Megatrends in Energy Storage

Polarium develops products to meet our customers’ needs. And our customers have far-sighted businesses, that are affected by global trends. Therefore, to understand how our customers need to develop their businesses, we also follow the interaction of global trends. In this article, I will briefly go through four megatrends that I would argue are driving global development and reshaping the role of energy storage in the global economy, and what the implications of this are for the energy storage sector.

Climate Change

First is of course the single most pressing issue of our time. A challenge so great that it’s probably misleading to label it a megatrend.

The Intergovernmental Panel on Climate Change (IPCC) recently concluded that the climate crisis is more acute than previously thought. Climate change is accelerating and in as little as 10 to 20 years, global average temperatures are forecast to increase by at least 1.5 degrees Celsius, with man-made emissions of fossil fuels being the main driver. Substantial emission reductions are necessary to minimize temperature rises, which are crucial for maintaining biodiversity, air quality, and the habitability of our planet. To avoid the crisis turning into a disaster, individuals, businesses, and policymakers must tackle this issue with the utmost urgency.

Today, non-renewable fuels supply more than 80 percent of the world’s energy. This is not sustainable. Right now, businesses, policymakers and individuals are working together to reduce greenhouse gas (GHG) emissions and tackle climate change. And there’s a lot to be done in a short period of time. To reach the goal of the Paris Agreement and avoid a climate disaster, carbon dioxide (CO₂) emissions need to be at least halved every decade from 2020 to 2050.

Massive Growth of Renewables

One way of decarbonizing energy has been the emphasis from policymakers on subsidies and incentives for renewables. Measures that have been successful and led to a massive growth of investment in renewable energy sources, such as wind and solar. This is the biggest shift in the energy system since the introduction of nuclear power – and this is only the beginning.

Within the next decade, renewables are expected to become cheaper than existing power plants.[1] This is projected to trigger a fivefold uptake in the installed capacity of solar photovoltaics and onshore and offshore wind by 2035. And by 2050, wind and solar are forecast to grow from today’s roughly ten percent of the power mix to 56 percent,[2]representing the initial stages of a massive shift.

The Price of Carbon

Another increasingly popular policy measure – one that I think will have major implications for the telecom sector going forward – is the price of carbon.

To reduce carbon emissions, policymakers are keener than ever to put a price on carbon. Going back 20 years, emitting carbon was virtually free of charge. By the end of last year, roughly 15 percent of annual global GHG emissions were covered by a carbon pricing initiative and it’s expected to grow to more than 20% as early as this year. In addition, the actual cost of carbon emissions has doubled in the past two years alone. And if you remember that CO₂ emissions need to be halved by every decade to 2050 – it’s fair to say that further carbon pricing initiatives are more than likely going forward. The implications of this for businesses all over the world cannot be understated. Reducing GHG is no longer about goodwill. It’s about the bottom line.

Blackouts and Brownouts

In the past decade, the increase of blackouts and brownouts in the US has become an increasingly pressing issue. On average, outages cost between $18 billion and $33 billion a year in the US.[3]

This problem is far from being unique to the US. It has long been a major challenge in the developing world. But blackouts are also increasingly common in Europe and other typically stable grid markets. This is due to a variety of reasons, such as more extreme weather, increased intermittency in the energy supply, growth in energy demand, and a long-term underinvestment in energy grid infrastructure.

What Does This All Mean for Energy Storage?

So, we have climate change – driving a surge in renewables, and the increased cost of emitting carbon. Meanwhile, we have more and more blackouts and brownouts, even in what used to be stable grid markets. What does this all mean for the energy storage sector and how energy storage solutions are applied?

In short, it means that a lot of energy storage is needed. To meet these megatrends, the world must make a shift from fossil dependency to renewable energy. The challenge with renewable energy, however, is that the two main sources – wind and solar – are intermittent. This makes energy storage the missing link between fossil independency and constant energy reliability.

By Peter Wasmuth, co-founder, and Head of Europe, Polarium

 

 

[1] https://www.mckinsey.com/industries/oil-and-gas/our-insights/global-energy-perspective-2021

[2] https://about.bnef.com/new-energy-outlook/

[3] https://www.washingtonpost.com/ %2fnews%2fwonk%2fwp%2f2013%2f08%2f13%2fwhy-blackouts-are-becoming-more-common-in-two-charts%2f%3futm_term%3d.adfc7f71196c&utm_term=.adfc7f71196c