Professor Phil Hart, director of energy and power, Cranfield University Energy networks, Energy retail, Finance and investment, Generation, Policy & regulation, Strategy & management, Opinion

Phil Hart says we must take a whole-system approach to energy – and that includes economics.

We’re all prosumers now. We don’t just sit back and consume music, film or news, we make our own media and share it with the world. But when it comes to energy, that’s a mindset that potentially threatens the historical stability of the industry.

Ten years ago very large power stations were delivering stable consistent power to homes and industry. With the advent of validated carbon emission concerns and their cure – renewables – that energy security blanket is being removed. We are moving into a phase of significant market disruption.

Photovoltaic solar cells are cheap and getting cheaper. The technology is also getting better, with the potential for higher power generation. There are better systems for localised storage and more efficient use of what’s generated. As costs plummet it becomes more compelling for homes to be aiming towards self-sufficiency and, potentially, excess sales. Enter the “energy prosumer”, and a steady rise in the number of personal sellers of excess capacity from their own micro power stations. There’s nothing fundamentally preventing any organisation or enterprise from generating energy and selling to the highest bidders – in competition with the traditional major generators if the commercial structures are in place.

So what is the business model for the future? We need consistency in supply but are building variability in the form of renewables. We need to bring about a change in energy mix as a basis for supporting the ongoing success of solid, large-scale energy enterprises.

A way has to be found to guarantee supply of baseload on demand while limiting CO2 emissions. Making traditional thermal energy plant more efficient must be part of our continuing energy provision mix. We must improve carbon capture and use technologies, and make materials and process improvements to allow more efficient operation. Power storage of various types may be the long term answer but we have a long way to go. Certainly lithium based batteries are making great strides and costs are falling rapidly.

Much current research is focused on making individual systems more efficient, but what matters in the end is system costs, how the total solution can be made to add up commercially. I see this as the particular role for Cranfield University, advancing the technical approaches but always with business in mind. Such a system will be flexible and have space for the prosumer, utility and other enterprise models – combining all the critical qualities of ongoing security, future stability, and healthy profitability.

 

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