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Power

Renewables are becoming economically competitive because of developments in battery technology, which impacts markets as well as global political dynamics. How will the shift from centralized to decentralized power generation and consumption models affect your customers, citizens, and real-estate assets?

Changing Economics of Power

Renewable energy is nearing an inflection point where it will be cheaper in many use cases than traditional power. This is not a result of politics, wishful thinking, or government subsidies – it is the result of the billions of dollars that are being poured into battery technology innovation by Tesla and others who are developing electric vehicles.

Effective grid storage batteries fundamentally change the cost dynamics of power generation. When unsubsidized solar and wind power becomes cheaper than traditional coal, gas, and nuclear power, the calculus for municipal, regional, and national infrastructure decisions will obviously shift. Less obvious are the second and third order effects to investors, retail, shipping, trade, and global financial markets.

The last major shift in energy technology (coal to oil) changed the world. Follow our analysis to see how this transformation develops and where intersects with industry and national strategy.

Batteries & Renewables

As solar and wind technologies are mature, batteries to offset day/night leveling issues are the remaining piece of the puzzle for the mainstream economic viability of renewables. Rapid advances in this field have occurred over the past five years because of electric vehicles, which will have the second-order effect of enabling renewables to be a cost-competitive part of the global energy mix.

PV solar technology has drastically improved in terms of cost and efficiency since the first commercial implementations in the 1970s and 1980s. Solar technology is mature and commercially viable at both the residential and industrial scale. The last remaining issue for solar to become cost competitive with traditional energy sources is cost-efficient grid-storage batteries, which mitigate solar’s inherent day/night issue.

Wind power generation has also experienced significant growth in recent decades, and has reached the point of commercial maturity. Wind farms, which can range from dozens to thousands of turbines, are cost competitive with traditional energy sources at times. The last remaining hurdle for wind power is cost-efficient grid-storage batteries to mitigate wind’s inherent variability.

The regulatory environment and business models surrounding the way power is bought and sold will need to change to accommodate renewables. The current model (1-seller, many-buyers) will shift to a new model that allows for many-sellers, many-buyers, and many-storage providers – all of whom flip roles continuously. In addition to turning energy markets upside down, real-estate holdings and even vehicle fleets will become an entirely new type of productive asset class.

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