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Thinking small is the future

It might seem that the energy industry is the last one to grab technology structures that are flexible, agile and modular. But this is about to change.

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In 2008 Warren Buffett more than quadrupled Berkshire Hathaway’s stake in ConocoPhlips just as gas and oil prices were almost at their peak. That move cost his company several billion dollars. He later said, “I did some dumb things in investments in 2008.” We wonder how he’ll look back on the £3.6bn investment he has just made in wind power.

One of his companies – MidAmerican Energy – has revealed its goal of finding 100% of its energy for customers in Iowa through wind power. It’s looking to get approval for a 1000 turbine project Wind XI. More than a quarter of the state’s electricity comes from this source already, a result of a state law enacted in 1983 requiring investor owned utilities to purchase 105MW of power from wind generation.

Interest in renewable energy is expanding too in Africa. Prices are dropping as competition has grown – with the result that solar power is 80% cheaper today than it was a few years ago. The need for a move in this direction is clear. “It is not acceptable this day and age that in Africa you have over 600 million people without access to energy,” said Erastus Mwencha, deputy chair of the African Union Commission recently told a debate hosted by the World Economic Forum. “That means for Africa: for every three people, two don’t own devices. In the case of Nigeria, it is producing petroleum but importing consumption.”

Thinking small is the future, according to fortune.com. It says energy is transitioning from “large, centralised, monolithic systems that take years to build..to smaller, distributed, networked systems that can be built in weeks or months.” The benefits on both a social and environmental case are clear. Communities which have never been connected to the grid don’t necessarily have to wait for gigantic solar fields or wind plants. Smaller scale projects mean smaller costs and in a rural country that might be the solution. Jaqueline Novogratz, CEO of Acumen – an NGO that works to expand the energy supply in Africa- said, “Think about the fact that it takes most governments about $1000 to connect a rural household to the grid and a number of years to expand it. On the other hand a five to ten mile system is more like $150 and cab be financed over a one to two year period by the household itself. You can completely change the economics of what it will take to reach the world’s poor.”

Much work is being done in tackling the biggest obstacle for renewable energy – transforming it into storable fuels. A team at CalTech led by Nathan Lewis from the Division of Chemistry and Chemical Engineering has an idea to generate energy copying what happens in the photosynthesis process and storing it as we do with fossil fuels. Lewis says achieving this goal would be a game changer for the market – “We want to make an artificial photosynthetic system that in a scalable, sustainable way, with an efficiency ten times greater than the fastest growing crop, makes a fuel that we can directly use in our infrastructure from the sun. If we do that, then history shows that humans are very good at innovating and developing next generations of technology, making it faster, better, cheaper.”

For the first time – a result of shareholder pressure – the oil giant Shell has published a paper looking at what it would take to meet international climate goals. Up until now it had maintained that the increasing demand for energy would hold more sway than calls for agreement to keep global warming at below 2C. Saying a commitment to achieve that would be ‘technically feasible but very challenging’, Chief Executive Ben van Beurden wrote, “We know our longterm success as a company depends on our ability to anticipate the types of energy that people will need in the future in a way that is both commercially competitive and environmentally sound.” It gave away scant details about what that type of energy would be.

While some might be keen for a race to the end, the warning tale of SunEdison, the Wall Street darling of just 12 months ago, lingers ever present in the renewable sector.  As nytimes.com says, “There is a timeless element to SunEdison’s swift demise: an executive with an Icarus complex chasing a fast growing market embarks on an aggressive strategy fuelled by cheap debt. Soar. Crash. Burn. Repeat.”

But for those people far removed from the grid who wait for news of success and lights at night-time, will a steady approach deliver in time?