Being restricted, not able to travel has its benefits, you gain more time to climb into your own reading, research or passions. For me, this has been my “Energy Transition” year.
The sheer amount of articles, reports or webinars around all aspects of energy have been partly overwhelming but significant in their reference and knowledge gaining. This intensity of purpose towards the energy transition has given me an enormous boost in its understanding.
When I reflect back on this 2020 year, recognising the needs to make a significant energy change has really gained a very high awareness.
2020 advanced the commitment to the shift from fossil fuel to renewables that has real momentum in the coming years. 2021 will be the breakthrough year where the energy transition has the unstoppable forces happening.
Let me summarize my top six energy developments that built-in 2020 that have given a potentially lasting momentum to the energy transition that will, in my opinion, have a real impact in 2021. Plus my seventh one, a personal one, boosted my energy understanding and confirmed a growing recognition by others’ of my contributions.
Firstly, let’s look at my top six energy enablers to significantly impact the energy transition that is being undertaken. Each will have a massive impact on 2021.
ONE – We are entering the autumn of fossil-fuel generation
Coal, Oil and Gas are really on the ropes, fighting to stay relevant against the onslaught of renewables. Coal is on its way out that is for sure, the early retirements of dozens of coal plants in 2020.
Global coal consumption was such way down due to Covid-19 and renewables’ pace. Growing positioning has become far more competitive and offers real confirmation that renewables can bridge much of the energy demand.
Gas is not so far behind. The scrapping of plans to replace coal with gas and opt for clear energy portfolios and cancelled previously planned pipelines are among the issues that are putting huge pressure on the Gas Turbine business.
Power generation will be the major battlefield in 2021 to see if the “interim” argument, the bridge, takes hold or the longer-term one, of going straight for renewables wins.
The issue of a legacy for investing in Gas Turbines that have a life of thirty years or more of normally useful lifetime returns is at risk. They could quickly become stranded assets or wrongly positions in the new energy designed a system where renewables are more central.
I feel early retirement debates and required decisions to not invest in fossil fuel generation will dominate 2021. Fossil fuel-fired generation is heading for a very tough year in 2021.
TWO – The commitment to Carbon Neutrality
The commitments of both China and now the incoming US administrations recommitting to the Paris Agreement is highly significant. The whole raft of more vigorous policies, support programs and regulatory measures to tackle the CO2 emissions and the increased “drumbeat” to decarbonization will become much louder in 2021. Governments really need to “drive” change.
The continued push to carbon-free electricity is happening at an increasing rate, with the application and acceleration of clean energy technologies, and the power grids to manage and run increasingly on zero-carbon power. The energy system is being argumented with increased sector coupling management, and increase storage alternatives will be one of the top investment focus in 2021. Decarbonizing is central to all we do.
THREE.- The Race towards Hydrogen at Scale requires lower cost points.
For me, hydrogen became the big talking point of 2020. We have been deluged with Hydrogen opinions, suggested options and so much advice on how and when this “hydrogen economy” emerges into one that gives real commercial scale. Hydrogen is moving towards the alternative energy source to solve the harder-to-abate areas, bridge the wind and solar variability, and provide transport fuel alternatives in power-to-x solutions.
Green hydrogen is the place to get to, as quickly as possible. What needs to be announced in 2021 is significant breakthroughs in electrolyzer technology that can significantly upscale volume and show the promise of rapid cost reduction. The scaling trajectory will have a similar pathway that solar and wind took to get to the point where they are today where costs are required to fall dramatically to gain acceptance and adoption.
The disruptive technology breakthroughs for green hydrogen need to be delivered in 2021 to kick-start the Hydrogen revolution.
In 2021 the Hydrogen Council has to make some hard decisions. Does it continue to back all Hydrogen shades (grey, blue, green) or shape its memberships focus to one and only one Hydrogen choice, that of Green hydrogen? Green Hydrogen is generated by the different renewables and technology solutions available; mostly solar, hydro, and wind feeding into electrolyzers.
Investment decisions and technology clarity need to be fully determined on Hydrogen Those decision and clear pathways for Hydrogen need to be nailed down in 2021.
FOUR – The focus will shift further to reducing Greenhouse Gases in 2021
The transport industry, aviation, and shipping need to make definite inroads to find their fuel alternatives in 2021. There are options, but a winner or two needs to emergy and the industries consolidate behind these.
Methane Gas has to be given much sharper attention too, and that continues to push the oil and gas industries into getting their emissions in real shape. All greenhouse emissions in building, in industry, in transport need to be “forced” to act by Government edict and have clear time commitments to make the necessary changes to clean energy.
Bans on Gas Vehicles needs even more legislation incentive, the two or so decades needs shortening, so the laggards in the car industry finally get the incentive to commit.
2021 will see Gas Emissions becoming central to policy and which technological breakthroughs being determined as the ones to put the investment capital behind.
The one really grey area for me is translating all the talk of carbon capture, utilization and storage (CCUS) into real compelling and globally commercial solutions. If they can’t see the shift to decarbonization through renewables and green hydrogen, all the political, technological, and industry solution providers combined weight behind them to provide commercially viable CCUS solutions with blue hydrogen takes increasing hold on future energy designs. CCUS needs to have clear, scalable and proven solutions.
FIVE – Getting our Storage, Battery and Grids capable of delivering Electricity Stability
As we recognize the largescale deployment of energy storage, this has the real potential of overturning any business as usual for any electricity market needs. If it is to satisfy instantaneous demand, smooth out discrepancies between generation and loads, provide flexibility in load shifting and position both batteries and storage as the ancillary service for managing all the present and future options in power generation and consumption self-consumption.
As batteries and storage costs continue to fall and the amount of energy these can store will shift the economics of power across the grid, displacing and disrupting plants and grids in their design, flexibility, and capabilities. Storage will upend many industry structures.
Storage system design will take a more central role, where lithium-ion, ölead-acid, flow-cells and other emerging technologies will optimise value to the needs on hand. Storage is recognized as giving two critical aspects of any energy transition, resilience and insurance to manage stability and fluctuations.
Energy storage and battery hold a critical part of the future, and 2021 will see these energy-storage systems become broader solution sets, not one-off positioning. They will become an integrated design feature, and this will emerge in 2021.
SIX– The Financial Energy Commitment Year of 2021 needs to be substantial
Financial institutions and Banks are finally making their move. Banks always want risk certainty, and they have really struggled over the investments at scale in emerging technology or alternative fuel solutions. The pretence (no other word for this, in my opinion) of their deep commitment to the energy transition has been lacking.
Banks and Financial Institutions should be “called out” and recognize their pivotal role in ‘forcing’ reducing carbon intensity as primary investors. They need to move with greater intent and purpose away from fossil fuel-related investments to renewable ones and resolve to back pioneering technologies in greater ways.
The boom of investment return needs to be seen, where Government Economic policy sends that powerful signal to the markets to commit in deeper, sustaining ways. We need to get past piecemeal or pilot projects to assess risk over a protracted time, we need bolder investment visions in investments in clean energy solutions.
Banks need to reorganize their portfolio of energy investments in radically different ways. Taking carbon intensity reduction as the core investment focus does begin to regroup individual segments in a new way of evaluation. 2021
Banks and Financial Institutions in 2021 need to finally come off the fence of backing both fossil fuel and renewables and make this reduced carbon intensity central to their investment decisions going forward.
SEVEN – My seventh one is my own deliverables in 2020 that I believe will build-out and lead to a significant “return” in 2021 for all who want to engage.
This reflection of my 2020 will be in my opening post of 2021, entitled “restating my energy purpose”.
My best of Energy Wishes to you in 2021. Let’s search for synergies and making connections that are mutual and rewarding.