New energy technologies “should not be called alternative energy anymore,” according to an industry watcher.
Speaking at the Governor’s Utah Energy Development Summit in Salt Lake City, Ethan Zindler, head of U.S. research for Bloomberg’s New Energy Finance Ltd. (NEF), said most of the money being invested in energy is being used to develop those so-called alternative energy sources.
Over the past 12 years, he said, $2.5 trillion has been invested in wind, solar, biomass, geothermal, biofuel, small hydro and technologies related to improving energy efficiency. And those investments are causing “profound” impacts on the energy sector already and will continue to do so.
“The way in which energy gets produced, delivered and consumed are being fundamentally transformed, and have been being transformed over the last decade or so,” Zindler said. “And these changes are fundamentally empowering businesses and homeowners, presenting them with expanded choices and control over consumption. In fact, I would argue that we’ve entered the era of the empowered consumer when it comes to energy.”
Those empowered consumers can, for example, analyze and adjust heating, air conditioning and electricity using their smartphones. In some places, they can select “where they prefer to buy their electrons from,” with options including “green” power programs, producing power themselves with roof-top PV (photovoltaic) systems, and better battery technologies for storing electricity, he said.
What’s more, motorists can buy vehicles with engines that burn gas, diesel, ethanol, methanol or hydrogen, or buy vehicles with electric motors or hybrids. They can turn their garages into fueling stations with wall plugs.
“Think about it: A decade ago, relatively few of these options were available,” Zindler said. “The variety of choices available to us now has dramatically expanded and given rise to what I said is the empowered consumer, and, of course, I mean that pun.”
While relatively few Americans have the inclination or income to become an energy geek like himself, Zindler said, prices for those new options continue to fall. The price of a PV solar module is down 90 percent since 2008, helping solar generating capacity grow to 14,000 megawatts, and the localized cost of energy from wind farms has dipped by half since 2009, allowing wind to surpass hydro as the nation’s fourth-largest power resource, at 8 percent of power consumed.
“We at the NEF believe that further growth and eventual mass adoption of these technologies is not just probable, but it’s inevitable,” he said.
While consumers expect to have more choices, cheaper energy and 100 percent reliability, those new technologies are “inevitably creating some challenges, and, yes, some conflicts,” Zindler said.
For example, he noted that many traditional auto dealerships make money not by selling cars but by servicing sold vehicles. However, electric cars require less servicing because of fewer moving parts.
Another example is the disruption being experienced by the owners of large-scale power coal, natural gas and nuclear power generation facilities who are seeing renewables edging their way onto the grid, he said. Wind, solar and geothermal generation has essentially no associated fuel costs, which brings energy prices down, he said — “and that’s not necessarily great news for incumbent generators.”
“What we have seen repeatedly is that the influx of this new generation hurts the incumbent market players. It’s not easy if you’re an existing coal or nuclear plant that has been selling its power at a certain price when suddenly a much-lower-priced competitor comes into the market,” Zindler said.
Compounding things for local utilities is the lost revenue from distributed generation facilities, in the form of small-scale roof-top generation on homes and businesses. Add to that net energy metering, which allows those smaller generators to sell excess power to the grid at a certain price.
“It’s really no surprise that incumbent utilities around the world often have what at best can be described as an awkward relationship with PV systems installers,” Zindler said. “From a utility perspective, PV system-owning consumers enjoy all the benefits of being attached to the grid but essentially don’t pay their fair share for that infrastructure. That leaves other ratepayers — often less-affluent ratepayers, it should be noted — to carry more of the load of transmission and technical costs.”
That, he said, is an important issue in Utah, which now has the second-largest per capita volume of PV in the U.S.
While the changes in the energy sector have been profound over the past couple of decades, “they show no sign of letting up soon,” Zindler said. While the changes may cause short-term disruption for some, in the long run they will benefit everyone, he said.
“Frankly, to bet that we’re going to return to some kind of status quo and not continue to change, I would argue may be the riskiest bet that we can make of all,” he said. “Change is now the new normal in the energy sector.”