13 April 1892 saw the birth of Robert Watson-Watt, the inventor of radar, and descendant of Scottish inventor James Watt after whom the unit of power was named. Also on this day in 1960 the first satellite navigation system was launched and a decade later in 1970, the oxygen tanks on Apollo 13 exploded leading to one of the most extraordinary examples of innovation and resourcefulness ever seen. However my own personal favourite innovation associated with this day was in 1742 when Handel’s famous oratorio Messiah premiered in Dublin.

No-one denies that innovation is important, but it’s surprisingly difficult to achieve. This interesting article explains that in innovating we must be guided by possibilities and not experience, and literally figure it out as we go along. This is strongly counter to most people’s natural impulses, particularly when livelihoods can depend on the success or otherwise of the project.

“Pursuing your beliefs without data-driven validation may seem terrifying, but studies show that doing this actually increases the opioids in one’s brain, thereby causing a calming effect. It also stimulates reward pathways in one’s brain and boosts the production of dopamine — a neurotransmitter that helps us feel more comfortable about moving forward to become happier tinkerers.”

 

The energy sector is facing disruptive innovation on an unprecedented scale, generating opportunities for new entrants and threatening traditional business models. State-mandated de-carbonisation policies are driving unexpected changes:

 

#1 Decentralisation
T
he top disruptive trend is decentralisation as generation is increasingly connecting to distribution networks, by-passing the transmission system and disrupting network traffic in ways not previously seen. This presents multiple challenges to system operators who lack visibility over distribution-connected generation, much of which is intermittent. The past couple of weeks have seen unprecedented solar generation in the UK, almost all of which is connected to local networks.

 

#2 Storage
The costs of batteries is falling dramatically making large-scale deployment economically viable. There are challenges around business models, and the lack of a coherent regulatory framework, but it is more a question of when rather than if these issues will be resolved. Batteries provide an alternative to network reinforcement and is disruptive of traditional system operations.

 

#3 DSR
Large consumers are increasingly taking control of their usage, installing measuring devices which allow them to first understand and then control their consumption through load shifting to take advantage of cost benefits and providing turn-up and turn-down services to system operators. Aggregators are emerging to combine multiple loads in order to provide meaningful amounts of response to the grid, again impacting traditional grid management processes with the potential to replace reinforcement investments.

 

#4 Digitisation
Still in its infancy, the digitisation of energy has the potential to be hugely disruptive. As consumers of all sizes are able to measure and control usage at the appliance level, so load-shifting will become a daily activity for all users. How this activity is managed will drive the impact on both distribution and transmission systems, as will the degree to which small users begin to use domestic or community-based storage solutions.

 

#5 Electric vehicles
EV penetration is still small, inhibited in large part by the lack of charging infrastructure. Providing this infrastructure will be key to the large-scale deployment of EVs and will result in the installation of significant new flexible storage capacity in the EVs themselves, however it is a significant challenge for urban planners wanting to avoid the wide-scale disruption associated with laying new cabling under roads and pavements.

 

There is a high degree of consensus that these changes are coming. The challenge for innovative companies is to develop business models that enable them to earn a living in a market where the fundamental market structures have yet to adjust to the new realities. The challenge for policy-makers is to re-shape the regulatory environment to accommodate and encourage these innovations, without destroying the economics of important legacy systems.

Whether they can rise to these challenges (and avoid such policy cul-de-sacs as retail price caps) remains to be seen.

 

 

 

Please follow and like my blog:

6 thoughts on “Disruptive innovations in the energy sector

  1. “Pursuing your beliefs without data-driven validation may seem terrifying, but studies show that doing this actually increases the opioids in one’s brain, thereby causing a calming effect. It also stimulates reward pathways in one’s brain and boosts the production of dopamine — a neurotransmitter that helps us feel more comfortable about moving forward to become happier tinkerers.”

    Sadly however, not more successful tinkerers, one notes.

    Surely this is all verbose renderings of ‘ignorance is bliss’ and ‘drugs make you feel better’?

    1. It was the first part about data-driven validation that resonated for me – it takes courage to strike out and try something new.

      I’m not keen on the “tinkering” characterisation, as it has connotations of amateur, garden-shed activity, however learning-by-doing is absolutely an appropriate approach to innovation. Too often businesses fail to respond to market disruptions due to inherent risk-aversion and desire for confirmation data before acting.

      I’ve had personal experience of firms failing to implement strategic entry into new markets due to uncertainty and lack of experience of how the market works – a total catch-22 leading to damaging corporate inertia.

      If the studies mentioned are correct, it suggests that overcoming the initial “fear” will deliver benefits that should help innovative behaviours become more comfortable for business leaders, which can only be a good thing. Of course it doesn’t mean abandoning all caution, but having a willingness to take controlled risks with trying new things before they are “proven”.

  2. It all sounds so plausible, and yet in reality it’s smoke and mirrors used to disguise the fact that the reality of ‘alternative’ energy is that it is in fact pursued despite data INvalidation.

    We do not fail to pursue it because we don’t know that it WILL work, it’s because we DO know that it WONT work.

    Engineering at least is the science of building bridges that don’t fall down, even though we never built them before.

    Its not the business of putting them up using other people’s money because we don’t know that they won’t fall down.

    Engineering development is undertaken to see how practical is an idea that theoretically should work.

    Pseudo-engineering fraud is obtaining money to tinker with ideas that definitely won’t work.

    Take windmills. No amount of tinkering can make a technology whose input is a low energy density and fickle source of energy, take up a smaller space and need less backup or storage than is dictated by the quality of its energy source.

    And since backup and storage is non-free, it won’t make an intermittent and unreliable source any cheaper will it? And if its already so expensive as to need massive subsidy, it isn’t going to get cheaper as a result.

    Renewable energy in the modern sense exists ONLY because of some sleight-of-hand by climate alarmists in cahoots with rent seeking energy companies. Instead of demanding low carbon emission technology – which would have lead directly to a massive investment in nuclear power – the legislation was couched in terms of a ‘renewable obligation’.

    Why? Why not simply tax carbon emissions and let the market decide on what technology was best?

    It is all propaganda. ‘Alternative’ energy doesn’t work cost effectively. If it did it wouldn’t need subsidy and it wouldn’t need talking about. It would just go in there and succeed.
    Ergo we need BS reasons to justify someone else taking the financial risk of investing in it and running it.

    What better investment is there than to have a technology mandated by law and underwritten by public money, irrespective of whether it works effectively or not?

    Cui Bono?

    1. I agree with your comments about alternative energy. Decarbonisation policies have been pursued based on what is (in my view) some rather shaky science. I’m also somewhat baffled – from a scientific perspective – by the focus on carbon when other pollutants are far more damaging in the shorter (and more easily verifiable) term.

      I also agree with your point on technology choice. The ideological decision that decarbonisation must be primarily achieved through renewables has led to the current policy chaos where just about every segment of the industry now requires subsidies to be viable. This is highly dysfunctional and a very poor use of resources.

      Neither am I persuaded that all these alternative energy sources are genuinely low carbon when entire project life-cycles and supply chains are taken into account – something I’m hoping to explore in a forthcoming post.

      However, my point was that given decarbonisation policies ARE being pursued they are having a number of disruptive impacts on the energy market, and successful companies will be those who are able to respond effectively through innovation.

      To your point about building bridges – engineers can be expected to build models and small-scale prototypes if new approaches are being considered. Even then, as in the case of the Millennium Bridge, this may be inadequate and remedial work required, but being unwilling to take that risk would seriously inhibit innovation.

      This does not mean ignoring data and blindly spending money on pie-in-the-sky notions. Despite the significant drop in the costs of battery and solar panel production for example, it’s deeply misleading to suggest that “solar + storage” is a viable alternative to a conventional energy system absent some significant innovation in battery technology that delivers materially higher energy density and duration. Yet this doesn’t stop the seemingly endless stream of support for the notion, and claims that there is no need for HPC since solar + storage is already here.

      And on that note, HPC is also a terrible idea – spending billions on an unproven version of a technology that may be undeliverable in its currently proposed form is far from smart. That is emphatically not what I mean by learning-by-doing.

      So what realistically are the choices? Should companies sit back and watch traditional business models fall apart while trying to exploit unpredictable subsidy income streams, or should they seek to deliver innovative solutions to the current (and anticipated future) industry challenges.

      DSR should be desirable regardless of decarbonisation as it represents more efficient use of resources. Interesting innovations in thermal storage may deliver superior solutions to Li-ion. IoT is going to result in a range of smart, networked devices and appliances that could bring DSR into the home, and provides the opportunity for entirely new business models based on services and comfort rather than kilowatts.

      Cui bono….? Absent corruption, I would hope it would be those with vision, creativity and the courage to develop new, value-added solutions in a massively disrupted market…

  3. The massively disruptive technology was nuclear, but its been sat on very hard by people with vested interests in scaremongering and very deep pockets.

    Nothing else out there has any chance of success for fundamentally sound reasons of technology physics and engineering.

    Renewables are a massive distraction to ensure nuclear is not built. Pushed precisely because they do NOT work effectively, not because they do.

    1. I agree, but nuclear has also been sent down a cul-de-sac by post-Fukushima safety regulations. EDF’s in-service fleet largely suffers from excess carbonisation in the pressure-vessels due to manufacturing errors and the associated cover-up. Flamanville has the same problem, but due to changes in the certification regime, cannot get the safety certificate it needs to go into service. The ASN needs to decide whether to allow the current installation to go into service despite not meeting the current safety criteria, or to recognise that other reactors with the same issues are deemed to be operating safely.

      This is a completely in-necessary issue, but one which threatens the ability of EDF to deliver HPC. That (and the price) are reasons I’m against the HPC development, while being in favour of new nuclear more broadly.

      I’m interested to see how the current thorium trials evolve and whether SMRs can get off the ground. I’m not very persuaded that EPRs are the way to go and think if we want to build new nuclear in the UK today we should focus on a technology that has a proven track record…currently the only 3rd generation model that has this is the ABWR proposed for Wylfa Newydd. The whole topic of new-nuclear has, as you say, been derailed by various vested interests and an ongoing lack of proper engineering input into policy decisions.

Leave a Reply

Your email address will not be published. Required fields are marked *