The transition to renewable energy can seem pretty daunting. There are many more "moving pieces" than what we do today and figuring it all out isn't easy. That's the bad news. Here's the good news. We'll help you understand your options and at the end of the day, switching to renewables is an opportunity. If you're a homeowner, switching to renewables can help you save money. If you're thinking about renewable installations on a commercial scale, then renewables can help you make money. But like any opportunity, there are pitfalls that must be avoided to get to financial success. That's where we come in, as we not only know about current commercial offerings, but what sets us apart, is that we have a pretty good understanding of what's coming next as a lot of these technologies aren't mature, especially storage and solar.
Let's be clear
The transition to renewable energy is already well underway and it's going to happen sooner rather than later. What's driving the pace of the transition? The automotive industry. The automotive manufacturers have rolled the dice on electric vehicles (EVs). Forecasts are showing that more than half of the new vehicles that will be sold by 2030 will be electric. See: Let's be clear. The transition to renewable energy is already well underway and it's going to happen sooner rather than later. What's driving the pace of the transition? The automotive industry. The automotive manufacturers have rolled the dice on electric vehicles (EVs). Forecasts are showing that more than half of the new vehicles that will be sold by 2030 will be electric. (See: Bloomberg: More Than Half of US Car Sales Will Be Electric by 2030). Yes, the Inflation Reduction Act (IRA) is having a big effect on the renewables industry, but the automotive sector had already put its bet down and committed to producing EVs prior to the IRA. What this means is that buying a new gasoline powered car or truck is going to get more difficult in coming years. . Yes, the Inflation Reduction Act (IRA) is having a big effect on the renewables industry, but the automotive sector had already put its bet down and committed to producing EVs prior to the IRA. What this means is that buying a new gasoline powered car or truck is going to get more difficult in coming years.
A little history can be helpful here. At the turn of the 20 th century, the most common form of personal transportation was the horse. Horses were used to pull carts, trams, and even taxis as well as just having people ride them. In New York city, there were about 15,000 horses. These days there are about 2 million cars instead. Think about the infrastructure required for that transition. Instead of hay, you need gas stations. Instead of blacksmiths, you need car repair shops. Street cleaners no longer have to clean up horse manure and instead of stables, you need garages. Transitioning to cars from horses was a massive undertaking, but it happened. In transportation, transitioning from gasoline to electricity isn't going to be as big a challenge as going from the horse to the car was a century ago, but there are still a lot of issues to consider such as new infrastructure requirements. While it's easy to see that gas stations are going to start closing due to reduced demand in a few years, other changes aren't as obvious.
Renewables Roadmaps Are Scarce and Have Lots of Blank Spaces
When you want to go some place, it's helpful to have a road map. One of the reasons that we've gotten used to regular improvements in computer technology is that the semiconductor industry uses roadmaps which let everybody know what the milestones are and when they should be achieved up to a decade (or more). There's buy-in from the companies in the industry and so there's been consistent progress over many years. The downside of this approach is that "disruptive" is not a word that anybody wants to hear. If you want to be part of the semiconductor industry you follow the roadmap. Period.
The renewables industry doesn't have that kind of rigid plan. In fact, what's become pretty clear is that a lot of the people in the electricity industry really don't have a very good idea of how we get to a grid powered by renewable energy. Since there are a number of immature technologies involved here, there's no way to develop the kind of long term roadmap the semiconductor industry uses as there are too many moving pieces. Luckily, most of the needed technologies of renewables have much lower capital costs than semiconductors, so when something doesn't work as planned, it's easier to pivot.
Unlike the semiconductor industry where people understood and planned on lower costs per transistor as new generations of chips were developed, the renewables industry is struggling because people tend to use current costs of products such as solar cells and batteries for future planning. This faulty reasoning makes renewables much less attractive.
Here's an example. There are wild claims that giving up fossil fuels is going to cost $275 trillion. No joke, this is the number being tossed around. (See: Taming the Climate Is Far Harder Than Getting People to the Moon). That's crazy! Let's put that number in some type of perspective. The total value of all the residential homes in the US is ~ $50 trillion1. If the total cost of electrification would be 10% of the value of all the homes2 - that would be $5 trillion. That's still a big number, but it's going to happen over years. If it takes 20 years, well, that's $250 billion/yr or a bit more than a quarter of our annual spending on defense. That's a lot more reasonable and something we can begin to wrap our heads around. Also, $250 billion is a pretty good market which can help build new companies and create new jobs.
One of the biggest changes in the coming years is that both your car and your home are going to share the same type of power, i.e. electricity. This is going to allow a lot more flexibility as you'll be able to transfer energy from your home to your car for charging, or, during a power outage, from your car to your home to power your refrigerator and other appliances. Rather than buying fossil fuels whether it's gasoline for your car or natural gas to heat your home, you're going to need electricity to power both. This is where the savings can come in as a car runs a lot further on a dollar's worth of electricity than a dollar's worth of gas. If you use an electric heat pump for your home, you can also save money by not buying natural gas. Already, more homes are having heat pumps installed than natural gas furnaces. See: Chart: Americans bought more heat pumps than gas furnaces last year. That's because heat pumps are more efficient than natural gas heaters and as the cost of electricity falls, that's going to provide even more of an advantage.
The flexibility that comes with powering both your home and your car with electricity has lots of ramifications and some of these ramifications may take some time to cope with. Here are some easy ones: diesel generators for the home are probably going the way of the typewriter. We're also going to be buying more electricity as although some efficiency measures can reduce the amount of electricity for the home, swapping gasoline for electricity is going to increase the total amount of electricity we use. Some of the other issues though, require more thought, such as: does it make sense for all the homes on the block to have their individual charging stations? What about a storage battery for a charging station that could handle several homes, rather than a single home?
When buying electricity, the line between homes and automobiles are going to get really blurry. Both homes and cars (or trucks) are going to use batteries on a much larger scale than today. In order to make these batteries affordable, they're going to be multifunctional. The battery in your car or your truck is going to serve as your backup generator if needed, as it should be adequate to power your home for several days- and that includes heating/cooling. The battery in your home though, is going to both power your home and charge your vehicle. The solar panels you've got? They're going to charge the battery in your home or the one in your vehicle. Don't count on selling power back to the utility though (not on a daily basis), that's not their business model. Overall, your home power station is going to allow you to rip up three sets of bills: electricity, natural gas, and gasoline. Odds are that's going to save you at least $5,000/year and it could be a lot more.
Homeowners are going to have to decide whether or not they want to be connected to the grid, and if so, whether they want to be connected to a larger centralized grid, or a smaller micro grid. One of the joys of living in a capitalist country is that if utilities can't provide a service at a lower price than doing it yourself- well, you can tell the utility that you can do without their services. The utility is going to have to match or better the price point of being independent of the grid, otherwise, they're going to lose customers. This means that the way to determine the costs of renewable energy is to figure out what the customer is going to be willing to pay, not what the utility might want to charge.
If you're looking at your bank account and wondering how you're going to pay for this transition to renewable energy: relax, there's some good news. At the end of the day, kicking the fossil fuel habit is going to save you money, both directly and indirectly. It's like quitting smoking. When you quit smoking, well, first, you don't have to pay for the cigarettes. That's obvious. But what may not be so obvious are the indirect savings. You're going to be healthier so you spend less money on medical costs and life insurance, also pretty obvious. Then there are the unexpected savings from quitting such as spending less money on dry cleaning costs and room fresheners. Clearly, it's pretty easy to see that quitting smoking does save you money both directly and indirectly. Quitting the fossil fuel habit is going to save you money too, both directly and indirectly which is why you should seriously consider switching to renewable sources of energy sooner rather than later.
It's not too hard to find someone who can help you figure out whether a project will be profitable today. It's a lot harder figuring out whether the project is going to be profitable over its lifetime. Having a good understanding of how prices are going to change in the coming years is critical to ensure the long term profitability of an installation. Assuming that prices will remain static will leave a project vulnerable to later competition that could result in losses. Newer technology will enable competitive installations to reduce prices, thus, business models need to take this possibility into account.
People developing projects today often lack an understanding about the risks of various technologies. Too often, the technology is a "black box" and the claims of the manufacturers are accepted at face value. This can leave the project owner to unforeseen costs and shorter lifetimes than expected if the technology does not perform as expected. Asking the correct questions before the project is underway can save a lot of heartache and money later on. We can help you ask the hard questions to help ensure that you have a good understanding of the risks involved and how to ensure not only current profitability, but also future profitability.
The largest changes in the business models of the grid in over a century are underway. Determining the correct product mix of: Transmission and Distribution (T & D), Generation, and Storage is critical to avoid very angry customers and legislators. As an example, utilities in California have supported fixed rate charges which takes into account personal income, but customers are outraged. In contrast to the previous century of operation, utilities are now going to be faced with competition from their customers. A greater reliance on distributed energy resources (DER) means that customers will own more of their own generation and storage. If utilities cannot offer savings, the utility is going to lose market share. Understanding these price points will be critical to the long term fiscal health of the utility. We can help.
New technologies for storage are already being implemented at scale. Battery Energy Storage Systems (BESS) can increase resiliency, increase the efficiency of generation, and reduce T&D requirements. However, BESS technology is far from mature, and there are significant challenges to scaling up most current BESS. BESS should be evaluated on the basis of a number of factors- it's not a "one size fits all" technology, which seems to be the business model of most EPC firms. We can help utilities determine what BESS technologies should be considered for their geographical constraints. See: Battery Energy Storage in Stationary Applications.
Transitioning to renewables is complicated because there are so many moving pieces. Legilsators have to balance a wide variety of concerns here including: energy costs, environmental costs, siting, resiliency, environmental justice, safety, jobs, and quality of life within the communities they are responsible for. Some states, like New York, have already developed a road map for the transition to renewable energy. Most states have not. States will need to tailor their road map to their own individual requirements. What percentage of people live in rural regions? How large are the cities? Where should storage be located? If there is a fire, can it be contained? What is the least expensive form of generation? We can help you understand the challenges of renewable energy, so you can have an informed discussion with your various stakeholders. Otherwise, your state may become uncompetitive with respect to attracting new business or residents due to sky-high energy prices needed to pay for poorly thought out legacy installations. Keep your state attractive for new investment! Make sure you understand all the issues when transitioning to renewables.
1 Most people in the US live in a single family home.
2 There is some basis for this number as that's about the cost differential in housing
markets between homes that have solar panels installed and homes that don't.