Pride & Prejudice of Energy Transition

Since last decade, climate change is the biggest problem of humanity till date and energy transition is the response to the same. Across stakeholders, the trend has picked up the interest globally again, after a 2 years’ diversion due to Covid-19. We all fought quite well with the pandemic and now we are back to overcome bigger challenge. In last one-year energy transition has scored quite significantly in google trends (please check the image below). It touched the score of 100 as favourite word of Google in the month of November 2022 i.e. during United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, more commonly referred to as COP27.

On side notes, it is more searched in developing nations and popularity decreases as we move towards affluence. 

Historically energy transition is to move from less economical and efficient form of energy to more efficient and more economic form i.e. wood/biomass to coal and then to oil and finally the emergence of gas and nuclear. Earlier transitions were more because of commercial incentive which bolstered economic growth and also allowed greater energy access to broader population.

Nevertheless, this energy transition is different and is clearly driven by the need to meet climate targets, meet the challenge of environmental change and essentially the need to decarbonize the global energy system.

According to IRENA,, capacity additions to the global power mix have been consistently dominated by renewables in recent years. In 2020, new renewable capacity addition reached 82% of the total installed capacity, compared to 73% in 2019.

This transition would require to harness the non-fossil sources of energy like the sun and the wind. And to generate the energy from these sources we obviously need to build technologies such as solar panels, windmills, batteries etc. Further all these require to mine huge quantities of non-renewable materials which would need bigger mines as compared to what we have today for coal or any other mineral.

Our ticket to green growth, in other words, is digging deep in the environment. Now we know that mining can have grave impacts for local ecosystems and populations. But the point is how much and where we’re going to have to dig, and what that means for climate security and for geopolitics.

History tells us that when the dominant source of energy changes, power relations change as well. Countries that can transform energy to their own advantage, can gain the upper hand economically and politically, and then can put themselves at the centre of the global order. Think of the United Kingdom and coal, for instance, or how oil determined the ascendance of the US to a global superpower.

What that tells us is that the access to and processing of energy literally materializes into the ability to shape geopolitical power dynamics. And today, we’re facing the challenge of implementing the biggest energy transition in the history of humankind under a ticking climate clock. The race is on for a new generation of power. At the heart of which we have all of the critical materials that we need to decarbonize on the one hand and digitalize on the other.

So what’s happening with them? On the demand side we’re at the beginning of an exponential demand curve. If you take lithium as a proxy, a key component for batteries, global production already increased by just short of 300 percent between 2010 and 2020. Isn’t it a good news? It means that decarbonisation is in motion.

The not so good news is that our “clean” future is going to be more materially intensive than before. If you take a simple measure for it, the International Energy Agency (IEA) study indicates that with the current level of innovation, an electric car requires six times more mineral inputs than a conventional car. And this is only the start. The World Bank tells us that with the current projections, global production for minerals such as graphite and cobalt will increase by 500 percent by 2050, only to meet the demand for clean energy technologies.

Now let’s look on the supply side Who currently exploits and processes minerals and where deposits to meet future demand are located tell us exactly how the transition is going to change geopolitics. So if you look at a material such as lithium, countries like Chile and Australia tend to dominate extraction, for cobalt, the Democratic Republic of Congo dominates extraction, for nickel, countries like Indonesia and the Philippines tend to dominate extraction and for rare earths, China dominates extraction. For all aforementioned extractions, China dominates processing. So, whole global balance of power is getting rehauled with this transition which is off course natural phenomenon.

China is currently trying to gain access to more mineral resources through its Belt and Road Initiative. The United States and Europe are both thinking of reshoring critical mining and processing and orienting some of their international partnerships to facilitate access to more mineral resources. Japan is exploring some of its oceanic marine reserves to build strategic reserves. Now at first sight, Russia’s invasion of Ukraine has nothing to do with whatever is being mentioned above. But Ukraine happens to be mineral rich. It also happens to be one of only two countries that had struck a partnership with the European Union to diversify and develop supply chains for critical raw materials. That partnership was specifically designed to help the EU decarbonize and in the process to better integrate with Ukraine from a political and economic perspective. Eight months after the partnership was struck, the invasion took place. Now, mineral resources may not explain everything about the war. But they certainly can’t be ignored in analyzing the events.

Because when it comes to the race for critical raw materials, what’s actually happening is that we’re headed right back into a new scramble for resources, at the heart of which you find all of the big players eyeing countries with vast mineral deposits. And yet so many of these countries that are located, for the most part, in Africa, in Latin America, in Central Asia and in the Indo-Pacific. The International Institute for Sustainable Development (IISD) produced a map representing all of the different materials that we need in order to decarbonize, their geographic location and their deposit size. As it so happens, a lot of the deposits are located in countries that rank fairly high on corruption indices.

Another map was published by Notre Dame Institute which shows the countries that are climate vulnerable are also the ones that are resource endowed. Also, those big ecosystems that we need to protect and regenerate in order to stabilize the global climate regime? To reboot the hydrological cycle and to protect biodiversity? Many of these big ecosystems are located in the same fragile countries that were mentioned in map of IISD. They also happen to sit on vast mineral deposits. Changing or eliminating these ecosystems through mining, through deforestation or anything else would undermine ecological integrity.

So, the big question – is this fight against climate change pushing environment and humanity towards more dangerous path?

Our modern economies have advanced and grown for two centuries through the gigantic blind spot of fossil fuel exploitation and its unintended consequences. The big lesson here is that we can’t afford to just shift to a different set of energies, technologies and materials without paying attention to the unintended consequences. The stakes are too high. They involve our future and bigger question is they also involve our humanity and nature.

Decarbonisation is the way forward. There’s not one single doubt allowed about this. But the way forward also demands of us that we start imagining our future beyond decarbonisation already. A climate-safe future is a necessary condition for peace. But we won’t achieve a climate-safe future without peace among ourselves and with environment. And to build peace, we need to shake things up in international politics and in the way that we do business and economics.

So where do we start?

  • Science. Science can tell us exactly where it is safe to mine and where it isn’t, from an ecological perspective. Where it is not safe to mine, we need to act as though these minerals did not exist and establish protected areas under which no mining licensing can take place. Where mining does take place, we can integrate socioeconomic and ecological regeneration within business models.
  • Global public good regime. If decarbonisation is a matter of human survival, then the materials that we need in order to decarbonize should be managed collectively under a global public good regime. The alternative is conflict and planetary breakdown. So while we figure out exactly how to design this regime, the countries at the heart of the scramble for resources should receive adequate support, competent and coherent support to face off the joint challenges of geopolitical competition and climate disruptions on the other hand. In other words, investing into conflict resolution, into the fight against corruption and into context-specific resilience, should be top priorities of our global energy transition.
  • New ways to do business and economics. We can’t just switch from one energy system to another. What we need instead is to reduce our need for energy and for materials. And that starts with massive public and private investments into circular economic models that favour recyclability and material substitution. Followed by developing ecological assessments for supply chains that account for greenhouse gas emissions, but also for water, soil, biodiversity, material and energy footprint all at once.
  • Innovation. All of this can only happen if we start shifting our thinking about innovation. Innovation in our times is about bringing back economic footprint within planetary boundaries. Anything else, even the coolest of new products, if it isn’t aligned with that goal, it’s not innovation, it’s business as usual.

So, successful energy transition entails a regime which can engulf everything which comes under social, political, economic and most importantly environmental security.

Digitisation – Making grid future ready

Electric grid is becoming more and more important when we are looking towards electrifying the whole economy due to climate change.

There is so much uncertainty with regards to climate change. How we have looked into the past will not help how we look into the future. So when we are thinking of the grid which is the backbone of the any country’s critical infrastructure, a backbone of national competitiveness and economic growth. So without a reliable and resilient grid we have threats to that competitiveness. Electricity grid is one of the biggest testimony of ingenuity and it is serving its purpose from quite some time. Now there is lot of demand coming to grid due climate uncertainty and our goals for net zero to bring in more renewables to this biggest machine.

Now that we need to think of grid for future it important to think of ways to bring in the reliability and resilience. The recent memory of Texas grid failure episode in US, which resulted in ~5million people without power for multiple days. This is an indication that we shall be prepared for the impact of extreme weather on the grid as Texas experience extreme cold and in California in 2020 it was extreme heat which made the grid issue.

Weather events have gone more and more severe typically in particular regions. The weather events like “Sandy” is getting more and more extreme, though in India we are still better as compared to western parts like US where the grid is getting older and more fragile. These events strain the power ecosystem, though the sector is getting ready for bitter weather events but there are other areas as well which are getting involved due to climate change like extreme rains, wild fires, which can’t be handled by the grid alone. This calls for the interconnection working with various other departments within government. Therefore, this becomes more important than ever for both social and economic security of the nation when electricity is the backbone of the critical infrastructure of a country.  

Due to these climate changes, generation technologies are changing significantly. More renewables are getting part of the grid and also they are becoming much more distributed and we are moving away from old central generating plants. These distributed energy has introduced many new generators like rooftops, small solar plants etc. This makes virtually each person living in a city a generator. Therefore, we need technology to control all these new generators.

Digitisation which is sweeping all other industry will sweep power sector as well.

We generally turn-on a blub by just a flip of a light switch and never just think from what is that powering the electricity bulb and from where it is coming? It’s our grid, which making it happen and this light bulb and the complexity happening behind the scenes on the electric grid, is a key piece to solving the climate crisis. It’s how we’re going to mitigate the risk of extreme storms flooding our cities, avoid scorching the Earth with severe drought, and ensure that our children and grandchildren inherit a habitable planet, but we need to rethink how the grid works and our relationship with it.

We need to stop transacting with the grid and start interacting with it. But before we go talk about the future of the grid, let’s go back to that light switch. When you turn it on, it closes a circuit that connects your light bulb to the rest of the electric grid.

The grid senses this new demand, and somewhere, probably far away from your light bulb, a power plant generates just a little more power. That adjustment happens basically instantaneously. Across the whole grid, we have less than a minute’s worth of storage, so the electrons flowing through your bulb were produced just moments beforehand. As users of electricity, our experience is completely transactional: Flip switch, consume power, pay bill. We don’t need to know how it works; it just does.

But what happens when it doesn’t work? What happens if that power plant doesn’t increase its generation to meet the demand from your laptop?

Blackout !!!!

Not just for your light bulb, but across the whole grid. Now, historically the grid has prevented blackouts a certain way. As demand varies over the course of the day, big power plants, primarily fossil fuel power plants, ramp up and down to match it. But that is not going to cut it if the grid is going to solve climate change.

Right now, over 50% of the power flowing on the grid comes from fossil fuels. Producing that power contributes one third of global greenhouse gas emissions. As is, the grid is a huge contributor to climate change, but going forward, it’ll be an even bigger part of the solution.

Now the solution?

It’s not just as simple as replacing existing fossil generation with carbon-free alternatives. To solve climate change we’re going to need to electrify basically everything: transportation, heating, manufacturing. By doing that, by electrifying everything, the grid becomes integral to addressing nearly 75% of global greenhouse gas emissions. But by doing that, we will double how much electricity we need, and all of it has to come from carbon-free sources.

So the question: “How do we solve climate change?”

actually turns into:

“How do we build and operate a grid without fossil fuels?”

Now, renewables are finally ramping up.

Today, wind and solar produce roughly 10% of the world’s electricity, but integrating them into the grid isn’t always seamless. Before, the only thing we had to worry about was uncertainty in demand, but renewables add uncertainty and variability to generation too, and that uncertainty causes high price volatility.

Here’s a simple example:

A wind farm is happily spinning along, generating low-priced power, but suddenly the wind stops blowing, and to keep meeting demand, another more expensive power plant makes up the difference, causing prices to skyrocket.

Now, imagine hundreds of thousands of wind and solar farms spread across the grid. That’s the grid we need to solve the climate crisis, but it means that these price dynamics will happen millions of times over.

We need to moderate these dynamics, while preserving the stable and reliable electricity that we have today. To do that, we’ll be reimagining how the grid works. Rather than ramping fossil fuel power plants to meet demand, renewables will be spreading across the grid, rapidly adjusting their production as weather conditions change.

Electric vehicles will be acting as mobile batteries, drawing and then contributing power to the grid wherever they’re connected. Smart thermostats and appliances will be making our buildings a little warmer or colder, or shifting the time of day that our dishwashers run to better match when power is available. Intelligent factories will be automatically adjusting their production, increasing throughput when power is abundant and scaling back as prices rise.

Massive batteries will be absorbing energy in periods of excess and returning it to the grid when supplies run short. The grid is becoming this interactional place, with all of these components working together to ensure balance and stability. But what’s missing here is the underlying technology that ties all of these interactional components together.

This grid needs a brain.

Each device will be responsible for making its own decisions. Those decisions will depend on algorithms that predict future costs and availability of electricity. Just like we use weather forecasts to decide whether to bring a sweater, the pieces of our future grid are going to need price forecasts to know when to use or produce power because remember, if the grid isn’t in perfect balance:

Blackout !!!

The brain needs to be using rapid, hyper-localized, physics-based forecasts of grid dynamics across both short and long timescales. We need to confront the real world – competing values, and interests; questions of political, technological, economic feasibility -to make that brain a reality.

Digitalisation is a new era for power systems or we can also say for energy ecosystem as whole. The term digitalisation is an amalgamation of three aspects; IDA (can be read “idea”)

1.      Interconnections

2.      Data

3.      Analytics

The first step is to establish the channels for interconnections between human to machines and also machines to machine(s); which can help to generate data; further putting analytics on top, of can help us to develop intelligence for effective decision making.

AI and physics based algorithmic models can help us to anticipate the needs of the grid. These algorithms can guide each battery, each thermostat, each factory to make the choices that keep our grid operating efficiently and reliably. It will not only solve the climate crisis but digitisation can prepare a solution which have self-regulating capability to keep conditions favorable to life. It’s a lot like an ant colony acting beyond the awareness of each individual ant, and our future grid is exactly the same.

All of our daily actions must work symbiotically to maintain a healthy, stable system. We have all the pieces that we need to solve the climate crisis, or at least most of them. We have batteries, we have renewables, we have smart thermostats. Now we just have to bring them all together.

It requires us to stop transacting and start interacting with the grid. It requires us to become the grid.