission world. 

Just as discovery of oil and gas in Bass Strait and the North West Shelf transformed Australia’s energy prospects and industrial development, the new renewable energy revolution will create surprises. Countries traditionally seen as importers of energy, such as Japan, could become energy giants, and threaten existing major energy suppliers. 

There’s a message here for Australia, as we could be a big winner in the global race towards an energy-efficient, renewable energy future. But it would mean cannibalising our existing energy industries, a bit like the situation Kodak faced when it developed digital photography. Kodak lacked the courage to embrace the future. Will we? 

Alan Pears has worked on sustainable energy issues since the late 1970s. He is one of Australia’s best recognised and most highly awarded commentators on sustainable energy and climate issues. He teaches part time at RMIT University and is co-director of Sustainable Solutions, a small consultancy.

This article originally appeared in Renew magazine. Reproduced with permission.