Rethinking strategic public-private partnerships to rapidly achieve a net-zero energy world

January 2022  |  SPECIAL REPORT: ENERGY & UTILITIES

Financier Worldwide Magazine

January 2022 Issue

Even prior to the mass production of the Model T Ford, it was known that CO2 emissions would eventually be responsible for increasing the average temperature of the planet. Today, finally, we are seriously attempting to limit further warming of the planet through the transition from the primary use of fossil fuels, which have driven the growth of our global economy and enabled a high standard of living in many parts of the world, toward the use of renewable sources. It is remarkable that enormous scientific and technological advances, including human genome, synthetic biology, the microelectronics infrastructure, wireless communication, electric vehicles, artificial intelligence (AI) and so on, have been achieved since the early 1900s, yet throughout this period an existential challenge has confronted mankind with very little action taken. On the other hand, it is refreshing to note that the scientific and technological (S&T) advances have created a ‘toolbox’ to solve the S&T challenges associated with the transition.

Many believe that the Glasgow accord will be the most instrumental step toward motivating a diverse range of governments, corporate entities, private investors and national laboratories to develop, or accelerate further development, partnerships, agreements and funding mechanisms to seriously enable the energy transition, and suppress current events, such as extreme weather events, the melting of the arctic, the displacement of populations around the world and mortality rates due to multiple factors, including particulate emmissions. A key consideration is the increasing alignment with private capital, as exemplified by the $130 trillion committed through the Glasgow Finance Alliance for Net Zero. This group of financial leaders recognises not only the positive business opportunities of the transition to net zero, but also that ultimately the associated economy-wide costs for funding this transition will prove significantly cheaper than the overall cost to mankind. This estimate of costs is around 1 or 2 percent of global gross domestic product (GDP); it is an investment which will ultimately provide financial returns to corporate and financial entities which must inevitably fund most of the costs of this transition.

Corporate investments in science technology and manufacturing, enabled by government policies, as well as government investments into foundational science, and deployment, at universities, national laboratories and industry, have been responsible for significant reductions in the cost of renewables, particularly wind and solar power. Today, these power-generation sources are comparable in price, or cheaper, than conventional fossil-generation sources, and nuclear, in most places around the world. More importantly, renewables are responsible for generating revenue streams for corporate entities, a necessary condition to make the transition a reality. Indeed, government investments and partnerships with academia, national laboratories and industry have been largely responsible for de-risking renewable technologies, making them viable for large-scale deployment, sustainably.

The next step forward to completing the transition, because of its scope, pace and scale, promises to be more challenging than anything ever undertaken by mankind. What potentially, in part, does this transition really look like?

First, the energy system of the future must play the central role in facilitating the net-zero economy. The grid of Edison, designed to generate power and dispatch to customers with limited communication, has been evolving to accommodate technological changes and evolving customer demand. Specifically, the proliferation of connected energy technologies, such as electric vehicles, smart thermostats, LEDs, distributed wind and solar power generation, has necessitated the development of systems and algorithms to manage the use of energy, to maintain the stability of the grid, as customer needs are met. For example, the simultaneous charging of many electric vehicles in a local community or a parking garage could lead to grid instability challenges. Energy use by consumers for activities, such as the use of washers, can be deferred to off-peak hours. Under development is a new generation of smart homes, buildings and communities, which generate and store their own power, and use management systems relying on AI to serve the diverse needs of consumers, which will also interact with the grid to minimise energy use. The energy system of the future, by all expectations, must be reliable and resilient – must adapt to changing operating conditions and recover quickly after a disruption – and must be secure from cyber physical threats. Such a system should operate in a seamless manner, relaying power generated by multiple fossil and non-fossil sources, in the interim, and eventually renewable sources and nuclear power. It is anticipated that soon, a typical family home will have numerous connected energy technologies. Therefore, an American city with a million homes will have millions of connected energy technologies, necessitating the need to create the infrastructure to monitor in real-time, and optimise the performance of, millions of devices. This entire infrastructure will necessarily have to be operated autonomously; humans could not accomplish this. Moreover, energy systems will be accompanied by carbon capture infrastructure and by a hydrogen infrastructure. This will enable the capture of CO2 and the generation of green hydrogen, using electrolysis, together with a range of biological and chemical strategies to produce chemicals, e-fuels (fuels derived from electrical processes vs oil & gas resources) and materials. Achieving this would decouple future growth of the economy from fossil fuels.

The overall challenge of accomplishing a net-zero economy will depend not only on a vast range of S&T advances, but the development of new industries that do not yet exist; these include carbon capture and hydrogen infrastructure. Many chemical and biological processes, for example, must be further developed to be able to generate chemicals and materials at scale, cost effectively. Some materials used in energy devices, such as batteries which power electronic devices, will have to be replaced by newly developed materials systems that are not only earth abundant, but more reliable, with improved performance, and they must be cost effective. Key examples include new battery chemistries for lithium ion batteries, for example, and new materials that will replace silicon in power electronic applications such as inverters, used to convert current from solar or wind to be useful for the grid. The S&T capabilities are available to meet the challenge.

Unfortunately, the S&T advances represent only a part of the overall actions necessary to achieve this transition. A massive scale-up of power generation from renewables, and the associated build-up of the necessary infrastructure, to replace fossil fuels, and more importantly to meet the growing and diverse customer needs, will be required. An entirely new ecosystem must be developed to accommodate this transition. More to the point, whereas it is understood that decisions based collectively on technology, policy and finance provide effective outcomes, going forward it is especially important that individual and institutional actions, in terms of the adoption and use of technologies, advanced manufacturing technologies, a circular economy (reuse, recycling, repurposing), together with integrated collaborative business solutions, must be included in the development of strategies.

To compound matters, poor, underserved communities within developed nations face different challenges than more affluent ones, primarily due to less developed or aging infrastructure. The net-zero related challenges promise to be more difficult, but the overall goals cannot be met without addressing them.

A paradigm shift is required to achieve the transition. For example, airports, large commercial buildings and cities that are planning to electrify in order to achieve net-zero goals will have to rely on new strategies; these strategies must anticipate future growth opportunities and behaviour patterns of customers. Decision science and analytical tools to guide investments based on projected energy needs, and associated diverse energy requirements, with specific performance metrics must be further developed. To understand how to build the new capabilities for future organisations, one will need to develop a structural framework that would include energy assets, such as wind turbines, solar, storage capabilities, charging infrastructure and electrolysers, and understand the interoperability of these technologies. Moreover, one must exploit high performance computing capabilities to emulate the performance and operation of these and other assets at realistic scales – millions of energy devices. Together, the real and emulated assets would create a platform to test and validate future energy systems. Such a platform would include strategies to address potential cyber physical threats. A new, globally unique, platform called advanced research on integrated energy systems (ARIES), supported by the US Department of Energy, is currently under development to address these challenges. A range of corporate organisations with interest and activities in the energy space, as well as academic organisations, are involved in developing the capabilities of ARIES for its future uses.

A new approach for net zero carbon solutions at speed and scale

Indeed, the global energy landscape has experienced profound changes due to ever increasing demands, and the challenges posed by climate change have urgently accelerated the need for an ‘energy transition’ across multiple sectors. Investors are needed to spur venture capital investments in start-ups and to increase the scale of projects and of companies at the pace needed to address the global challenge. The potential return on investments from start-ups may not be immediate but may take time, as understood by investors in technologies such as small modular nuclear (fission) power reactors and power generation using nuclear fusion, which may have a potential payoff in two decades. Breakthrough Ventures, a Bill Gates venture, has taken a long view with regard to its investments, which are planned to be long term, with anticipated highly transformational outcomes.

To achieve this titanic shift toward lower emission options, companies from all sectors must work cooperatively and strategically prepare for and guide a future grounded in a net zero carbon economy. Solving the world’s critical energy challenges requires a fresh approach to re-engineering the public-private approach to developing and deploying technology. Activating collective capabilities across academia, national laboratories, corporations across all major sectors, finance and investment and policy, is essential, as we cannot reach these ambitious goals without fully considering the interconnectivity of the challenges each of us faces within our own industry. A multifaceted and revolutionary approach is critical to meeting energy goals and finding solutions to address complex global needs.

Only through new approaches to partnerships and scalable business solutions will we meet the urgent needs of the world and create our future, sustainable energy system.

 

Peter Green is the deputy director for science and Doug Arent is the executive director for strategic public private partnerships at the National Renewable Energy Laboratory (NREL). Mr Green can be contacted on +1 (303) 275 3008 or by email: peter.green@nrel.gov. Mr Arent can be contacted on +1 (303) 384 7502 or by email: doug.arent@nrel.gov.

© Financier Worldwide

BY

Peter Green and Doug Arent

National Renewable Energy Laboratory (NREL)

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