Sustainable Business Blog

Browse the 'Sustainable Business Blog' to discover interesting facts about energy efficiency, principles of sustainability and how to be sustainable in business. Learn why sustainability is important and how to improve energy efficiency in the workplace. Access energy efficiency resources and commercial energy saving tips

Emissions Reduction: The Bright Future of a Commodity Going South

The state of Victoria, in the south east of Australia, is similar to many western nations in that the use of electricity from centralized electricity generators on the grid is on the wane, as illustrated in the graph below, and is a leading cause of emissions reduction. Electricity consumption is down 17% compared with 2008 levels – with corresponding emissions reduction, and peak demand also seems to be on a downward trend. This is due to energy efficiency, rooftop solar, and a decline in manufacturing.

Data in the graphs below comes from the Australian Energy Market Operator (AEMO)

Emissions reduction shown in Victoria's electricity consumption declining from 2009 through to 2017
Emissions reduction shown in Victoria’s electricity consumption declining from 2009 through to 2017

Yet the future is bright for this commodity whose consumption has been going south. And the really big opportunity may well be down south.

Electric cars will increased the demand for electricity

Whilst they aren’t here yet in a big way, electric cars are coming (as those in the Tesla Model 3 queue keep telling you), with most of the the major automakers now firmly committed to electrification. Consuming somewhere between 15 to 20 kWh of electricity per 100kms, an electric car traveling 12,000 kms a year will require around 7 kWh of electricity per day to charge it. In Victoria that represents around one third of a typical household’s electricity usage.

Whilst energy efficiency and rooftop solar will continue to make inroads, as electric cars roll out and home chargers are installed, its hard to see grid electricity use continuing to decline at the rate it has, whether in Australia or in Austria. An emissions reduction challenge will be ensuring that energy is sourced from renewable sources.

In temperature and cool climates, the switch from natural gas, coal and oil to renewable electricity for heating will massively increase electricity demand

Another big transformation, as the response to climate change firms, will be the move away from natural gas and fossil fuels used for heating, to clean renewable electricity, for emissions reduction. In Victoria, which has a temperature climate with its capital Melbourne at a latitude of 38 degrees South, as shown in the graph below, nearly 90% of stationary energy use now comes from gas. Gas consumption is also much higher in winter than it is in summer.

Victoria's approximate stationary energy consumption - emissions reduction
Victoria’s approximate stationary energy consumption over 1 year – emissions reduction challenge

The seasonal gas consumption trend is almost the mirror image of the solar trend, where production peaks in summer.

Accounting for the fact that electricity can be used to pump heat with high efficiency, if all stationary energy consumption moved to electricity, we would need around twice as much electricity as we now need in Victoria, with a consumption profile like that shown below. Add in electric cars and the demand for electricity could be approaching three times current levels.

Distributed energy behind the meter will account for some of the extra supply, as will energy efficiency, but most of the extra supply will likely come from grid connected sources. Clearly to achieve emissions reduction this will require a big increase in the MWh supplied by renewable sources.

Emissions reduction challenge - Victoria's stationary energy if all electricity
Victoria’s stationary energy profile over one year it it was all supplied by electricity

Most of the demand for electricity will be from May through to October. Countries in temperate and cool climates in the northern hemisphere will have the opposite stationary energy demand profiles – high energy demand in January, lower in July.

Not an easy transition

The switch to electric cars will be disruptive, the switch away from gas to renewable electricity just as challenging if not more so. Fuel switching (gas to electricity) is capital intensive, and presently is only economic to do so when assets are at the end of their life and need replacing anyway. Homes with gas hot water also have gas stoves and gas space heating – these three different assets won’t all need replacing in the same year – thus making the economics of fuel switching challenging to the home owner.

But as the world continues to ramp up efforts to fight climate change, more and more attention, and more innovation, will be deployed to aid the emissions reduction achieved through a transition away from natural gas and other fossil fuels.

How can we tap into renewable energy reliably year round?

Getting all this energy from renewable sources year round, given the intermittent nature of solar and wind, will not be easy. Solar is now the cheapest form of renewable energy, and its price seems to be on an inexorable and perpetual decline. But solar production peaks in summer.

There is a lot of focus now on battery storage, but while the popular lithium chemistry being deployed to provide storage is good for storage lasting from minutes to days, it’s not suited for saving energy generated in summer for use in winter, and certainly not economic to do so. Demand response, now a buzz word, can’t shift demand across seasons.

Countries could look to develop large pumped hydro storage systems, or install huge banks of flow batteries, or build massive hydrogen tanks, to store energy in summer and use it in winter. However the cost of this would be enormous.

But with solar getting cheaper and cheaper, perhaps there is another way.

The opportunity for the south / the responsibility of the south

Energy consumption in the northern hemisphere is much higher than in the southern hemisphere. There is an opportunity for those in the temperate south, in Australia, Africa and South America, to size their renewable energy supplies for their winters, thus not having to bother with inter-seasonal energy storage, and export their excess summer energy to the north, for use in the north’s winter.

Energy exporters like Australia, used to exporting coal and now natural gas, can build on existing expertise. But instead of shipping off sources of carbon pollution, they could be shipping clean energy. This could be in the elegant form of electrons traveling across massive transmission lines (but which could have sovereign risks associated with the transmission cables as they cross many borders), or batch shipped on boats as hydrogen.

Temperate countries in the south are uniquely positioned to do those. The global energy imbalance is to the north. Solar has taken over from wind as the cheapest form of renewable energy. Rather than having every country or region in the world oversize their renewable energy systems by designing for winter, or building massive inter-seasonal storage infrastructure to save summer energy production for winter use, it would be much more financially and resource efficient to have the south transfer its summer solar energy to the north’s winter.

The total kW of globally deployed renewable energy and the amount of energy storage required is much, much lower if we look to seasonal south to north renewable energy transfers, and can be built on the cheapest form of renewable energy – solar.

Politicians, entrepreneurs, engineers, investors, international negotiators, marketers. The opportunity, the responsibility, is in the south.

Leave a Comment

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

Subscribe to our Newsletter

    Scroll to Top
    Scroll to Top