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Renewables—disruptors? or Disrupted? PUBLIC ACCESS

The Contribution of Wind, Solar, and Bioenergy Systems may be Determined by the Cost of Materials and of Natural Gas.

[+] Author Notes

Garry Golden is a professionally trained futurist who speaks and consults on issues shaping society and business in the 21st century.

Mechanical Engineering 133(12), 30-34 (Dec 01, 2011) (5 pages) doi:10.1115/1.2011-DEC-3

This article analyzes the future of renewable energy. Looking to the future, renewables are expected to be the fastest growing category of energy through 2035 as global efforts gain momentum. According to the U.S. Energy Information Administration, in its Annual Energy Outlook 2011, renewable electricity generation is expected to grow by 72%, raising its share of total power generation from 11% in 2009 to 14% in 2035. The strongest sources of growth will be wind and biomass, while solar remains the perennial dark horse with tremendous but unproven potential. Renewables could also see breakthroughs ahead based on advances in nanotechnology and its impact on materials science and engineering. To overcome the challenges to gaining real market share from legacy hydrocarbons, renewables must catch the wave of other trends shaping the global energy landscape, including materials engineering and business models that help to lower barriers and speed adoption.

Energy: Compare lifecycle costs and relative merits of leading renewable energy technologies.

Few topics in the energy sector meet as much conflict—both fanfare and skepticism—as the visions of the future renewable energy portfolio for power generation and transportation.

For many engineers there is a strong desire to see the numbers and then extrapolate forward to compare lifecycle costs and performance characteristics of realworld operations. But there are challenges associated with extrapolation. Traditional forecasting techniques offer only a limited view compared to scenarios that explore key uncertainties about how renewable systems might evolve in the years ahead.

The most likely future for renewables is indeed one of fast growth but slow capture of market share as the world economy continues to expand around traditional hydrocarbon resources. But there are other paths to greater adoption of renewables based on a convergence of global trends that might enable them to disrupt a business-as-usual future. There are also influences, including the availability and cost of critical materials and the price of natural gas, that could temper the growth of renewables in the coming decades.

Today, renewables account for 8 percent of U.S. national energy production. But numbers can be misleading. Most of this market share is not due to the symbolic renewables of wind and solar that dominate the current U.S. and global discussion, but to the more traditional renewables of biomass and hydroelectricity. Around the world, the original renewable resource of biomass (from plant and animal waste) accounts for the largest portion of the renewable market share.

Looking to the future, renewables are expected to be the fastest growing category of energy through 2035 as global efforts gain momentum. According to the U.S. Energy Information Administration, in its Annual Energy Outlook 2011, renewable electricity generation is expected to grow by 72 percent, raising its share of total power generation from 11 percent in 2009 to 14 percent in 2035. The strongest sources of growth will be wind and biomass, while solar remains the perennial dark horse with tremendous but unproven potential.

Despite the projections of fast growth but low share of total production, renewable energy advocates believe that major barriers to lowering cost and scaling up can be overcome—and with favorable policy support, renewables will be poised to surprise skeptics and account for a much larger share of global energy production by mid-century.

To understand the possible futures of renewables we must look closely at key trends and sources of uncertainty that could change the game.

What might surprise us and accelerate the adoption of renewable energy systems?

Here are some possibilities: The impact of globalization on the energy value chain, more aggressive policy measures by emerging economies (e.g. the BRIC nations: Brazil, Russia, India, and China), technical improvements based on functional nanomaterials, and business models that bypass legacy competition and capture the self-interest of market-driven incentives.

What might disrupt the disruptors and empower the incumbent hydrocarbon sector?

A sharp rise in the price of critical materials used in renewable energy systems—or a shift in global policy towards natural gas.

In order to overcome the challenges to gaining real market share from legacy hydrocarbons, renewables must catch the wave of other trends shaping the global energy landscape, including materials engineering and business models that help to lower barriers and speed adoption.

In recent years, domination of renewable policy and production has begun to shift from traditional engineering giants, such as the United States, Germany, Japan, and Korea, towards emerging markets that see renewables as critical to their domestic energy security.

Solar energy, with its unproven potential, remains the dark horse among renewables.

Grahic Jump LocationSolar energy, with its unproven potential, remains the dark horse among renewables.

China has found leverage in statecoordinated industrial policies for manufacturing solar cells and batteries—and more recently in protecting its large reserves of critical materials, particularly rare earths, which are used in such renewable energy devices as wind turbines. China's recent involvement in the production of polysilicon for solar panels has completely reshaped the global landscape of competition leading to a sharp drop in prices for PV modules. This Chinese state-sponsored rapid increase in output has led to bankruptcies of U.S. startups Evergreen Solar and SpectraWatt, but offers some hope to global markets seeking cheaper solar systems. China is now confronting the delicate balance of managing production without creating overcapacity and harming its domestic industries and role in the global value chain.

Brazil is leveraging its lead in biofuels from sugar cane into partnerships with advanced biotechnology companies such as LS9 and Solazyme to create designer biofuels and biomaterials. India-based Tata Ltd. has placed a key early investment in Sun Catalytix, which was founded to commercialize an artificial photosynthesis technique developed at Massachusetts Institute of Technology to produce low-cost fuels.

Why defining renewables matters

Renewable portfolio standards guide states and utilities in investing. Yet how we define renewables is a moving target and not without controversy.

Wind and solar (both photovoltaic and solar thermal) have clear public recognition.

But the portfolio is much wider and nuanced. Geothermal does have regenerative elements based on core heating. Hydroelectric production can be included in some renewable portfolio targets based on size of production.

Biomass, which can be carbon neutral, does not receive as much media attention as wind and solar. Yet the U.S. Department of Energy includes biomass in its renewable portfolio and expects bio-based fuels to be the majority share of total renewable energy.

And as we look to the future we might see a continued expansion of renewable energy systems based on emerging science and engineering around artificial photosynthesis and the emerging concept of electrofuels which generate clean molecule fuels through non-photosynthetic processes.

Looking ahead, we can expect the unexpected around the globalization of the renewables industry that leads to a future that is more interdependent and competitive with other technologies as emerging economies seek a higher place on the renewable energy value chain.

Renewables could also see breakthroughs ahead based on advances in nanotechnology and its impact on materials science and engineering. The early hype stage of nanotechnology, which promised nanorobots in our blood stream, is giving way to a more pragmatic approach to materials integration that moves us beyond mere characterization to functionalization of nanoparticles and nanotubes. The promise of these nanomaterials is a world of low-cost, highperformance materials used across the renewables portfolio to increase catalytic surface area for thinfilm solar cells, batteries, and fuel cells—and to reduce weight for automobile chassis, improve the strength of wind turbines, and substitute for critical materials used in electric powertrain systems.

A promising roadmap is being built around the foundation of carbon nanosheets—or graphene—that exhibit tremendous electrochemical properties that could transform core components used in renewable systems. We might expect significant breakthroughs in the role of functional nanomaterials to improve existing materials manufacturing and to lead to entirely new methods for building renewable energy system components.

The final driver of disruption might be found in the role of business model innovations that lower barriers to adoption and bypass direct competition with entrenched incumbents. Renewable fuel startups have business models based on using carbon emission streams as a feedstock for algae that convert CO2 into usable bioenergy and biomaterials that are sold as premium byproducts. Imagine a future in which waste-to-energy is a profitable business model for the world to adopt.

Fuel cell based companies are also starting to think more innovatively about disrupting the market. A startup, Bloom Energy, which sells fuel cells that it calls Energy Servers, has lowered barriers to adoption by eliminating the need for customers to make major capital investments in hardware. In 2011, the company unveiled Bloom Electrons, a program in which it offers to sell what the company bills as clean electricity on a subscription basis, taking away the cost needs for operation and maintenance on the customer end.

Beyond the widely referenced barriers of cost and scale— renewables face other sources of uncertainty that make it difficult to predict how energy markets will unfold. Rising costs of key materials and the role of natural gas could delay or derail market growth in renewables.

The limited view of cost curves and technology diffusion

There are many models and frameworks used by policy makers and business leaders to forecast the development of renewable energy systems against realworld market dynamics for power generation and transportation fuels.

The most commonly cited forecasting tool is based on experience curve models (a.k.a. cost curves; learning-by-doing) that rest on the simple notion that experience (measured by installed capacity) leads to improved performance and lower costs.

The goal is seeing future price parity on this experience curve for the power sector via levelized cost of energy that accounts for capital and variable costs common to the electricity industry. Among the current portfolio (excluding hydroelectric) wind power remains the bright spot in development along the experience curve.

The other framework policy makers will explore is the use of technology diffusion curves or S-curves, which estimate the product life cycle and performance of installed legacy systems (e.g. power plants, combustion engine vehicles) to help us understand when end users might invest in replacing existing systems with new alternatives.

Both models have reasonable assumptions but can only offer a limited view of broader factors likely to shape energy markets.

The limited view of experience curves is that the key metric of installed capacity is descriptive of past events that might not reflect future trends—and cost or price parity itself is not the pure determinant of successful user adoption. Costs can shift around disruptive technical performance for various reasons, such as materials engineering or government industrial policies.

The limited view of technology diffusion curves is that they do not account for new business models that might bypass direct competition of installed legacy infrastructure. In our recent past we saw accelerated global market adoption of wireless telecommunication infrastructure and cell phones that had little resemblance to the cost structure of the fixed-line business model. There was no competition between old and new. Is there an energy industry analogy of a leap-frog diffusion curve? Could renewables based on distributed power generation avoid competition with existing installed base of grid power—or have to fit within rigid regulatory frameworks?

So while the experience curve and technology diffusion models help us understand business as usual, factors of cost, and replacement user adoption, the engineering community might broaden its thinking about what might enable renewables to meet or exceed expectations.

In 2010, Chinese policy makers hinted at a possible shift in industrial policy that sent shockwaves through the global manufacturing economy when it threatened to reduce its exports of rare earths used in electronics and renewable energy systems. By most estimates China controls 90 percent of rare earths production used in renewables such as wind, solar, and advanced power electronics. To counter a possible restriction in trade in critical materials, engineers are looking to expand global production, to develop ways to capture rare earths from e-waste, and to innovate around nanostructured material substitutes. Policies and technologies associated with critical materials will remain a source of uncertainty for leading players in renewable energy industries.

Renewables could also be delayed or derailed by the rise of global production of natural gas. Natural gas has long been promoted as a bridge fuel for the 21st century transition from carbon-heavy fuels to renewables. But the expansion of global production and reserves from shale gas deposits create a great deal of uncertainty. And it remains unclear if real world markets will see natural gas as a bridge fuel or a longer-term replacement to coal and oil that siphons investments away from renewables.

Natural gas could gain wider legislative and public support based on the promise of jobs from domestic production and relatively clean output for power generation. The result could be devastating for developers of wind and solar based electricity projects.

Natural gas also plays into another game-changer concept in the energy landscape via distributed power generation. Some visionaries are bypassing wind and solar and looking to natural gas as a clean, reliable, and competitive power generation option based on residential and commercial solid oxide fuel cells. After years of misplaced expectations, fuel cell companies are finally gaining traction around early market makers such as Bloom Energy and Clear Edge Power, which are working with large electricity consumers interested in localizing their power generation.

There is a powerful vision for cleaner fuel-based distributed power generation. Imagine walking into Home Depot or Lowe's in 2020 and being able to purchase a refrigerator-size energy appliance that takes you off the power grid by converting natural gas into electricity and heat. This vision of a self-reliant and fuel-based distributed power solution could hold more appeal to consumers than the idea of rooftop solar panels.

For professional engineering communities around the world, renewables will continue to capture our imagination given the expected fast growth and accelerating factors caused by globalization, materials innovation, and new business models that help to increase market competitiveness.

Even in a future where traditional hydrocarbons dominate the market share of energy production, there are no limits to imagining how engineers might transform the renewables landscape.

Imagine a future where factories produce new categories of energy appliances based on battery storage, solid-state fuel cells, or devices that produce solar fuels via artificial photosynthesis.

Imagine our transportation market expanding past two billion vehicles based on lightweight composite chassis or electric drive trains that integrate batteries and fuel cells.

Imagine engineers tasked with building bioreactors across the planet to capture CO2 waste streams.

Imagine engineering teams working at offshore or high-altitude wind farms that deliver streams of electricity to global markets.

Seeing the story beyond the numbers and understanding broader global trends and emerging opportunities will be critical to the engineering community as it looks towards bringing value to the global marketplace and inspiring the next generation of engineers.

A Bio Future of Energy

If energy in the 20th century was defined by geoengineering and extracting energy from below the ground, the current century might be shaped by bioengineering and growing energy above the ground.

The dream of bioenergy researchers is to isolate naturally occurring microbes that are able to absorb carbon dioxide from waste streams to create more valuable hydrocarbon chains that can be used as fuels or feedstock for more valuable biomaterials used in the food and pharmaceutical industries.

More forward-looking bioengineers are turning to principles of synthetic biology to understand how we might design microbes with specific genetic expressions that maximize metabolic conversion rates and yields.

Other visionaries see bioindustrial manufacturing processes, which use microbes to assemble molecules that improve key energy material components (e.g. cathodes, anodes, membranes) used in batteries, fuel cells, solar cells, and organic electronics.

The desire to expand the role of bioengineering in energy has precedent. All of our hydrocarbon supplies are rooted in biological energy. Coal is ancient plant mass. Oil and natural gas are descendants of shelled algae that lived in ancient shallow oceans.

The future success of bioengineering will require collaboration across the entire engineering profession. While the frontline might indeed be researchers in labs focused on biomolecular engineering, they will need support from mechanical and electrical engineers to develop larger scale bioreactors able to grow, harvest, and develop biomass into valuable byproducts.

U.S. Energy Information Administration, International Energy Outlook 2011, www.eia.gov/forecasts/ieo/.
International Energy Agency, World Energy Outlook, www.iea.org/weo/.
U.S. National Renewable Energy Laboratory, Renewable Energy Databook, www.nrel.gov/docs/fy10osti/48178.pdf.
NREL Energy Analysis Center, www.nrel.gov/analysis/.
U.S. Advanced Research Projects Agency - Energy (ARPA-E), arpa-e.energy.gov/.
Technological Learning in the Energy Sector: Lessons for Policy, Industry, and Science, Martin Junginger, Wilfried van Sark, and André Faaij, eds. Edward Elgar Publishing 2010.
Copyright © 2011 by ASME
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References

U.S. Energy Information Administration, International Energy Outlook 2011, www.eia.gov/forecasts/ieo/.
International Energy Agency, World Energy Outlook, www.iea.org/weo/.
U.S. National Renewable Energy Laboratory, Renewable Energy Databook, www.nrel.gov/docs/fy10osti/48178.pdf.
NREL Energy Analysis Center, www.nrel.gov/analysis/.
U.S. Advanced Research Projects Agency - Energy (ARPA-E), arpa-e.energy.gov/.
Technological Learning in the Energy Sector: Lessons for Policy, Industry, and Science, Martin Junginger, Wilfried van Sark, and André Faaij, eds. Edward Elgar Publishing 2010.

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