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Energy Innovation Will Continue to Flourish in 2021

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Florian Kolb's picture
Chief Commercial Officer & General Manager Energy Intertrust Technologies Corporation

Florian Kolb joined Intertrust as Chief Commercial Officer and General Manager, Energy, in January 2020 after a 15-year career in a series of business leadership roles within the European energy...

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  • Feb 3, 2021 5:15 pm GMT
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This item is part of the Special Issue - 2021-01 - State of the Industry, click here for more

2020 has been a year of big surprises and disruptions, something which extends to the utilities industry as well. The pandemic has led to an abrupt end of existing B2B energy consumption patterns and, to a certain extent, also in B2C. The energy systems around the world have had no or little time to adapt to these sudden changes. Given the underlying demand and supply structures of the electrical energy industry, these fluctuations were big for energy, but relatively small compared to the disruptions other industries have seen. Overall, it is fair to say that utilities have proven they can respond with the same robustness as they have in previous crisis moments.

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Given the pandemic, it’s an interesting task to think ahead about what will happen in the industry in 2021. To boil it down into a short statement: no revolution expected, the evolution to a more digital and carbon-free grid and industry will continue.

What will be the nuances of this evolution in 2021 for the electrical energy value chain?

  • Given the successful start of vaccination programs, the pre-pandemic state of electrical energy will be reestablished soon. One of the highlights for 2021 in the U.S. (with global implications) is the start of the Biden presidency. The Biden administration’s pledge to reestablish the U.S. commitments to fight global warming and the climate crisis is a big thing with large implications for the electrical energy industry.
  • The push for more wind and solar generation will accelerate in 2021, as well as for the end of coal. In regions such as Europe, the end of coal is already progressing well. This implies that the decentralization of the energy system will accelerate, requiring additional efforts to balance electrical supply and demand. Delivering this balance, as well as ensuring sufficient profitability levels for renewables, will require the industry to push forward with additional efforts to strengthen its digital infrastructure and energy data handling.
  • For transportation and distribution grids, one of the biggest issues in 2021 will be the increased penetration of electrical vehicles. All research confirms that certain adjustment measures are required to ensure an efficient and reliable grid. The key question here is how quickly electric vehicle penetration will increase over the long term. Given the relative low elasticity of the grid infrastructure, it will be important to take measures early enough to meet this challenge. One big element for 2021 therefore will be to ensure that efficient digital grid planning and scenario analysis is enabled to meet this challenge. With more volatility from electric vehicle charging approaching the grid, utilities have to expand this capability. Grid scale storage can significantly contribute to solving peak demand issues so this will be another area of innovation.
  • Hydrogen in grids will remain an R&D topic in 2021.
  • In 2021, downstream (energy B2C and B2B) retail businesses will see continuous efforts by new entrants challenging incumbents in competitive energy retail markets. Energy retailers will also try to offer their customers value-added services beyond standard commodity energy. These can include flex management services for behind-the-meter devices, home IoT services, and electric vehicle charging.
  • As for innovation, investment in energy innovation in 2020 has been affected by the pandemic to a lesser extent. Given the contribution of innovation to mega-trends such as electrification of everything and climate change, energy innovation is expected to continue to flourish in 2021.
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Matt Chester's picture
Matt Chester on Feb 3, 2021

As for innovation, investment in energy innovation in 2020 has been affected by the pandemic to a lesser extent. Given the contribution of innovation to mega-trends such as electrification of everything and climate change, energy innovation is expected to continue to flourish in 2021.

What do you think made investment in this space resilient compared with other sectors that were hit harder by the pandemic? 

Florian Kolb's picture
Florian Kolb on Feb 4, 2021

Even 1 or 2 years of pandemic are very short-term time horizons in our industry. Given the medium and long term orientation and mindeset of investors and decision makers in energy, it is no surprise that we see limited impact from the pandemic. Climate change and climate crisis are the best example and proof for this on the other end of the spectrum. Sure, there is some short term impact but it is the outlook on the long end that moves and shakes up the industry dramatically.

Randy Dutton's picture
Randy Dutton on Feb 4, 2021

Seems energy efficiency is being overwhelmed by increased consumption. What of the increased massive energy demand from Internet use?

"Consider that just one hour of videoconferencing emits up to 1,000 grams of carbon dioxide, requires 2 to 12 liters of water and demands a land use adding up to about the size of an iPad Mini.

When factored across the demands of server farms, by leaving the camera off

 during a web call these footprints can be reduced by 96%.

And if you don’t really have to stream in high definition, don’t. By streaming content in standard definition on such platforms like Netflix or Hulu, researchers estimate those same carbon dioxide, water and land use reductions could be made by as much as 86%.

While global emissions dropped by record levels in 2020, the pandemic-prompted shift to remote work and the utilization of more in-home entertainment are presenting their own environmental challenges that are only expected to grow, researchers say...."

https://www.purdue.edu/newsroom/releases/2021/Q1/turn-off-that-camera-during-virtual-meetings,-environmental-study-says.html

Or the massive increase in power needed for digital currency mining, and AI algorithm training and use? 

If electricity production accounts for a significant amount of global warming gases, and Google's AI Algorithms increasingly use more power, it's it Big Tech's fault? "Training a version of Google’s language model, BERT, which underpins the company’s search engine, produced 1,438 pounds of CO2 equivalent in Strubell’s estimate—nearly the same as a round-trip flight between New York City and San Francisco. These numbers should be viewed as minimums, the cost of training a model one time through. In practice, models are trained and retrained many times over during research and development.https://www.technologyreview.com/2020/12/04/1013294/google-ai-ethics-res...

Matt Chester's picture
Matt Chester on Feb 4, 2021

"Consider that just one hour of videoconferencing emits up to 1,000 grams of carbon dioxide, requires 2 to 12 liters of water and demands a land use adding up to about the size of an iPad Mini.

When factored across the demands of server farms, by leaving the camera off

 during a web call these footprints can be reduced by 96%.

And if you don’t really have to stream in high definition, don’t. By streaming content in standard definition on such platforms like Netflix or Hulu, researchers estimate those same carbon dioxide, water and land use reductions could be made by as much as 86%.

Really interesting, thanks for bringing up these thoughts I wouldn't have considered myself. I still think in the end we're benefitting by trading transportation emissions for the high definition video conferencing, but it is food for thought about what calls need to be video and which can be regular calls (or even emails!)

Florian Kolb's picture
Florian Kolb on Feb 4, 2021

One of the core innovation areas therefore is how to get to levels of renewables well above where we are today (e.g. 40% in Germany) and moving to 100% one day. The cost/MWh from wind and solar is low already or decreasing. Next challenge is the coordination so the lights stay on. Sector coupling and storage are rising, so is energy data management. It will be a supply side effort.

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