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Shifting energy sources?
When thinking about an energy outlook, possibly some terms come into your mind like new technologies to power the world, global warming, fossil fuels, etc.
Nowadays, society has put the environment on its concerns, trying to look forward to its conservation. It is not new the fact that some reliable energy sources, such as fossil fuels, have negative effects on the environment conservation and these can be irreversible. Moreover, energy demand grows among time and this fact increases the need to look for sustainable solutions, leading to the development of renewable energy sources.
Many societies are adapting their assets to integrate renewable energy. So we have arrived to a solution, just shift fossil fuels for renewable energy sources, right? Well, no it is not. At this point we realize energy transition is starting.
Energy transition is the transformation of energy industry, it occurs when certain source of energy is being substituted. It is occuring now, the tendency to generate energy from renewable energy sources has increased and started substituting fossil fuels. However, there is still a long path for this transition.
Reliability and performance
Energy efficiency of renewable systems has increased in the past decades, guaranteeing significant energy conversion. Nevertheless, capacity factor of renewable systems are not as high as other fossil fuels generation systems; for instance, wind farms capacity factors -one of the highest in renewable energy- are 40% to 60%, compared to 70% - 90% from thermal plants.
Due to the fact that renewable energy relies on the presence of natural resources like sun radiation, wind speed, marine currents, etc. These are not present everywhere or everytime; for example, high windspeed is not present all day, depending if it is onshore or offshore, high measurmentes only occur some hours, but the amount time it occurs it is economically worth it.
In addition, solar modules produce the major amount of electric energy at noon, time where people do not take advantage of this because almost everyone is not at home, this effect is called duck curve. Nonetheless, this problem can be solved using a battery storage system, but it has another trouble and is that the implementation costs increase.
Economic issues
At the beginning of the century, it was not affordable to execute renewable energy projects, but thanks to the constant innovation on renewable equipment, manufacturing costs decrease, currently showing competitive prices in comparison with fossil fuels devices. According to IRENA (International Renewable Energy Agency) solar PV and onshore wind average levelized cost of energy (LCOE) is reducing since 2010, they have reduced 82% and 47%, respectively.
Moreover, governments are establishing different incentives like tax benefits, fostering the creation of more renewable projects that also can improve employment statistic significantly and decrease the carbon emissions, according to its decarbonisation goals.
In the other hand, there is still a long path for the economic viability in countries where renewable industry is not consolidated, because costs increase due to the need of foreign trained staff, equipment import or legal loopholes when regulating these projects. Consequently, projects cannot be done everywhere.
Global demand for fossil fuels will exist
Despite the fact that renewables are booming in the energy industry, there are still many other industries that need fossil fuels in order to work. For instance, gas is needed for daily activities like cooking or transporting, also oil can be extracted or converted in many goods that cannot be replaced like gasoline, lubricants, plastics, asphalt, kerosene, raw material for textiles... a lot of things! Besides, 57% of the global demand for oil comes from the transport industry. Maybe if you thought that in near future oil demand will disappear, you are wrong, substitution is not remotion, so oil & gas industry will still be operating.
The challenge for companies at this industry is to look forward to reach zero emissions. Some are opening new business lines towards renewables, developing low carbon technologies for their operations or modifying their assets using renewable energy to power them. These facts show that oil & gas industry has welcomed energy transition.
Not the only one
Finally, in spite of presenting some obstacles, energy transition is needed in order to avoid drastic effects from climate change. In addition, new technologies like green hydrogen are to be developed and, linked with data science, AI and machine learning, it is possible to improve green industry performance and reduce, even more, fossil fuels demand.
Before that, fossil fuels demand will keep reducing periodically -but still exist- until renewables demand ovelaps. It has happened among history, this is not the first energy transition humans have experienced, the way we have fueled the world has changed a few times, as shown below.
I wonder if there will be a next-era energy transition.
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