Deployment Or Innovation — Which Road To A Low-Carbon Future?
At the “Energy for Tomorrow” conference in Paris, last week, one of the core discussions in the energy industry was: is a low-carbon world a challenge of deployment or one of innovation?
In other words: do we already have the technologies we need (e.g. solar, wind, grid management) and now just need to focus on deploying them? This could be called the evolutionary approach. There will, of course, be innovation and cost reduction through ongoing deployment and scale. However, we would essentially work with what we already have. This approach would recognise the fundamentally conservative nature of energy and infrastructure markets that rely on upfront financing of long-term cashflows.
Take solar as an example: despite innovations such as thin film and, more recently, perovskites solar cells (organic cells), 85% of the solar power installed this year is crystalline PV — a technology that is over 60 years old and has been brought to competitiveness through thousands of little improvements. If you think about new energy (e.g. solar) and new markets (e.g. India), you might expect an entrepreneurial, disruptive boom market. Instead, what you find is very conservative infrastructure business, with an eye on minimising risks.
A counter-example is electric cars. For a long time, global car manufacturers focused their efforts on increasing the efficiency of the combustion engine, following the existing technology path. Electric mobility was sidelined. Now we seem to see a sea change. Electric mobility has become central to the research and product development strategies of almost all big car companies. In part, this is thanks to the pioneering efforts in technology and marketing of Tesla (and Toyota’s Prius before that). Another aspect is that the combustion engine might have reached the end of the road. The Volkswagen emissions scandal also came about because the car manufacturer could not improve diesel engines fast enough to keep track with much needed, ever stricter regulations. In mobility, we need a new innovation path. In electricity, we have perhaps already shifted to the right one.
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At the conference in Paris, the “deployment” approach was propagated by some of the largest energy companies. For instance, Ulrich Spiesshofer, CEO of the Swiss energy technology giant ABB, told me that, “we need to now focus all our efforts on deploying the technologies we already have.”
On the other side stand the disruptors and technologists, such as Bill Gates and many Silicon Valley representatives. They argue for a revolutionary strategy: we need innovation in technologies and business models to bring about radical change. These new technologies could be (just examples): new storage technologies, nuclear fusion, better carbon capture and storage, carbon sequestration from the atmosphere and oceans, space solar power, or geo-engineering. Their point is that, given current technology trends, and even the much feted Paris Agreement, we are still far off from a 1.5 degree climate change goal we need to reach.
Of course, one could argue: it will be a bit of both — innovation and deployment. One will feed into the other, as always in life and business and technology. However, such an answer would dodge the issue. We have limited budgets and limited time, so it matters whether companies, entrepreneurs, investors, and regulators focus their efforts on enabling, for instance, distributed solar business models or on researching a space solar program. The question is: where do we put our focus?
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